EU lifts Ukrainian grain ban, Poland and Hungary move to impose restrictions

18 Sep 2023 --- The European Commission (EC) has lifted temporary bans on Ukraine grain after Kyiv, the country’s capital, agreed to tighten control over its agricultural exports.

The European Union has been acting firmly to support the export of Ukrainian grains and other foodstuffs, notably through the Solidarity Lanes. 

The success of this work led to temporary distortions in the markets of the five member states that share a border with Ukraine, leading to the imposition of temporary restrictive measures on a series of Ukrainian foodstuff exports on May 2. 

In parallel, a coordination platform was set up, bringing together Ukraine, Bulgaria, Hungary, Poland, Romania, Slovakia and the EC. It contributed to developing infrastructure, increasing logistical capacity, and removing administrative barriers to exporting agricultural products from Ukraine. 

However, the measure failed to satisfy Poland and Hungary, which announced they are set to impose their own nationwide prohibitions on a “unilateral basis,” a scenario that Brussels wants to avoid at all costs.

“We will extend this ban despite their disagreement, despite the European Commission’s disagreement,” Polish Prime Minister Mateusz Morawiecki said last week. “We will do it because it is in the interest of the Polish farmers.”

Waldemar Buda, Poland’s minister of economic development, has signed a new “national regulation” to keep the trade embargo in place.

Buda said on social media: “The regulation is indefinite.” 

Meanwhile, Hungary has reportedly published a decree to block 24 Ukrainian agricultural products, including grains, vegetables, honey and several types of meat. 

The European Union has been acting firmly to support the export of Ukrainian grains and other foodstuffs.The products will be sealed at the border and only allowed transit to other countries.

“Hungary is taking matters into its own hands to safeguard its farmers and will maintain and expand the import ban within its national jurisdiction,” said a government spokesperson, quoting the agriculture minister.

“Concerns arise that an influx of cheap Ukrainian imports could overwhelm neighboring EU markets, leaving inadequate storage capacity for the upcoming autumn harvest,” the government spokesperson outlined.

Speaking from Santiago de Compostela, in northern Spain, European Commission executive vice-president Valdis Dombrovskis, who is in charge of trade relations, is urging member states to “work along the lines” of the new agreement and “refrain from unliteral measures.”

“All countries must work in a spirit of compromise and engage constructively,” Dombrovskis noted. 

Restrictions lifted
The temporary prohibitions lifted on Friday were enacted on 2 May and applied to five European Union states in Ukraine’s periphery: Poland, Hungary, Slovakia, Romania and Bulgaria.

The countries had said the sudden increase in tariff-free, low-cost grain from Ukraine was depressing prices for local farmers after the EU suspended duties on all imports from the war-torn nation.

Under the restrictions, four products from Ukraine – wheat, maize, rapeseed and sunflower – were allowed to transit through the five Eastern countries but could not stay inside their markets for domestic consumption or storage. 

The European Commission had committed to phasing out the bans by 15 September, even if Poland and Hungary warned they would launch restrictions. 

Under the decision announced on Friday, temporary bans were lifted. In return, Ukraine has agreed to introduce “legal measures,” such as a licensing system, within 30 days to avoid new surges in grain exports, the European Commission said in a statement. 

In the meantime, Ukraine will establish “effective measures” to tighten control over the four agricultural products previously blocked under the bans. These actions should prevent “any market distortions.”

Kyiv has until today to submit a plan explaining what kind of steps it intends to take to keep its exports in check, the European Commission added.

Dombrovskis says, “market disturbances experienced in spring were no longer present, and the prolongation of the bans was therefore not justified.”

The restrictions were “not something that should be there for an unlimited time,” he recalled, noting that the embargo could be reinstated as an “emergency option” if the situation deteriorated.

A long-running issue 
Since their introduction, the bans have been a point of deepening friction between Brussels and Kyiv. They considered them “unacceptable” and contrary to the spirit of solidarity shown toward the country after Russia launched the war.

Several member states, including Germany, France, the Netherlands and Belgium, had raised concerns about the detrimental impact of the restrictions on the single market, which should function with equal rules for every country.

The five Eastern countries vocally pushed for the bans to be extended until the end of the year and possibly block goods “other than cereals and oilseeds.”

The Polish opposition has been linked to the parliamentary elections of 15 October, as the ruling Law and Justice party aims to attract conservative voters in the countryside. Slovakia is also heading to the polls on 30 September.

Edited by Elizabeth Green