Brussels proposes steep EU tariffs on Russian grain, fearing market turmoil

The European Commission fears Russia could exploit its production capacity to flood the EU market with low-cost cereals.
The European Commission fears Russia could exploit its production capacity to flood the EU market with low-cost cereals. Copyright Alexei Nikolsky/AP2011
Copyright Alexei Nikolsky/AP2011
By Jorge Liboreiro
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The European Commission has proposed a steep increase in tariffs on Russian grain that comes into the bloc's common market.

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The measure would apply to cereals, oilseeds and derived products, like vegetable oil, that originate in Russia and are bound to be sold in any of the 27 member states. The same goods coming from Belarus, one of Vladimir Putin's closest allies that often provides cover for his disruptive actions, would be equally subject to the regime.

Under the proposal, the EU would slap a €95-per-tonne tariff on Russian maize and wheat, an abrupt hike compared to the zero duties in place today. Other products would be subject to an "ad valorem duty" of 50% to match the expected increase.

The figures are designed to be so high that they discourage purchases of Russian grain, which last year amounted to 4.2 million tonnes worth €1.3 billion. For its part, Belarus sold 610,000 tonnes with a value of €246 million.

Although this represents a small share of all EU imports, the Commission believes Russia, one of the world's largest agricultural producers, has enough capacity to dump low-cost cereals on Europe and unleash market turmoil, should Putin wish to do so.

The measure is essentially preventive as no major disturbances have been detected for the time being. Strictly speaking, it is not a sanction but has very similar aims: to deprive Moscow of yet another source of revenue and ensure the grain its troops have stolen from occupied Ukrainian territories does not find its way to European customers.

In practice, European companies would still be able to buy, sell and store supplies of Russian and Belarussian grain, even if it would no longer be economically sustainable due to the steep tariffs. Cereals that transit through the bloc's territory to reach other countries, such as those in Northern Africa, would be exempted from the measures.

The proposal, unveiled on Friday morning, still needs to be approved by member states through a qualified majority vote. The Commission had the plans ready to go but only moved ahead with them after a meeting of EU leaders in Brussels the day before. 

"There are several good reasons for making this proposal," Commission President Ursula von der Leyen said on Thursday evening. "It will prevent Russian grain from destabilising the EU market in these products. It will stop Russia from using the revenues from the export of these goods to the European Union. And it will ensure that illegal Russian exports of stolen Ukrainian grain do not enter the EU market."

During the summit, Latvian Prime Minister Evika Siliņa and Lithuanian President Gitanas Nausėda called for an all-out prohibition on Russian grain, which would have required the use of sanctions. Ukrainian President Volodymyr Zelenskyy also raised the matter in his virtual address to EU leaders.

"Unfortunately, Russian access to the European agricultural market is still unrestricted. And when Ukrainian grain is thrown on the roads or railway tracks, Russian products are still being transported to Europe, as well as goods from Putin’s controlled Belarus," Zelenskyy said, according to a transcript. "This is not fair."

Since the beginning of the war, the question of agriculture has become a hot-button issue fraught with political repercussions. The first shockwaves were sent after Russian troops blockaded the Black Sea and prevented Ukraine, a mighty agricultural exporter, from using its traditional trade route towards low-income nations. 

This prompted the EU to set up the so-called "solidarity lanes," exempt all Ukrainian goods from tariffs and quotas and provide alternative pathways by land. But the project was met with backlash in neighbouring member states, namely Poland, Hungary, Slovakia, Bulgaria and Romania, which complained the glut of low-cost, duty-free Ukrainian grain was depressing prices for local farmers and filling up storage.

Poland, Hungary and Slovakia imposed unilateral and uncoordinated bans on a range of Ukrainian foodstuffs, which last to this day.

Despite multiple attempts by Brussels to settle the long-running dispute, the bloc has failed to find a durable solution. A deal to extend the free-trade regime until 2025 was reached earlier this week, with beefed-up safeguards to control the flows of poultry, eggs, sugar, oats, maize, groats and honey.

But shortly after the agreement was announced, member states asked for more time to analyse the text, casting doubt over the process.

This article has been updated with more information about the tariffs.

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