Ukrainian govt urges food exporters to develop new markets before possible EU restrictions

MOSCOW. April 15 (Interfax) - The European Union will be able to impose restrictions on imports of sensitive food products until the end of the year 14 days after such imports exceed allowable amounts under the updated rules of the autonomous trade measures for Ukraine, Ukrainian media reported First Deputy Agrarian Policy and Food Minister Taras Vysotsky as saying in a video posted on his ministry's Telegram channel.

"The mechanism is as follows. The restrictions themselves essentially go into effect on June 5 of this year. If at a certain point, for example on July 1 or August 20, the amount of quotas for which restrictions were proposed is reached, the European Union has the right to make a decision within 14 days to restrict imports of this product until the end of the calendar year," Vysotsky said.

The proposed mechanism is absolutely new in the history of trade relations, these are "not classic quotas or restrictions," he said. Time will tell whether it will be applied in practice or not, but this option has been worked out and EU countries could use it, Vysotsky said.

Asked what this means for Ukrainian exporters, he said they need to look for alternative markets, since the size of the quotas set by the EU is far smaller than Ukraine's ability to increase agricultural exports.

He said a positive development is that Ukrainian producers have already begun the process of diversifying exports, without waiting for the imposition of the restrictions. He cited Ukrainian sugar producers and exporters as an example.

"Indeed, sugar is on the list where restrictions may be imposed after the quota is reached, which is about 260,000 tonnes, according to estimates. When, for example, we look at sugar exports last year, the absolute majority, 90% plus, was exported to the European Union. Already in March of this year more than 20% was exported to other countries - the Middle East, Africa. In the first ten days of April 2024, Ukraine exported 40% of sugar produced last season to other markets. Again, to the Middle East and to Africa," Vysotsky said.

Speaking about the outlook for Ukrainian wheat sales on the European market, he recalled that wheat was repeatedly mentioned in discussions with European agriculture ministers, but it was not included in the final list. However, the EU has decided to monitor and constantly analyze the scale of shipments. Ukrainian corn will also be subject to such control.

"Corn is included in the restricted quotas, but it's worth mentioning that this restriction is not actually critical, since we can also export more corn taking into account the rules that exist outside the quota," Vysotsky said.

He said that there is time before the summer during which exporters should diversify their markets.

The European Parliament and European Council reached a tentative agreement on April 8 on extending the liberalized trade regime for Ukraine until June 5, 2025 while providing for measures to protect EU farmers.

The autonomous trade measures will help support Ukraine's economy and help the country with its gradual integration into the EU internal market, the EU said.

Under the agreement, in the event of a significant disruption on the market of the EU or markets of one or several member countries due to imports of a given agricultural product from Ukraine, the European Commission will be able to respond quickly and impose any measures it deems necessary.

As part of measures to protect the interests of European farmers, the EU will be able to impose restrictions for particularly sensitive agricultural products, such as poultry, eggs, sugar, oats, corn, groats and honey.

The parties agreed to extend the reference period to determine if imports exceed a certain threshold for triggering this automatic safeguard. If imports of these products exceed the average quantities imported in the second half of 2021, 2022 and 2023, the conditions for imports will be reviewed. The EC also pledged to tighten monitoring of grain imports, particularly wheat.

The EU introduced the duty-free trade regime for Ukraine in 2022 and is now considering extending it again for another year. Many EU countries have seen periodic protests by farmers this year sparked in large part by duty-free imports of agricultural products from Ukraine.