Last weekend, the leaders of Great Britain, France, Germany, and Poland visited Ukraine to call for a 30-day ceasefire. Not long after, however, U.S. President Trump urged Ukrainian President Volodymyr Zelensky to accept an invitation from Russian President Vladimir Putin to participate in peace talks even without a prior ceasefire. Meanwhile, Europe is putting pressure on Trump to impose tougher sanctions on Russia, even though these have so far had little effect.
What has helped Ukraine, however, is Western military aid, which Trump continues to provide. Unfortunately, the most likely scenario remains that the conflict will simply continue, partly because it is in Putin’s interest to do so, as it makes it easier to divert attention from the many domestic problems in Russia.
Against this backdrop, there is now a debate in the EU about whether or not to extend the favourable trade access that Ukraine currently enjoys to the European market. Last month, Ukrainian Prime Minister Denis Shmyhal warned at the EU-Ukraine Business Summit in Brussels of ‘serious consequences’ if the European Union does not extend the agreement on this in time.
The ‘autonomous trade agreement’ between the EU and Ukraine expires on June 5th. It was concluded in 2022, after the start of Russian aggression, and provided for the removal of almost all EU import tariffs and other trade barriers for Ukraine. Only for a number of agricultural products, such as poultry, eggs, honey, and sugar, was a temporary emergency stop mechanism introduced later, which comes into effect if imports of these agricultural products from Ukraine exceed certain maximum thresholds.
For the European Union, extending this deal until the end of this year is not of great economic importance, but for Ukraine, it could mean billions of euros in lost revenue. Given that European countries are providing military support to Ukraine, it would therefore be particularly unwise not to simply extend this trade agreement.
Free trade
This would also allow the EU to send an international signal that, contrary to current U.S. policy, it will continue to pursue free trade with allies such as Ukraine.
Unfortunately, rumours suggest that this is not what the EU intends to do. It would prefer to negotiate a new trade deal ‘with quotas.’ This would cost Ukraine a lot of money, which the same EU member states would then have to make up in the form of military aid, not least because Trump’s peace plan does not look likely to convince Russia.
Another reason is internal resistance within the EU. Because their markets were flooded with cheap Ukrainian grain, farmers in EU member states such as Poland, Bulgaria, Slovakia, and Romania have repeatedly protested against the access that Ukrainian agricultural companies have to the European market. However, an import regime with quotas is not a sensible way to address these very valid concerns.
There are frequent complaints about Ukraine’s failure to comply with European standards. Instead of introducing new trade barriers, the European Union could focus on streamlining standards for its own farmers, complemented by more effective oversight. After all, it is not just industry that is struggling with European overregulation.
European regulations are also a major concern for the European agricultural sector, not only because they negatively impact profitability, but also because EU farmers must compete with non-European producers who are not held to the same standards. Trade barriers, on the other hand, would affect both Ukraine and European consumers. After all, it is the latter who foot the bill for excessive regulation.
Imposing regulations on trade partners
Another key negotiation is the long-delayed trade agreement between the EU and the Latin American trade bloc Mercosur. After years of difficult negotiations, the European Commission reached an agreement last autumn. One of the main reasons it took so long was that the EU demanded that these countries adopt all kinds of European regulations, rather than cut those burdensome regulations on industries back home. For example, the EU asked for a “sustainability annex” after the core terms had already been agreed on.. This was not at all appreciated by Brazil, Argentina, Uruguay, and Paraguay, which meant that everything took much longer.
In the trade relationship between the U.S. and the EU, the European tendency to impose all kinds of non-tariff barriers is a complication. Trump is now pushing against this. For example, the U.S. Trade Representative (USTR) wants the EU to scrap its deforestation regulation. It argues that this new European law, which imposes new bureaucratic obligations on imports of products such as livestock, cocoa, palm oil, and rubber, will cost U.S. agriculture and industry exports $8.6 billion a year.
This type of legislation is a good example of how the EU tries to impose regulatory choices on its trading partners, thereby undermining good trade relations. First, it was the Southeast Asian palm oil exporters Malaysia and Indonesia that complained about this. These countries consider it particularly unfair that, even though NGOs have praised them for achieving a significant reduction in deforestation, the EU continues to refuse to recognise their standards as equivalent. This is despite the fact that the most recent version of the Malaysian anti-deforestation standard MSPO is even stricter than the European one.
After Brazil and the United States—at the time still with Joe Biden as President—also began to complain, the EU was forced to postpone the entry into force of the legislation by one year. Now, Trump is simply asking for these kinds of trade-distorting non-tariff barriers to be removed.
A ‘Trumpian’ European Union
The EU’s plans to reintroduce trade quotas on imports from Ukraine threaten to cost the country billions of euros. It is questionable whether this contradictory approach to Ukraine is a wise policy. On the one hand, the EU is supporting Ukraine militarily and politically, but on the other, it’s considering imposing economic restrictions that will harm the country’s economy. These are ‘Trump methods in the velvet EU glove’, says a Ukrainian source involved in the farming sector.
It is also striking that Poland is leading the push for protectionist measures against Ukraine. On the one hand, it’s among the strongest advocates for military support to Kyiv; yet, on the other, it’s demanding trade restrictions that would hurt Ukraine’s economy. The Polish presidential elections obviously play a major role in this contradictory approach.
The European Commission is now considering temporary measures in case no agreement is reached on the extension by June 6th. This procrastination is a bad approach. Indecision is the thief of opportunity. No one is asking the EU to intervene militarily in this delicate conflict, but that does not mean that Europe can do nothing. If the European Union supports Ukraine with a cautious policy of supplying defensive weapons, it must also continue to grant trade access.
