EU ambassadors find agreement on extension to Ukraine tariffs waiver. With one change

Brussels – A slowdown in the schedule, a further delay of two days, but in the end, the agreement goes through. Ambassadors from the 27 EU member states gave the go-ahead for an extension to tariffs stop on food imports from Ukraine until June 5, 2025, at today’s (March 27) meeting, with a compromise on a deal that “ensures a balanced approach between support for Ukraine and protection of EU agricultural markets,” reads the note from the rotating EU Council Presidency. Despite the wavering and changes, which could still have a significant impact on the EU’s support for Ukraine on the economic-agricultural front, now the text, as amended from the provisional understanding reached last Wednesday (March 20), will be submitted to the European Parliament, which, if there are no objections, will proceed to its approval.

After allowing time for the 27 EU leaders to discuss the issue at the summit last Thursday and Friday (March 21-22), the meeting of the Permanent Representatives Committee (COREPER), scheduled for Monday (March 25), has been postponed for two days. The delay was due to the uncertainty of the situation caused by the objections of three member countries in particular (France, Poland, and Hungary, supported partially by others such as Italy) on two issues: the extension to 2021 of the reference period for triggering the “emergency brakes” in the event of market disruptions in the Union (or just one of its members) and the inclusion of wheat in the list of products to be considered precisely for measures to protect European farmers. Continued consultations over two days to avoid the blocking minority led the Belgian rotating presidency to present a new compromise proposal last night (March 26) on the modalities for extending the tariff waiver, first discussed this morning at the opening of the proceedings and approved “in a constructive spirit” in the afternoon. Diplomatic sources reveal that only Slovakia and Hungary opposed it.

If approved by the Parliament along the lines agreed between the ambassadors, the renewed Regulation will apply from June 6 and extend until June 5, 2025, the suspension of tariffs on Ukrainian exports to the Union but with a requirement for the Commission to take action within 14 days (no longer 21) to trigger automatic safeguards in the event of market disruptions. The existing “emergency brake” on “particularly sensitive” agricultural products (i.e., poultry, eggs, and sugar) is strengthened, taking into account “any negative impact on the market of one or more member states” and not just the EU market as a whole. The list of products triggering “emergency brakes” is extended to four others—oats, corn, semolina, and honey. However, only the commission’s commitment to strengthen the monitoring of wheat and other cereals imports (not the inclusion in the list) remains as understood. More precisely, the EU executive is to provide a declaration for strengthened monitoring of the impacts of these products. For the activation of the “emergency brakes”, the reference period is now between July 1, 2021, and all of 2022 and 2023, and this means that the European Commission will be obliged to reintroduce tariff quotas only if imports of poultry, eggs, sugar, oats, corn, semolina, and honey exceed the average volumes of the last two and a half years.

Regarding EU imports from Ukraine, sources in Brussels report some data that may give insight into how the (partial) extension of the reference period may impact the possibility of triggering European market safeguard mechanisms. For poultry, 76 thousand tons were imported in 2021 and 173 thousand in 2023; for sugar, 18 thousand in 2021 and 496 thousand in 2023; for barley, 50 thousand in 2021 and 660 thousand in 2023; for wheat, 288 thousand in 2021 and 6.1 million in 2023, and for corn 7.4 million in 2021 and 12.9 in 2023. According to sources, compared to the 2 billion in annual benefits for Ukraine under the Commission’s proposal (later dropped to 1.7 billion under the March 20 provisional understanding), benefits would fall just above 1.6 billion annually (it could have been only 800 million in case of the adoption of all the more restrictive demands). At this point, only the response of MEPs is awaited after Easter since this is a change from the provisional agreement, although the approval of the EU Parliament should not create any particular problems, given the fact that the original negotiating position was even more uncompromising in favour of protecting the European agri-food market.