Ukrainian Agribusiness Community Calls for Urgent EU Trade Agreement Negotiations

Ukrainian Agribusiness Community Urges Swift EU Trade Negotiations

The Ukrainian Agribusiness Club (UCAB), along with prominent agricultural associations under the Public Union "Ukrainian National Agrarian Forum" (UNAF), has raised significant concerns regarding the impending expiration of the Autonomous Trade Measures (ATM) with the European Union. In a joint statement, they outlined the immediate necessity to establish a future trade framework between Ukraine and the EU, particularly as the current arrangements are set to expire on June 5, 2025.

The representatives of Ukraine's agrarian sector are not opposed to the European Commission's suggestion to replace the annual ATM extensions with bilateral trade agreements focused on further trade liberalization, as stipulated in Article 29 of the Association Agreement. However, they insist that adequate time must be allotted for comprehensive negotiations concerning the new trade framework.

Importance of Stability in Trade

This urgent call to action is rooted in the desire to create a stable business environment for Ukrainian producers while also ensuring predictability for European farmers and processors. UCAB articulated the advantages of transitioning to a bilateral trade format, which would not only guarantee long-term agreements but also facilitate mutual market access. There is also hope for a gradual liberalization strategy that accounts for sensitive product categories and includes necessary safeguard measures to protect both parties during the transition.

The looming expiration of the current ATM regime is a pressing issue. If a new agreement is not reached prior to the expiry, the trade dynamics between Ukraine and the EU could revert to the tariffs and quotas that were in effect before 2022. Initial projections warn that such a regression could inflict serious economic ramifications on Ukraine, potentially leading to a €3.3 billion drop in foreign exchange earnings, a 2.52% reduction in GDP for 2025, and significant declines in agricultural output and tax revenue.

Request for Accelerated Negotiations

In their statement, UCAB has explicitly urged the European Commission to expedite negotiations for an ambitious future trade agreement. The authors have expressed concerns that without timely arrangements, the economic stability of Ukraine’s agribusiness sector—and by extension, its overall economy—could face serious threats.

The agricultural sector plays a critical role in Ukraine's economic health, contributing approximately 15% to the GDP, with foreign exchange earnings totaling about $24.7 billion. This sector has already suffered over $80 billion in losses due to the ongoing war, raising alarm over the sustainability of recovery efforts. Continuing support from international allies remains pivotal during this critical phase.

The EU's Role in Ukraine's Agricultural Landscape

The EU is not just a primary market for Ukrainian agricultural exports, accounting for over 51% of total agricultural exports, but also a key supplier of essential agricultural resources. Although Ukraine has regained some access to maritime export routes, the ongoing hostilities hinder full operational capabilities, especially for packed goods requiring container transport. Instead, these products are being routed via the "Solidarity Lanes" to EU ports, which significantly increases logistical costs and diminishes the competitiveness of Ukrainian exports in traditional markets.

Given these challenges, the stability of the agricultural sector and the broader economy of Ukraine is heavily reliant on ongoing support from the European market, not merely as a consumer but as a critical partner supporting stable supply chains and access to financial resources critical for the industry's development.

In conclusion, reverting to the tariff quotas and duties as they were in 2021 could spell disaster for Ukraine’s economy. The implementation of a new trade agreement or the extension of the existing ATM regime is indispensable for maintaining the stability of Ukraine's agricultural sector and the overall economic framework of the nation during such turbulent times. UCAB’s message to the European Commission and EU member states is clear: there must be an urgent push to finalize negotiations, ensuring that the agricultural community of Ukraine can thrive amidst the current adversities.