EU to Ukraine: Here’s Ammo, But Good Luck Selling Your Wheat
Photo: Ottó from Pixabay
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Last weekend, the leaders of Great Britain, France, Germany, and Poland visited Ukraine to call for a 30-day ceasefire. Not long after, however, U.S. President Trump urged Ukrainian President Volodymyr Zelensky to accept an invitation from Russian President Vladimir Putin to participate in peace talks even without a prior ceasefire. Meanwhile, Europe is putting pressure on Trump to impose tougher sanctions on Russia, even though these have so far had little effect.
What has helped Ukraine, however, is Western military aid, which Trump continues to provide. Unfortunately, the most likely scenario remains that the conflict will simply continue, partly because it is in Putin’s interest to do so, as it makes it easier to divert attention from the many domestic problems in Russia.
Against this backdrop, there is now a debate in the EU about whether or not to extend the favourable trade access that Ukraine currently enjoys to the European market. Last month, Ukrainian Prime Minister Denis Shmyhal warned at the EU-Ukraine Business Summit in Brussels of ‘serious consequences’ if the European Union does not extend the agreement on this in time.
The ‘autonomous trade agreement’ between the EU and Ukraine expires on June 5th. It was concluded in 2022, after the start of Russian aggression, and provided for the removal of almost all EU import tariffs and other trade barriers for Ukraine. Only for a number of agricultural products, such as poultry, eggs, honey, and sugar, was a temporary emergency stop mechanism introduced later, which comes into effect if imports of these agricultural products from Ukraine exceed certain maximum thresholds.
For the European Union, extending this deal until the end of this year is not of great economic importance, but for Ukraine, it could mean billions of euros in lost revenue. Given that European countries are providing military support to Ukraine, it would therefore be particularly unwise not to simply extend this trade agreement.
Free trade
This would also allow the EU to send an international signal that, contrary to current U.S. policy, it will continue to pursue free trade with allies such as Ukraine.
Unfortunately, rumours suggest that this is not what the EU intends to do. It would prefer to negotiate a new trade deal ‘with quotas.’ This would cost Ukraine a lot of money, which the same EU member states would then have to make up in the form of military aid, not least because Trump’s peace plan does not look likely to convince Russia.
Another reason is internal resistance within the EU. Because their markets were flooded with cheap Ukrainian grain, farmers in EU member states such as Poland, Bulgaria, Slovakia, and Romania have repeatedly protested against the access that Ukrainian agricultural companies have to the European market. However, an import regime with quotas is not a sensible way to address these very valid concerns.
There are frequent complaints about Ukraine’s failure to comply with European standards. Instead of introducing new trade barriers, the European Union could focus on streamlining standards for its own farmers, complemented by more effective oversight. After all, it is not just industry that is struggling with European overregulation.
European regulations are also a major concern for the European agricultural sector, not only because they negatively impact profitability, but also because EU farmers must compete with non-European producers who are not held to the same standards. Trade barriers, on the other hand, would affect both Ukraine and European consumers. After all, it is the latter who foot the bill for excessive regulation.
Imposing regulations on trade partners
Another key negotiation is the long-delayed trade agreement between the EU and the Latin American trade bloc Mercosur. After years of difficult negotiations, the European Commission reached an agreement last autumn. One of the main reasons it took so long was that the EU demanded that these countries adopt all kinds of European regulations, rather than cut those burdensome regulations on industries back home. For example, the EU asked for a “sustainability annex” after the core terms had already been agreed on.. This was not at all appreciated by Brazil, Argentina, Uruguay, and Paraguay, which meant that everything took much longer.
In the trade relationship between the U.S. and the EU, the European tendency to impose all kinds of non-tariff barriers is a complication. Trump is now pushing against this. For example, the U.S. Trade Representative (USTR) wants the EU to scrap its deforestation regulation. It argues that this new European law, which imposes new bureaucratic obligations on imports of products such as livestock, cocoa, palm oil, and rubber, will cost U.S. agriculture and industry exports $8.6 billion a year.
This type of legislation is a good example of how the EU tries to impose regulatory choices on its trading partners, thereby undermining good trade relations. First, it was the Southeast Asian palm oil exporters Malaysia and Indonesia that complained about this. These countries consider it particularly unfair that, even though NGOs have praised them for achieving a significant reduction in deforestation, the EU continues to refuse to recognise their standards as equivalent. This is despite the fact that the most recent version of the Malaysian anti-deforestation standard MSPO is even stricter than the European one.
After Brazil and the United States—at the time still with Joe Biden as President—also began to complain, the EU was forced to postpone the entry into force of the legislation by one year. Now, Trump is simply asking for these kinds of trade-distorting non-tariff barriers to be removed.
A ‘Trumpian’ European Union
The EU’s plans to reintroduce trade quotas on imports from Ukraine threaten to cost the country billions of euros. It is questionable whether this contradictory approach to Ukraine is a wise policy. On the one hand, the EU is supporting Ukraine militarily and politically, but on the other, it’s considering imposing economic restrictions that will harm the country’s economy. These are ‘Trump methods in the velvet EU glove’, says a Ukrainian source involved in the farming sector.
It is also striking that Poland is leading the push for protectionist measures against Ukraine. On the one hand, it’s among the strongest advocates for military support to Kyiv; yet, on the other, it’s demanding trade restrictions that would hurt Ukraine’s economy. The Polish presidential elections obviously play a major role in this contradictory approach.
The European Commission is now considering temporary measures in case no agreement is reached on the extension by June 6th. This procrastination is a bad approach. Indecision is the thief of opportunity. No one is asking the EU to intervene militarily in this delicate conflict, but that does not mean that Europe can do nothing. If the European Union supports Ukraine with a cautious policy of supplying defensive weapons, it must also continue to grant trade access.
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