Dairy traders urge European Commission rethink trade concessions with Ukraine

As the European Commission’s autonomous trade measures (ATMs) that have governed imports from Ukraine over the past three years come to an end, the European Dairy Trade Association Eucolait urges a rethink on the bloc’s policy to allow the expiry of these special measures.

Eucolait warns that tariffs will be reinstated on a range of dairy commodities as the trade concessions lapse.

This comes as trade between Ukraine and the EU will revert to the terms outlined in the EU-Ukraine Association Agreement, as was the case prior to June 2022 when the Commission initially introduced ATMs to show solidarity with Ukraine in the wake of the Russian invasion.

The ATMs have already been extended once, and we understand there is a short-term transitional import system, which will apply between June 6 and the day the Commission concludes the ongoing review of tariff liberalization under Article 29 of the Deep and Comprehensive Free Trade Areas (DCFTA) and new rules come into force.

Pre-war import duties

The lapse of the ATMs and the subsequent changes will be damaging to the European dairy industry, flags the association. For the dairy sector, this change means the reintroduction of tariff rate quotas (TRQs) on certain products — most notably butter and milk powders — while others such as cheese and whey will continue to benefit from duty-free access.

For a smoother transition, the Commission has prepared an implementing regulation concerning tariff rate quotas, which will be managed on a first-come, first-served basis (as opposed to import licenses). 

Eucolait calls for continued trade liberalization with Ukraine and urges the European Commission and their Ukrainian counterparts to swiftly conclude a revised agreement that enables the free circulation of all dairy products, as the reintroduction of quotas on dairy products serves no one’s interest.”  

Speaking to Food Ingredients First, Eucolait secretary general Jukka Likitalo explains: “Ukrainian producers are, of course, very concerned. From an EU perspective, the quotas are reintroducing unnecessary complexity to trade with Ukraine and limiting supply options.” 

“The imports of these products (milk powders, butter, butteroil, milk, cream, and other liquid and fermented products) will be capped by the quota volumes. The impact will be most significant for skimmed milk powder (SMP) as milk powder imports from Ukraine (mainly SMP) exceeded 15,000 metric tons last year and the quota for the remainder of the year is only 7/12 of 5,000 metric tons, so a bit less than 3,000 metric tons.”

“That quota could be filled in a couple of months. The quota for butter is 7/12 of 3,000 metric tons, which could also be filled rather quickly. EU tariffs are too high for imports to take place outside of those quotas.” 

“The impact on fresh products and liquids is likely to be limited as so far imports have been significantly below the quota volume.

Reconsider trade concessions

Eucolait says it’s “regrettable” that a permanent solution providing for reciprocal tariff liberalization has not yet been reached, despite the long-standing awareness of the ATMs’ non-renewal. 

Likitalo says the duty- and quota-free access granted to Ukraine has offered substantial support to the Ukrainian dairy sector without negatively impacting EU-based businesses. He believes it’s not too late for the Commission to rethink trade concessions.

In a previous statement, the Commission has said that the ATMs have had a clear positive effect on Ukraine’s trade with the EU, helping to alleviate the difficult situation faced by Ukrainian producers and exporters as a consequence of the war.

Together with the Solidarity Lanes, the ATMs have ensured that trade flows from Ukraine to the EU remained stable in 2022 and 2023 despite the major disruptions caused by the war and against the general trend of a decrease in Ukraine’s trade overall.