A week in Brussels, Chile, Energy & Environment, Latest news, Ukraine, Russia & CIS

Week in Brussels: Russia sanctions, Chile FTA, palm oil

A new week has passed in EU trade policy. Here some highlights. By Rob Francis and Iana Dreyer.

EU closes remaining gaps in export controls for Russia

The EU is now putting an end to the remaining exceptions to exports of products covered by its dual-use export control regime.

As part of its 6th sanctions package targeting Russia, which is due to be unveiled either today or over the coming week-end, the EU plans no longer to give blanket authorisations in three remaining areas covered by its dual use technology export control regime: goods re-exported for repairs or replacement, temporary exports linked to exhibitions or fairs, and any telecommunications-related products.

The EU is also moving to restrict exports of services to Russia that fall outside its dual-use export control regime. “The Kremlin relies on accountants, consultants and spin doctors from Europe. And this will now stop. We are banning those services from being provided to Russian companies,” Ursula von der Leyen announced this week to the European Parliament.

This comes of course on top of the much talked about oil import ’embargo’ or 6-month phase out.

Borrell sees Chile FTA talks clinched by year-end

The EU’s High Representative for Foreign Affairs and Security Policy Josep Borrell this week wrote in a blogpost that he hoped the modernised Association Agreement between the EU and Chile can be signed “before the end of the year”.

Elsewhere, he suggested that November could be a target date, given this would mark the twentieth anniversary since the signing of the original agreement.

The EU-Chile negotiations were concluded last year but were held up by French reluctance to move forward with FTAs more generally in an election period.

The new leftist Chilean government, which was elected in November, also required time to analyse the deal agreed by its predecessor, but it now seems willing to take the next step.

Reporting on his trip to Santiago from 27 April to 1 May, during which he met with Chilean President Gabriel Boric, Borrell revealed that the two parties discussed “how to best finalise the modernisation of the Association Agreement of 2002”.

The EU foreign affairs chief referenced how the “shockwaves of the Ukrainian war are causing inflationary pressures and supply chain disruptions that are dramatically lowering growth projections around the world. Chile is no exception”.

He also noted the high level of inequality, both in Chile and across South America, and said that a “serious project of regional integration, as the one that the European Union represents, could be of great help. This is another reason to strengthen our cooperation”.

The upgraded deal includes more agriculture market access, more protection of geographical indications, disciplines on services, public procurement market access, investment rules, upgraded environmental – including sustainable farming and climate – provisions, as well as new chapters on raw materials and gender.

A trade deal with Chile would be much prized by Brussels, given that the country possesses many of the raw materials, such as copper and lithium, which are necessary for the EU to achieve its environmental and digital targets for the coming decades.

Palm and vegetable oils

The EU vegetable oil and protein meal industry association FEDIOL this week issued a message of calm regarding the supply of sunflower oil which had been jeopardised following Russia’s invasion of Ukraine.

“While the market situation for sunflower oil at the beginning of the war launched by Russia in Ukraine was rather tense, triggered by panic buying across the whole chain up to the final consumer, the situation has over the last weeks improved,” the association said on Tuesday (3 May).

It notes that sunflower seeds and oil are being exported from Ukraine “mostly by rail and by truck”, albeit not at the pre-war levels when Ukraine’s Black Sea ports were open.

FEDIOL notes that as a result of this increased availability prices have subsequently dropped.

“The continuity of supply streams may pose problems locally, but in fact bottled sunflower oil is readily available in the EU and shortages on some supermarket shelves are not due to lack of sunflower oil availability,” stated the association.

On the same day, FEDIOL also lamented Indonesia’s decision to establish an export ban on palm oil products.

“In a situation of high commodity prices, including for vegetable oils, this will add tension on global markets,” argued the association.

Europe sources about 335.000 tonnes of crude palm oil from Indonesia on average per month, which equates to over 40% of total imports.

FEDIOL estimates that there are currently “4-6 weeks of palm oil volumes available in European storage facilities and the temporary decision by the Indonesian government does not give rise to concern for the supply on the European market in the short term”.

Expectations are that Jakarta will lift the ban shortly, given the country usually exports approximately 2 million tons of palm oil per month and has limited storage capacity.

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