Ukraine free-trade deal: Will emergency measures be renewed or will the country see a return to quotas?

As the EU’s emergency trade measures, which lifted duties and quotas on Ukrainian exports, will expire on June 5, EU politicians are debating whether to renew a duty-free trade deal or let the agreement lapse, allowing the EU to reinstate quotas on Ukraine.

The European Parliament and Council reached a provisional agreement to extend trade liberalization measures for Ukraine while adding sensitive agriculture products with import “safeguards” to curb the influx of low-cost imports and maintain market stability in March 2024.

At this time, politicians said the agreement — rooted in the EU’s “continued commitment to stand by Ukraine”— will be in place until June 5, 2025. A previous statement from the EU said the emergency measures were “a pillar of the EU’s support to Ukraine’s economy, providing access to the EU market in the face of Russia’s relentless aggression.” 

Free-trade deal an “economic lifeline”

Ukraine has viewed the Autonomous Trade Measures (ATMs) as a gesture of solidarity and stability, but crucially, they have been an economic lifeline. 

The ATMs have provided temporary tariff-free and quota-free access for Ukrainian goods, including cereals, animal or vegetable fats, and oils. Certain sensitive products, including poultry, eggs, honey, and sugar, were subject to emergency safeguards if their imports exceeded predefined thresholds.

Speculation is mounting over precisely what will happen next, with some reports claiming the EU doesn’t plan an extension on the free-trade deal in its current form and is mulling a potential new set of rules.

Recent discussions have included a possible plan to replace the ATMs with updated limits within the 2014 EU–Ukraine free-trade deal, initially put in place following Russia’s invasion of the country. 

However, Ukraine wants to keep the current deal in place. Last month, Ukraine’s Finance Minister Serhii Marchenko warned that the reintroduction of duties on Ukrainian goods in the EU would have devastating consequences for the Ukrainian economy.

Surge in Ukrainian imports

Now, politicians are faced with the question of whether to extend the temporary suspension of import duties and quotas on Ukrainian agricultural exports. Meanwhile, EU farmers have continually renewed their concerns regarding the potential market disruptions caused by the influx of Ukrainian agricultural products in the EU market. 

EU farmers protested across the block last year over a raft of economic pressures, with fears over Ukrainian goods flooding the market being among their concerns. 

Current emergency measures also include a safeguard mechanism with an “emergency brake” applying to eggs, poultry, sugar, oats, maize, groats, and honey.

Reports are also emerging that Denys Shmyhal, Ukraine’s prime minister, is calling for an extension to the trade liberalization mechanism with the EU so that there is more time to develop an alternative plan.