New opportunities for export to EU: Would Ukraine receive additional quotas

Author : Olha Trofimtseva

Source : 112 Ukraine

Ukraine expects another increase in tariff quotas for food products duty-free export to the EU
10:52, 15 May 2017

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Ukraine expects another increase in tariff quotas for food products duty-free export to the EU.

Last September, the European Commission has approved this decision, and May 5, International Trade Committee of the European Parliament supported it.

Symbolically, on the day when the Council made the historic decision, completing the approval of visa-free regime for Ukrainian citizens, it also considered the question of additional autonomous trade preferences for Ukraine (but did not vote on the matter).

Related: 7 arguments against export of Ukrainian roundwood

However, if there are only some formalities left before final introduction of visa-free regime, the final result concerning the issue of new autonomous preferences is not that obvious.

In particular, during the previous stage of approval of the European Parliament Committee on International Trade, processed tomatoes and wheat dropped from the list.

MEPs decided that Ukraine is already exporting wheat to the EU in significant quantities, including out of quota. Therefore, in their opinion, Ukrainian exporters do not need the additional increase in quota.

Another situation is with the processed tomatoes. European producers are concerned about our exports. Ukrainian side assured that additional quota in 5 thousand tons (current quota is 10 thousand tons) was uncritical for European manufacturers, but this did not convince the MEPs.

Instead, Ukraine managed to "defend" six different positions: honey, corn flour and corn, barley flour, cereals and oats.

Related: In 2016, Ukraine exported over 20 million tons of grain

In particular, the additional quota for duty-free export of honey should reach 3 thousand tons, cereals and processed grains - 7.8 thousand tons, grape juice - 0.5 thousand tons, oats - 4 thousand tons, maize - 650 thousand tons, barley - 350 thousand tons.

Let us underline that this is not about correction of the Association Agreement, but about the autonomous preferences. In other words, this is the EU's decision on our support, which does not require us to reverse movements.

The decision to increase the tariff quota was made against the backdrop of the economic war with Russia: suspension of free trade and transit closure that occurred early last year. This required urgent reorientation of our exports to new markets. And first of all, reorientation to the EU markets.

Some of our proposals have been rejected at the first stage of discussions with the EU. In particular, increasing quota for export of poultry meat and sugar. But you must understand that the benefits of trade with the EU is not limited to the size of duty-free preferences. The key achievements of the negotiations on the new autonomous preferences are increasing the quota for corn and corn flour (650 thousand tons) and barley and barley flour (350 thousand tons).

Price of the question is $ 180 million a year. At least, this is how our ministry estimates additional revenues from increasing quotas.

Related: In 2016, Russia exported to occupied Donbas goods at cost of $ 222 mln

Given that the effect of autonomous preferences is for three years, the total amount exceeds half a billion dollars. Still two important stages of approval of the decision are left: plenary session of the European Parliament and the EU Council vote.

Autonomous preferences will take effect almost immediately after a positive decision and publishing it on the Commission. If the EC proposal is not changed critically, the decision may come into force in July.

What are the chances of those areas where we have not received an increase in quotas? These chances remain, but, most likely, not within the next round of negotiations on autonomous preferences.

More and more promising opportunity is ahead - planned renegotiation of free trade, which takes place after three years of its operation. The economic part of the Association Agreement started working in January 2016 and therefore this process might be started in 1.5 years. So we now have to start working on our next steps.

Related: Ukrainian exports: Challenge for the next 5 years

It is possible that we will have to raise the issue of quotas and an increase in new positions.

After all, Ukrainian exports to the EU is constantly evolving. But it will be a two-way process: European side will make its proposals on bilateral trade conditions.

For example, according to the results of last year, we had almost no garlic or lamb exports to the EU. It does not mean that according to the results of 2017 quotas for these products are exhausted, but now exports by some of such positions has already begun. And in this dynamic soon we can reasonably assert that the existing quota does not meet our export opportunities.

Therefore, negotiations with the EU would not be completed with autonomous preferences or revision of terms of trade. We have just started to redirect our exports to the European market, and already have significant progress on it.

Our producers and exporters will continue this process.

Related: EU-Ukraine disputes: A new attempt to solve the problem of timber exports

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