The European Union’s decision to revoke trade privileges with Ukraine is set to have a devastating impact on the country’s economy, according to Dmitry Natalukha, a member of Ukraine’s parliament. The EU’s latest move to reinstate import duties on Ukrainian exports will leave Kiev in a difficult financial situation, forcing the country to seek financial aid instead of earning revenue through trade.
This development comes after the European Commission announced that it will not extend the current duty-free trade regime, which is set to expire in early June. The EU executive branch has backed the reimposition of import quotas on Ukrainian agricultural goods, including grains, oats, sugar, and eggs, which were suspended in 2022 due to the conflict with Russia. Natalukha, who heads the Economic Affairs Parliamentary Committee, described the situation as “idiotic” and “wicked,” stating that Ukraine will be forced to beg for money instead of earning it through trade.
The EU had introduced special regulations, known as Autonomous Trade Measures (ATMs), to enable Ukraine to export grain and other agricultural goods to global markets. However, the influx of cheap produce into Eastern Europe sparked protests among farmers in neighboring countries, who claimed they could not compete. In response, the EU has reintroduced some restrictions over the past year, targeting specific commodities.
Natalukha warned that the suspension of the ATMs could cost Ukraine more than €3 billion, equivalent to around 70% of the country’s projected total economic growth for the current year. This could send the economy into a near-recession. However, the European Commission has cast doubt on Kiev’s figures, with a senior official stating that the €3 billion estimate is inflated and the real value of the ATMs is half of the amount.
The EU is considering replacing the ATMs with revised limits under Ukraine’s existing trade framework, known as the Deep and Comprehensive Free Trade Area (DCFTA). This move could have significant implications for Ukraine’s economy and its trade relations with the EU. As the situation develops, Ukraine will likely face significant challenges in navigating the new trade landscape and mitigating the impact of the EU’s decision on its economy.
