Posted on June, 21, 2023 at 06:09 am
On May 25, the Council of the European Union ultimately renewed the temporary agreement for the bloc’s trade liberalization with Ukraine for another year (Consilium.europa.eu, May 25). The decision, which came into force on June 6, was not, however, easy to achieve as the EU’s eastern frontiers have been alarmed by the negative consequences this liberalization has had on a strategic segment of agricultural products. In response to that pressure, on June 5, the European Commission prolonged, until mid-September 2023, the ban on imports of Ukrainian grain—specifically wheat, maize, rapeseed and sunflower seed—to Poland, Hungary, Slovakia, Romania and Bulgaria (Euronews, June 5).
At the beginning of 2023, domestic pressure within the EU member states of Central and Eastern Europe (CEE) was intensively growing, as domestic producers usually sell their grain during the first fiscal quarter of the year. This pushed the agricultural ministers from Bulgaria, Hungary, Poland, Romania and Slovakia to appeal to the European Commission (EC). On January 30, during a session of the Agriculture and Fisheries Council, they called on the EC to mitigate the problems caused by Ukrainian grain imports (Farmer.pl, January 30). The EC did not respond to the appeal until late March, proposing an allocation of 56.3 million euros ($61.52 million) from the EU’s agricultural reserves to Bulgaria, Poland and Romania, as well as allowing the three countries to complement this aid with up to 100 percent of their national funds (Agriculture.ec.europa.ec, March 20).
The support package was rapidly adopted; yet, some still felt it was insufficient. Hence, on March 31, the prime ministers of the same five countries sent a letter to EC President Ursula von der Leyen. The letter contained their proposals for measures to counteract the crisis, including the “reintroduction of custom duties and tariff rate quotas in imports from Ukraine” if market distortions could not be eliminated by other means (Gov.pl, March 31).
In Poland, the situation with agricultural markets led to a small political crisis, which eventually resulted in Henryk Kowalczyk’s resignation as minister of agriculture and rural development on April 5. Polish farmers had been lobbying for a harsher government policy on imports for quite some time. And the inability to convince the EC to meet these expectations, including the partial reintroduction of duties on Ukrainian agricultural products, was specified as the direct cause for Kowalczyk’s resignation (Gov.pl, April 5).
Source: Oil Price