Ukraine 'not fully satisfied' with new EU grain deal but can make it work, says agriculture minister

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In a compromise reached on Wednesday evening, member states agreed to harden the free-trade regime with Ukraine by expanding the list of "sensitive products" that can be subject to tariffs, which now includes poultry, eggs, sugar, oats, maize, groats and honey.

The deal increases oversight over market trends to allow the use of "remedial measures," a vague term that opens the door for bans on a national level.

Altogether, it is estimated the tweaks will make Kyiv lose an additional €86 million on top of the €240 million foreseen under the original proposal.

But for Mykola Solskyi, Ukraine's minister of agrarian policy and food, the news is not as bad as the headlines might suggest.

"It's a compromise between many countries, including my country, Ukraine. All of us understand this is a unique situation because of the war we have at the moment," Solskyi told Euronews in an interview.

"Honestly, of course, we are not fully satisfied. We would like some other conditions for the continuation of this agreement. But at the same time, we want to say 'thank you' for these opportunities to trade again," he added.

"We understand that when you discuss a compromise, nobody can be fully satisfied. So it's more or less possible to continue trade in such a difficult situation."

Solskyi agreed with the projection of €330 million in economic losses for the country but noted it was "difficult" to calculate a precise amount due to the ever-changing trajectory of Russia's aggression, which can further hinder the country's ability to commerce.

"We are in a war situation now. Nobody knows what can happen tomorrow," he said.

For the past year, the EU has been immersed in a fraught debate about Ukrainian agricultural products, which the bloc exempted from tariffs and quotas to prop up the war-torn nation's economy. The special regime has been met with fierce contestation from farmers in Poland, Hungary, Slovakia, Romania and Bulgaria, who say the goods represent unfair competition, depress prices and take up too much storage.

Currently, Poland, Hungary and Slovakia have unilateral bans in place to restrict the flow of Ukrainian grain, despite repeated pleas from Brussels and Kyiv. 

"The agriculture sector has always been and will always be very sensitive in most countries in Europe," the minister said.

'No time for emotions'

Diplomatic attempts to resolve the yearlong dispute have so far yielded mixed results.

Poland, under the new government of Donald Tusk, a politician who has declared himself an avowed pro-European, has maintained the prohibitions to contain the ire of farmers and truckers, who have staged blockades along the border.

Warsaw has shown a willingness to achieve a lasting solution with Kyiv and the two sides held a high-level meeting on Thursday, which Solskyi described as "serious and honest," although no breakthrough was announced.

Polish officials have proposed a licensing system to control agricultural flows and suggested transit of Ukrainian wheat and maize could cease as of 1 April. Such a move would be painful for Kyiv as Poland is the main route towards Western Europe.

"Our opinion is that it's impossible to forbid" transit, said Solskyi. "We understand that there are a lot of emotions around these questions but it's not time for emotions."

While the backlash on Ukrainian foodstuffs has been concentrated in Eastern Europe, the recent weeks have shown a shift in France's thinking, a country that last year joined a letter denouncing the Polish, Hungarian and Slovak bans. Now, Paris warns disruption in the markets risks eroding public support for Ukraine and stronger action is required.

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In the latest negotiations on free trade, France joined Poland to push for one key amendment: the automatic safeguard to apply tariffs on "sensitive products" if they exceed the average levels of 2022-2023 had to be extended to 2021.

By adding a pre-war year to the equation, the coalition wanted to reduce the threshold and make it easier to slap back duties. France and Poland also demanded a longer list of "sensitive products" to cover wheat, a widely sold commodity.

"We understand the French government, like other governments that are under pressure from farmers," Solskyi said. "France is very agrarian. They have a lot of farmers there. They have a lot of interest in this area. That's why they are very sensitive with the poultry and eggs discussions."

The compromise reached on Wednesday excluded wheat but prolonged the reference period to the second semester of 2021, a half-win for the pro-restrictions camp.

"I don't think it'll happen very soon," the minister said about the likelihood of tariffs. "Of course, it's not what we want. But we have much more capacity."

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Throughout his interview, Solskyi appeared confident the long-lasting agricultural tensions would be contained in 2024 as Ukrainian companies gradually return to their "traditional" markets in Asia and Africa and therefore reduce trade with European clients.

"We have a war and everything can change. That's why everybody wants to be very careful with EU rules. But, in my opinion, there is much less risk," he said.

Asked if European solidarity with Ukraine will decrease or increase in the coming months, Solskyi said: "I hope that it's at least the same."