EU reimposes pre-war agri duties on Ukraine, seeks compromise in new deal

By Kate Abnett and Pavel Polityuk

BRUSSELS (Reuters) -The European Union reimposed duties and quotas on Ukrainian agricultural products from Friday, and hopes to clinch a deal on new quotas that will be smaller than imports during the last three years after Russia's invasion, the EU's agriculture commissioner told Reuters.

The EU temporarily waived duties and quotas on agricultural products in June 2022 after Russia's full-scale invasion to help Ukraine compensate for the higher costs of its exports, after Russia threatened its traditional Black Sea shipping lanes.

Those tariff suspensions expired on Thursday. The EU and Ukraine reverted to the pre-war regime of trade quotas on Friday, while the two sides negotiate a new longer-term deal. Brussels is seeking to strike a balance between supporting Ukraine in its war with Russia, and heeding European farmers' concerns about cheaper Ukrainian imports.

"What will be negotiated will be something in between the quotas under the existing DCFTA and the autonomous trade measures, the volumes that have been exported there," EU agriculture commissioner Christophe Hansen said in an interview with Reuters on Thursday.

The DCFTA refers to Ukraine and the EU's pre-war trade deal. The EU's "autonomous trade measures" temporarily suspended quotas on Ukrainian imports from 2022.

Ukraine's farm minister Vitaliy Koval told Reuters this week that Kyiv was pushing for an agreement on higher quotas than it had before the war.

EU farmers have complained that large shipments of cheaper Ukrainian sugar imports under the wartime tariff exemptions have undercut local supplies. The EU triggered "emergency brakes" to re-impose quotas on products including sugar and eggs in the past year, in response to surging imports.

The EU's Ukrainian sugar imports soared to 400,000 tons in the 2022/23 season and over 500,000 tons in 2023/24, far exceeding the pre-war quota of 20,000 tons.

Hansen said the new quotas on sugar would be "significantly higher" than those under the pre-war arrangements.

"I think we can absorb a certain amount of those products," he said, while noting sensitivities among European farmers concerned about higher imports of sugar, poultry and eggs.

Negotiations on the new EU-Ukraine deal started on June 2. Hansen said it was feasible a deal could be reached by summer.

"It depends now on both sides, I think technically that could be feasible," he said.

Agricultural goods accounted for about 60% of Ukraine's total exports last year, with the EU buying around 60% of those goods, worth about $15 billion.

A senior Ukrainian lawmaker said last month the loss of tariff-free access to the EU market could cost the country 3.5 billion euros ($3.99 billion) in annual revenue.

"Our solidarity with Ukraine is as firm as ever, and therefore we are very committed to deliver this agreement as quickly as possible," Hansen said.

The pre-war quota regime, which applies as of Friday, also includes lighter rules on import licenses for some goods like poultry and eggs, where instead of requiring licenses, quotas will be allocated on a first-come, first-served basis.

($1 = 0.8763 euros)

(Reporting by Kate Abnett; additional reporting by Pavel Polityuk in Kyiv, Gus Trompiz and Sybille de La Hamaide in Paris, Maytaal Angel in London; Editing by GV De Clercq, Susan Fenton, Philippa Fletcher)