Should Ukraine introduce mirror import restrictions on Polish products?

Should Ukraine introduce mirror import restrictions on Polish products?

Former Deputy Minister of Agrarian Policy and Food of Ukraine
15.09.2023, 08:51

Any escalation of economic relations is not a win-win scenario for everyone involved

The news from Poland and four other Eastern European countries—Bulgaria, Slovakia, Hungary and Romania—do not give us hope that after 15 September, the restrictions on imports of certain types of grains and oilseeds from Ukraine will be lifted.

This is despite the dissatisfaction by other EU member states such as Germany and Austria—and even though the European commission itself may decide to lift these temporary import restrictions.

What should Ukrainian farmers and exporters expect after 15 September?

This is the day when the restrictions imposed by the EU commission expire. Poland, however, insists that even if Brussels does not extend the import restrictions, the Polish government is going to unilaterally maintain them.

At the same time, according to recent reports, Bulgaria is ready to lift these restrictions on imports of Ukrainian products. What other Eastern EU members think is still unknown.

The position of the European commission itself—namely, the Directorate-General for Agriculture and Rural Development—remained rather vague until last week, while the EU commissioner himself, Janusz Wojciechowski, appears to be in favour of extending the ban.

Should Ukraine take the matter to arbitration or impose mirror import restrictions?

In my opinion, any escalation of trade and economic relations is not a win-win scenario for everyone involved.

On the other hand, our government cannot ignore the illegal actions of any of our trading partners, especially when they violate existing agreements and arrangements. We have to protect the interests of our producers, especially at such a difficult time.

At the same time, any drastic steps should be taken only when other options for reaching a compromise have been exhausted, with an understanding of the possible negative consequences for us.

In addition, I believe that a step towards increasing escalation in a particular dispute is only worthwhile if you, as a state, have ‘unplayed trump cards’ in your stock. So, of course, in this situation, I support economic diplomacy and attempts at finding a common language without the use of bans, restrictions, or other similar instruments.

How to look at a particular situation globally and comprehensively?

The current challenges with the export of Ukrainian agri-food products to some EU countries are no exception.

On the one hand, the situation has shown that we lack a high-quality, systematic, and professional dialogue with all our neighbouring countries in the agricultural sector. I have already floated the idea of creating an Eastern European Agricultural Club to jointly develop the future agricultural policy of the EU, taking into account Ukraine's accession to the bloc.

On the other hand, saying we are big, strong, powerful, and efficient in the agricultural sector, and therefore should be taken into account in the EU, is not very reasonable or effective in terms of any negotiations.

We should not position ourselves as a competitor to Polish farmers, but rather look for common ground to jointly shape the European agricultural future with our neighbours, partners and, in the near future, our partners in the world's most powerful agri-food bloc.

What role do EU ‘solidarity lanes’ play for Ukrainian exports?

Undoubtedly, the EU's Solidarity Lanes initiative helped Ukraine cope with the critical situation that arose in the spring of 2022, after Russia’s full-scale invasion and the suspension of grain and oilseed exports by sea, and it remains an important alternative route for our exports.

According to the EU commission, this export route has allowed Ukraine to export more than 40 million tonnes of grains and oilseeds since its launch, or about 60 percent of all exports of the Ukrainian agro-industrial complex.

From the first weeks of the EU-Ukraine Solidarity Lanes, it became clear that the logistics and infrastructure of EU countries, both at the border and in ports, were not ready for such volumes of agricultural products.

This made it possible to understand how powerful and highly efficient the ports on the Black Sea coast were built by our agribusiness. The German railway, which from the very beginning was actively involved in the transportation of goods both from Ukraine to the EU and in the opposite direction—humanitarian cargo, for instance—immediately said that there were not enough grain carriers in the whole EU.

It is the problem with logistics and infrastructure for fast and efficient transshipment of grains and oilseeds at the border and in ports for possible export to third countries outside the EU that has become one of the cornerstones for all participants in the European agricultural market. Unfortunately, we still see the EU commissions’s slow response to the situation.

Has the export volumes of grains and oilseeds to Eastern European countries actually increased since the launch of the Solidarity Lanes in May 2022?

Yes, and this is an objective market response. The blocking of sea routes required finding new ways to transport grain, millions of tonnes of which had been stored in Ukrainian elevators since 2021.

If we look at the figures, we can see that in the pre-war 2020/21 MY, the share of five neighbouring countries in our agricultural exports was about two percent, and in 2022/23 MY, this figure was 31 percent.

Was Ukrainian grains the reason for the fall in prices on the Polish or Romanian markets in 2022?

No. Contrary to the expectations of many European farmers, the global prices did not increase in 2022 compared to autumn 2021—they, in fact, decreased.

This is also because the markets began to gradually adapt to the new situation after the shock in the first weeks of Russia’s full-scale invasion of Ukraine and the blockade of the Black Sea ports.

Is there a domestic political reason for Poland's current position?

Yes. Polish farmers, who, on a Ukrainian scale, are mostly micro-producers, are considered a fairly influential electoral force, whose position is taken into account by all political forces in the country.

Given the parliamentary elections next month, the struggle for the farmers’ votes in Poland is becoming increasingly fierce, and no one can afford to ignore their dissatisfaction, even if it is unfounded or rather irrational.

This is where our farmers need to learn from their neighbours how to increase their role in the political processes of the state.

What are the alternative ways?

One option is consultations and negotiations to find a compromise option for supporting Ukraine in agricultural exports. The EU is discussing the possibility of allocating additional funds for certain programmes to support the logistics of Ukrainian grain, such as subsidising the transport of Ukrainian grain.

It is important to work on streamlining all procedures related to customs checks of products, including possible joint inspections by Ukrainian and Polish customs officers, transfer of phytosanitary or veterinary inspections to speed up transit through Poland, etc.

The Ukrainian agro-industrial complex has to build its own system of lobbying and constant dialogue in Brussels, both at the government and farmers' level. Yes, Poland does not want to lift its import restrictions—but it is a member of the EU, where trade policy is the prerogative of the European commission.

What can be done to compensate Ukrainian farmers for their losses? What additional tools to support exports, processing industry, technology development, or obtaining the necessary certification to access EU markets with finished products could be used as compensation? How can the EU support joint investment projects not only in Ukraine, but also in EU ports, if Ukrainian companies want to invest?

I believe that such issues should be discussed on an ongoing basis as part of this dialogue.

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