Brussels considers allowing restrictions on Ukrainian grain in case of market ‘disturbances’

“We need to take into account the sensitivities of agricultural sectors especially in neighbouring countries, which are most affected. So we’re looking at the best ways to do it, including the possibility of having safeguards not only in the case of disturbances of the EU market as a whole but also in case of disturbances in a single member state or a few member states,” Valdis Dombrovskis, the Commission’s executive vice-president in charge of trade, said on Tuesday morning.

“We know the regional impact of Ukrainian agricultural food exports is very uneven across the EU, primarily affecting neighbouring countries. And (we’re) also looking at how to safeguard the most sensitive products.”

The vice-president’s remarks, which echo an interview he previously gave to the Financial Times, represent a U-turn from Brussels, which spent most of 2023 vigorously denouncing the unilateral bans that Poland and Hungary had slapped on Ukrainian grain.

As part of the wide-ranging measures adopted in the aftermath of Russia’s invasion, the bloc decided to lift tariffs on Ukrainian imports, including agricultural products, in a bid to help the war-torn nation sustain its battered economy.

Ukraine, one of the world’s mightiest exporters of sunflower oil, barley, maize and wheat, urgently needed an alternative route to ship out its goods after Russian troops blockaded the Black Sea. The EU’s trade exemptions were meant to boost transport via land routes and free up space for consequent harvests.

But the sudden arrival of duty-free cereals flooded the markets of neighbouring countries, such as Poland, Hungary, Slovakia, Romania and Bulgaria, triggering the fury of local farmers, who saw the low-cost Ukrainian imports as unfair competition. The governments retaliated by imposing unilateral, uncoordinated bans, which the Commission considered unlawful, unfair and contrary to the principle of solidarity.

As a temporary solution, the executive allowed four specific Ukrainian products – wheat, maize, rapeseed and sunflower – to transit through the five Eastern countries but without staying inside their markets for domestic consumption or storage.

The scheme came to an end in mid-September, but Poland, Hungary and Slovakia disregarded the decision and re-introduced national bans. Kyiv was infuriated and filed a lawsuit before the World Trade Organization (WTO) against the three states.

Although Slovakia later made overtures to strike a deal with Ukraine, Poland and Hungary stood firm and kept their restrictions intact. Even after the election of Donald Tusk and his pro-European coalition, Warsaw said the protectionist measures would remain in place to shelter Polish farmers from market turmoil.

Hungary has made it clear the prohibitions are here to stay.

“We will continue to apply the import ban on  Ukrainian grain and other agricultural products to protect our farmers,” Péter Szijjártó, Hungary’s minister of foreign affairs and trade, said on Tuesday. “Transit is fine. Import no.”

With the grain saga still unresolved, the Commission appears to be betting on targeted “safeguards,” an euphemism for restrictions, to appease the discontent in the East.

Dombrovskis did not give any specific details about the upcoming proposal, which is expected to be presented in the coming days. It’s still unclear how much margin of action member states will have in practice and how many products they will be able to forbid.

The proposal will extend the lifting of tariffs until June 2025, Dombrovskis noted.