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Brussels is considering a compromise for Ukrainian grain

Брюксел обмисля компромис за украинското зърно

The European Commission is working on a new proposal that could allow eastern member states such as Poland and Hungary to impose restrictions on Ukrainian grain imports in the event of market disruptions, it said.

"We have to take into account the sensitivity of the agricultural sectors, especially in the neighboring countries that are most affected. So we are looking at the best ways to do it, including the possibility of having safeguards not only in the event of disruptions to the EU market as a whole, but also in the event of disruptions in one member state or several member states," said in Tuesday morning, Valdis Dombrovskis, the Commission's executive vice-president for trade.

"We know that the regional impact of Ukrainian agri-food exports is very uneven across the EU, mostly affecting neighboring countries. And we're also looking at how to protect the most sensitive products."

The vice president's comments, which he made in an interview with the Financial Times, represent a U-turn in policy from Brussels, which spent most of 2023 strongly condemning unilateral bans that Poland and Hungary imposed on Ukrainian grain.

We recall that the bloc decided to raise tariffs on Ukraine's imports, including agricultural products, in an effort to help the country prop up its battered economy.

Ukraine, one of the world's most powerful exporters of sunflower oil, barley, corn and wheat, urgently needed an alternative route to ship its goods after Russian troops blockaded the Black Sea. The EU's trade exemptions were intended to boost overland transport and free up space for subsequent harvests.

But instead, Ukrainian duty-free grain flooded the markets of neighboring countries such as Poland, Hungary, Slovakia, Romania and Bulgaria, angering local farmers who faced unfair competition.

The governments of the affected countries retaliated by imposing unilateral, uncoordinated bans, which the Commission then deemed illegal, unjust and contrary to the principle of solidarity.

As a temporary solution, the executive branch allowed four specific Ukrainian products – wheat, corn, canola and sunflower – to transit through the five eastern countries, but not remain in their markets for domestic consumption or storage.

The scheme ended in mid-September, but Poland, Hungary and Slovakia ignored the ruling and re-imposed national bans. Kiev was furious and filed a case at the World Trade Organization (WTO) against the three countries.

Although Slovakia later made offers to strike a deal with Ukraine, Poland and Hungary stood firm and kept their restrictions intact. Even after the election of Donald Tusk and his pro-EU coalition, Warsaw said the measures would remain in place to protect Polish farmers from market shocks.

Hungary has also made it clear that the bans will remain.

"We will continue to implement the import ban on Ukrainian grain and other agricultural products to protect our farmers," Hungary's foreign and trade minister said. "Transit is fine. Import - NO!'

To this day, the grain saga remains unresolved, but the Commission appears to be betting on a new approach to Ukraine to calm discontent in the East.

Dombrovskis did not provide specific details about the upcoming proposal, which is expected to be presented in the coming days. It is not yet clear how much leeway member states will have in practice and how many products they will be able to ban.

However, if the proposal is accepted, Ukrainian grain will be subject to customs duty until 2025 at the earliest, Dombrovskis noted.

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