The Position of the Ukrainian Agrarian Community on EU Trade Agreements

The Ukrainian Agribusiness Club (UCAB), along with leading agricultural associations within the Public Union "Ukrainian National Agrarian Forum" (UNAF), has underscored the urgent need for a solution regarding future trade frameworks between Ukraine and the European Union. This comes as the current Autonomous Trade Measures (ATM) regime approaches its expiration date.

Urgent Need for Action

The agricultural community in Ukraine is not opposed to the European Commission's proposal to replace the annual extension of the ATM with bilateral trade accords aimed at more extensive trade liberalization under Article 29 of the Association Agreement. This position hinges on the necessity for adequate negotiating time to establish a new commercial framework.

Representatives from the agricultural sector of Ukraine argue that such a move would foster market access stability to the EU for Ukrainian producers and ensure predictability for European farmers and processors. The advantages of adopting this approach include the long-term nature of the agreement, mutual market access, and a flexible liberalization framework accommodating sensitive product categories and safeguard measures.

Call for Accelerated Negotiations

Additionally, Ukraine is calling for expedited negotiations for the future trade agreement, as the current ATM regime will expire on June 5, 2025. Failure to secure a new agreement by this deadline would automatically revert the trade regime between Ukraine and the EU to the customs duties and tariff quotas in place prior to 2022. Preliminary estimates indicate these changes could precipitate significant economic repercussions for Ukraine, such as a potential loss of foreign currency revenues up to €3.3 billion, a GDP reduction of 2.52% in 2025, a decline in agricultural output by 7.74%, and diminished tax revenues for local and state budgets by 4.15%.

"If a trade agreement based on Article 29 of the Association Agreement is not concluded within the set timeframe, the European Commission must urgently initiate the extension of the current ATM regime for the duration necessary to finalize negotiations. This action would prevent a dramatic deterioration of entry conditions for Ukrainian products in the EU market and avert a macro-financial shock to the country's stability," the document emphasizes.

Significance of the Agricultural Sector

It is pivotal to note that the agricultural sector serves as a cornerstone of Ukraine's economic stability, contributing approximately 15% to GDP and accounting for 59.3% of foreign currency revenues (amounting to $24.7 billion) and significant tax returns. The ongoing war has inflicted over $80 billion in direct and indirect losses on the sector, while current high-intensity military actions cast uncertainty on sustainable recovery prospects, necessitating continued support from Ukraine's allies, at least in the medium term.

The EU remains the largest market for Ukrainian agricultural exports, accounting for 51.8%, and serves as a vital supplier of essential agricultural resources. Despite Ukraine regaining access to maritime export paths via the Big Odesa ports, these routes are currently only viable for bulk cargo due to ongoing hostilities. However, packaged and ready-to-consume products needing container transport are still exported through the "solidarity corridors" to the nearest EU ports, increasing logistics costs and reducing the competitiveness of Ukrainian products in traditional markets.

In light of this, the Ukrainian agricultural sector is critically dependent on the European market, not just as a consumer, but also as a partner ensuring stable supply chains, logistics, and access to financial instruments for industry development.

Conclusion

The return to tariff quotas and import duties from 2021 would have disastrous consequences for the Ukrainian economy. Therefore, a trade agreement based on Article 29 of the Association Agreement or an extension of the ATM is essential for the stability of the Ukrainian agricultural sector and the economy as a whole.

In conclusion, Ukraine implores the European Commission and EU member states to expedite negotiations for an ambitious future trade regime with Ukraine, considering current trade volumes. This would ensure the stability of the Ukrainian agricultural sector and support the economy during exceptionally challenging times.

Founded in 2007, the Ukrainian Agribusiness Club (UCAB) represents and protects the economic and professional interests of actors in the Ukrainian agricultural sector. UCAB serves as a unique platform to facilitate business relationships among leaders in the agribusiness sector, enhance their operational efficiency, and establish dialogue with government authorities. The organization actively encourages Ukrainian manufacturers to establish and sustain international trade relations. It encompasses Ukraine's largest agricultural producers and processors.