EU lifts bans on Ukrainian grain but Poland and Hungary move to impose unilateral restrictions

Ukraine is one of the largest producers of wheat and maize in the world and many low-income countries depend on its exports. - Copyright SERGEI SUPINSKY/AFP or licensors

By Jorge Liboreiro

Published on 15/09/2023 - 18:53•Updated 16/09/2023 - 07:52

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The European Commission has lifted the temporary bans on Ukrainian grain after Kyiv agreed to tighten control over its agricultural exports.

But the measure failed to satisfy Poland and Hungary, which swiftly announced they would impose their own nationwide prohibitions on a unilateral basis, the very chaotic scenario that Brussels wanted to avoid at all costs.

"We will extend this ban despite their disagreement, despite the European Commission's disagreement," Polish Prime Minister Mateusz Morawiecki told a rally on Friday. "We will do it because it is in the interest of the Polish farmer."

Shortly after, Waldemar Buda, Poland's minister of economic development, said he had signed a new "national regulation" to keep the trade embargo in place.

"The regulation is indefinite and will enter into force after publication at midnight on 16 September," Buda said on X, formerly Twitter. "Polish farmers above all!"

Meanwhile, Hungary published a decree to block 24 Ukrainian agricultural products, including grains, vegetables, honey and several types of meat, Reuters reported. The products will be sealed at the border and allowed only 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 neighbouring EU markets, leaving inadequate storage capacity for the upcoming autumn harvest."

Speaking from Santiago de Compostela, in northern Spain, European Commission Executive Vice-President Valdis Dombrovskis, who is in charge of trade relations and has been personally involved in the negotiations, urged member states to "work along the lines" of the new agreement and "refrain from unliteral measures."

"What's important right now is that all countries work in a spirit of compromise and engage constructively," Dombrovskis said when asked about the Polish reaction.

End-of-week deadline

The temporary prohibitions lifted on Friday were first enacted on 2 May and applied to five European Union states located 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 coming from the war-torn nation.

Under the restrictions, four products coming 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 had warned they would slap their own restrictions. Warsaw went as far as approving a resolution by the Council of Ministers and posting a video on social media featuring Prime Minister Morawiecki.

"Poland will not allow Ukrainian grain to flood us," Morawiecki said on Tuesday. "Regardless of what Brussels officials decide, we will not open our borders."

Under the decision announced on Friday, mere hours before the deadline expired, the temporary bans will be lifted. In return, Ukraine agrees to introduce "legal measures," such a licensing system, within 30 days to avoid new surges in grain exports, the Commission said in a statement.

In the meantime, Ukraine will establish "effective measures" to tighten control over the four agricultural products previously blacklisted under the bans. These actions should prevent "any market distortions" in the neighbouring countries.

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

"The European Commission will refrain from imposing any restrictions as long as the effective measures by Ukraine are in place and fully working," the statement said.

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

The restrictions were "exceptional safeguards" and "not something that should be there for an unlimited periods of time," he said, noting the embargo could be re-instated as an "emergency option" if the situation deteriorates again.

"At the same time, to avoid these market distortions, those export control measures will be taken from the Ukrainian side," he added.

A long-running saga

Since their introduction, the bans had been a point of deepening friction between Brussels and Kyiv, which considered them to be "unacceptable" and contrary to the spirit of solidarity shown towards the country after Russia launched the full-scale war.

Several member states, including Germany, France, the Netherlands and Belgium, had raised "serious concerns" about the detrimental impact the restrictions were having on the single market, which is supposed to function with equal rules for every country.

The European Commission committed to phasing out the embargo by 15 September and working on alternative solutions, such as improving infrastructure and boosting transport capacity through the Danube River, that could somehow alleviate the strain placed on road routes after the collapse of the Black Sea corridor.

But as the deadline approached, political pressure ratcheted up.

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

Poland, the largest of the group, led the public campaign and adopted an uncompromising attitude, openly threatening the European Commission with imposing a unilateral, nationwide prohibition on Ukrainian cereals after 15 September.

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

"We will extend this ban, this import ban, on a national basis, and this will become a serious fight in Brussels," Hungarian Prime Minister Viktor Orbán said on Friday morning, denouncing traders for buying "cheaper" Ukrainian grain.

Bulgaria, however, broke ranks with the Eastern coalition and voted this week to remove the restrictions after the deadline, arguing the economic forecasts and indicators no longer predicted severe consequences for the country.

The clash between politics and agriculture has proven a formidable challenge for the European Commission to manage and has been described as a litmus test for the bloc's steadfast support for Ukraine.

In the end, the executive chose a middle ground in which a considerable level of control will remain on Ukrainian cereals but under the direct supervision of Kyiv, injecting a sense of shared responsibility into the long-running dispute.

Ahead of the Friday deadline, President Volodymyr Zelenskyy and his officials have urged Brussels to keep it words and comply with the deadline.

"This is an example of Ukraine and the EU working together in true unity and trust. When rules are followed and agreements are kept, Europe always wins," Zelenskyy said on Friday evening in reaction to the announcement.

The president then added a pointed warning against any unliteral move that the Eastern countries might make to stop Ukrainian cereals.

"It is critical that European solidarity now work on a bilateral level. For our neighbors to support Ukraine during times of war," Zelenskyy said. "Should their decisions violate EU legislation, Ukraine will respond in a civilized manner."

The Ukrainian government had previously raised the prospect of taking legal action before the World Trade Organization if the prohibitions continued to drag on.

This piece has been updated to include new details and reactions.

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