UCAB asks EC not to impose restrictions on Ukrainian sugar, chicken, eggs, extend trade preferences for 4 years

MOSCOW. Feb 19 (Interfax) - The Ukrainian Agribusiness Club (UCAB) has expressed concern over the possible imposition of restrictions on exports of Ukrainian chicken, sugar and eggs and suggested that the European Commission (EC) consider extending trade preferences for Ukrainian agricultural products for a four-year period with simultaneous monitoring of their impact on the European Union market, the business association's website said, as reported by Ukrainian media.

"UCAB is concerned about the latest European Commission's proposals from 31 January regarding trade preferences for the next calendar year, starting from 6 June 2024. Unfortunately, the proposed regulation introduces EU import restrictions for the most important product groups for Ukrainian agro-exports (poultry meat, sugar and eggs). Although these restrictions are presented as safeguard measures in accordance with EU and WTO trade legislation, in fact, they provide for the automatic return of tariff quotas in case imports of these products from Ukraine exceed the arithmetic mean imports for 2022-2023," the statement said.

UCAB emphasized that these preferences are particularly important for the Ukrainian agricultural sector, as they enabled Ukrainian exporters to preserve production and jobs, as well as to ensure the receipt of forex proceeds during 2022-2023.

In 2023, Ukraine's agricultural exports reached $21.9 billion, which accounted for 61% of Ukraine's total commodity exports, compared to $23.4 billion and 53% of total commodity exports in 2022. The EU share in the total volume of agricultural food exports from Ukraine in 2023 reached 56.6% (55.1% in 2022), or $12.4 billion ($12.9 billion in 2022), the association said.

At the same time, Ukraine may face a macroeconomic crisis and currency devaluation in 2024 without international financial support.

Last October, Ukraine's balance of payments deficit reached $2.95 billion per month. This is the worst figure since the 2008 financial crisis, when the balance of payments deficit stood at $2.3 billion per month. Then, in 2008-2009, the Ukrainian hryvnia devalued by 70%, UCAB said.

The business association noted that the state budget deficit in 2024 will amount to $43.5 billion. It is expected that $41 billion will be provided by international donors, including the United States. If at least half of these funds are provided, the National Bank of Ukraine estimates that the currency will devalue by 25%-30%. If there is no financial support, the devaluation will be at 40%-50%.

"Therefore, the issue of maintaining open access for Ukrainian agri-food products to the EU market will be vital for Ukraine's trade balance. If proposed trade restrictions are introduced, Ukraine may face macroeconomic crisis," UCAB said.

The business association said with reference to the EC's statement that the negative impact of imports from Ukraine on the EU market has not yet been confirmed. In 2023, imports of agricultural products from Ukraine accounted for only 9% of the EU's total imports of agricultural products.

UCAB urged the EU institutions to follow the decision to support the Ukraine Facility program and abandon the proposed restrictions on imports of Ukrainian chicken, sugar and chicken eggs.

"The most effective step would be to extend trade preferences for a longer term, for example for a four-year period, while monitoring the impact of imports on the EU market and maintaining a close dialogue with the Ukrainian side within the framework of the EU-Ukraine Trade Coordination Platform established for this purpose," UCAB said.