Ukraine urges EU to renew duty-free trade deal

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Ukraine has warned of “really damaging” consequences if a looming deadline halts unrestricted trade with the EU, as the country grapples with uncertainty over long-term support from the US.

Emergency EU trade measures that lifted duties and quotas on Ukrainian exports are due to expire on June 5, with limited time left to extend them.

Introduced after Russia’s full-scale invasion in 2022, the policy was designed to support Ukraine’s economy. But some member states have since pushed back, citing concerns over its domestic impact.

“The European Union is our key trade partner, and that’s why it would be really damaging for us if we [found] ourselves in a situation which we had before the war,” Ukrainian finance minister Serhiy Marchenko told the Financial Times.

Ukraine is reliant on exports to earn vital foreign currency to fund the war effort. Revenues from exports to the EU under the ‘‘autonomous trade measures’’ accounted for almost a tenth of the country’s $41bn export revenue in 2024, according to government data.

Those flows could be at risk if the EU does not renew the measures in time. Ukrainian and European officials worry that the timeline is too tight for negotiations ahead of the expiration of the ATMs scheme. While Brussels and Kyiv agreed to broaden reciprocal market access beyond the current scheme, no progress has yet been made.

It would be a ‘‘very wrong signal’’ if we do not reach some kind of agreement with the EU,” Marchenko said. 

Some neighbouring countries are unwilling to broaden market access for Ukraine, an agricultural powerhouse, afraid it would undercut their farmers and stoke resentment. Still, a high proportion of exports that Ukraine sends to its neighbours actually transit to other buyers.

Cheap Ukrainian agricultural imports have become a political issue in Poland, where Prime Minister Donald Tusk’s government is seeking the support of farmers who have traditionally been a core electorate of the opposition Law and Justice (PiS) party.

Poland, Hungary, Slovakia and Bulgaria imposed unilateral bans on imports of Ukrainian cereals and other foodstuffs two year ago, in violation of the EU’s common trade policy.

Last time the EU trade measures were renewed, countries including Poland, France and Hungary insisted on introducing an “emergency break” mechanism that would impose tariffs on Ukrainian shipments of products including eggs, sugar, oats and honey if volumes went above certain levels, in order to safeguard domestic prices and protect their farmers.

Ukraine’s agriculture minister on Friday called for the Poland to use its EU six-month presidency to push through the trade deal extension. “Ukraine needs to clearly understand the further conditions of access to the EU market,” Vitaliy Koval said. Poland, he added, “has every opportunity to become a leader in this process”.

EU officials recognise that there is little appetite in Warsaw to expand trade liberalisation with Ukraine ahead of Polish presidential elections in May, and that Russia-friendly countries like Slovakia and Hungary would also likely oppose such a move.

Negotiations under Article 29 of the EU, which foresees reciprocal trade liberalisation with third countries, have not progressed and it is “too late for that now,” as it would require extensive negotiations that “would not be easy,” said an EU official.

A temporary renewal of the current agreement is the most likely fall back option, and preferable to pre-invasion trade terms for Ukraine, the official added.

A European Commission spokesperson said it will “soon” present Ukraine with proposals to “advance reciprocal tariff liberalisation”.

“The message is very simple: our producers need predictability over exports, [the] EU can’t start negotiations one week before the current regulation expires,” said a Ukrainian official.

The loss of trade revenue would hit the country at a time when uncertainty over forthcoming US military support would require additional budgetary efforts to make up for it.

“Without support from the United States we’d be in a very dramatic situation . . . because we cannot easily substitute” it, said Marchenko.

Additional reporting by Raphael Minder in Warsaw and Andy Bounds in Brussels