The European Commission is facing tricky decisions in the coming weeks over the influx of Ukrainian agricultural products into the European Union. September 15 marks the end of the so-called temporary preventive measures that have allowed wheat, maize, rapeseed, and sunflower seed from Ukraine to transit through Bulgaria, Hungary, Poland, Romania, and Slovakia. All four of those commodities must remain "unsealed" until they reach other EU member states -- ideally to EU ports to be shipped on to developing nations around the world. These measures came about in early May after Poland, then Hungary, Slovakia, and Bulgaria unilaterally shut their borders to all Ukrainian exports a month earlier, complaining that a glut of Ukrainian agricultural goods was filling up local storage and depressing prices for local farmers.
The European Commission scrambled for a solution that would satisfy the five frontline states (the above-mentioned four plus Romania) while being acceptable for Kyiv. There was also a need to ensure that Ukrainian agriproducts reached third countries, notably in Africa and Asia, that have reported food shortages.
Moreover, there was evident interest in safeguarding against major distortions on the EU's internal market -- something that the European Commission is officially in charge of. That's a lot of circles to square, and Brussels' solution in early May was to agree to preventive measures regarding the four products for the five frontline countries for one month, plus financial compensation for their farmers.
In June, the measures were prolonged with the understanding that they would be phased out on September 15 and, in a separate decision, the EU approved the extension by another year of a tariff-free regime with Ukraine covering all Ukrainian products entering the bloc.
Deep Background: Now the five frontline EU member states are pushing for an extension until the end of the year. You have crucial parliamentary elections in Slovakia on September 30 and in Poland on October 15, and farmers are an important and influential constituency in both countries.
The European Commission does have some understanding for the five, and numbers back up their worries. Before 2022, EU agricultural imports from Ukraine totaled 7 billion euros, and 90 percent came via the Black Sea route. By 2022, that figure had risen to 13 billion euros and 5 billion of the additional 6 billion euros of goods ended up on the markets of the frontline EU states.
The big culprit here is, of course, Russia, which has severely hampered Ukraine's lucrative Black Sea trade. Since the outbreak of the war, 40 percent of Ukrainian grain has been exported via the Black Sea Grain Initiative that expired in July after Russia opted not to renew it.
Turkey, which was key to the 2022 initiative that was struck to alleviate the global food shortage by opening trade from a handful of Ukrainian ports, has been working hard to resuscitate the deal. President Erdogan was expected to push for its renewal during a planned meeting with Russian President Vladimir Putin in Sochi on September 4.
There's a question, however, as to whether Russia is interested in a renewal. By strangling the Ukrainian Black Sea option, which normally allows for larger and cheaper worldwide exports with huge cargo ships compared to transporting overland in the EU, Russia has seemingly outmaneuvered an important trade competitor and made its own grain cheaper and more lucrative worldwide.
Drilling Down:
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