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Comment: EU pulls plug on free trade with Ukraine at its own peril

Ukraine should be regarded as part of the solution to the food security crisis and not suffer EU trade restrictions that also harm the single market and normalise violence.

Easter week 2024. The week that the EU dropped all pretensions to open trade. The week the European Council, browbeaten by violent farmers’ protests in Brussels, ended Europe’s short-lived free trade  flirtation with a desperate war-torn Ukraine.

Last week European leaders, in the course of their debate about whether to continue to arm and fund Ukraine, decided to emasculate autonomous trade measures introduced in 2022 as a lifeline to Ukraine’s bombed, mined and beleaguered farm sector.

What God giveth, God taketh away. Free trade was replaced by a ‘safeguard’ measure allowing tariffs or quotas to be reinstated if Ukrainian agricultural imports threaten to disrupt the EU market – or even just parts of the EU.

On top of this, an automatic safeguard  -the fashionable term is now ‘emergency brake’- will kick in once imports of products deemed sensitive like poultry, sugar, cereals, honey, reach a given level that is far lower than current import levels.

The new regulation will be sent now to the European Parliament which might make it even more restrictive.

This is obviously bad news for Ukraine, whose producers and farmers need the EU market to stay afloat and whose government needs the foreign exchange.

If the EU can be so mean-spirited towards a country that is currently on its knees, how will it treat Ukrainian agriculture once enlargement negotiations begin?

Ukraine should be regarded as part of the solution to the food security crisis that will not leave Europe unscathed in the next decades. But no.

It is thus hardly surprising that Ukraine has just joined the Cairns’ Group of competitive agricultural exporting countries at the World Trade Organization in Geneva, joining Australia, Brazil and others, faced with an uncompromising EU on which it must have concluded it cannot rely.

Waiting for the Barbarians

The autonomous trade measures decision is perhaps even worse for Europe in the years ahead, on at least three counts.

First, the restrictions on Ukraine’s exports will not provide discernible relief for the sectors calling for protection.

Take poultry for example, the European sector most vehemently opposed to Ukrainian exports. Cutting imports from current levels of around 190’000 tons a year to 90’000 tons -the pre-ATM level – will make scarcely a dent in the sector. Even 190’000 tons – of which half is frozen so of less value –  represents only 2% of EU consumption.

Even the commission itself, in its latest assessment of the cumulative impact of its FTAs, concluded that a high degree of liberalisation for Ukraine will hardly make a dent in Europe’s poultry, (or sugar or cereals…) sector.

So in robbing Peter the EU does not pay Paul.

The poultry and other sectors unhappy about Ukrainian competition will continue to be frustrated and disappointed. Their problems are genuine but they lie elsewhere – high costs of labour, energy and feed for example – but even these costs are moderating.

Still is easier to blame foreigners, outsiders, whether immigrants or imports, for one’s own home-grown problems.

The Alexandrian poet Cavafy in his great poem Waiting for the Barbarians  wrote of the human, political, need to channel frustration and  blame to outsiders, the other. But this – as we saw last week – leads to bad policy making.

Be careful what you wish for

My second criticism of the new ATMs is that, for the first time ever as far as I know, the emergency brake can be applied if imports disturb or threaten to disturb not the EU market as a whole, but individual member states – read Poland- or even regions inside a member state.

Imposing trade restrictions due to a local as opposed to an EU-wide effect is a dangerous precedent – and I suspect we have not seen the last of it.

Member states and aggrieved sectors will now call for similar restrictions on imports from other countries due to perceived local impacts, even other member state imports. One can easily imagine an emboldened France one day asking for curbs on Spanish imports; Poland for a brake on Romanian imports.

The principle of the single market just went up in smoke, like the black fumes from burning tyres and manure that greeted lawmakers as they entered the council building in Brussels last week.

The best lacked all conviction

Violence has its rewards? Perhaps the most regrettable aspect of last week’s Brussels council was to see member states giving in to violence on the streets.

An unrepresentative minority of farmers – mainly young, extreme in their views and some not sober – succeeded through arson and destruction to secure this Pyrrhic victory over Ukraine as well as the rolling back of much needed environment and climate legislation.

The protesters were not part of the highly respected and representative pan-European farm federation Copa-Cogeca which now faces the challenge of bringing these elements back into the fold.

So, another first: I am unaware of other occasions in which council decision making has buckled under local violent protests.

The council was misguided in its belief that accommodating the farmer’s views in this way would stave off the populism, breeding on farmers’ fears, that is spreading across much of Europe in this election year.

They have learned nothing from history, which teaches us that violence only begets more violence, and that adopting the clothes of the populists simply emboldens them and normalises extremism.

W B Yeats’ oft-quoted lines are for once quite apposite:

The best lack all conviction, while the worst

Are full of passionate intensity.

We don’t get fooled again

There is one final, longer term consequence of last week’s embarrassing display of poor governance.

I suspect the commission and several member states as they go to bed at night will feel both embarrassed and resentful at the way they have been bamboozled and browbeaten by farm lobbies on both Ukraine and the unwinding of the Green Deal.

The  farm sector earned enormous goodwill through the pandemic by keeping food on our tables, and as a result was able to change the narrative from farmers as the perpetrators of climate change and biodiversity loss to farmers as the victims. Last week it may have squandered that goodwill, what the New Zealanders call their social license.

A minority of the farm sector agitated violently against climate measures, effectively sawing off the branch they are sitting on, while showing true protectionist  colours in opposing imports even if fairly produced.

I fear that the EU in the next CAP and the next seven year budget will not forget this and will give even less money to farmers and make it even more conditional on environment performance.

And for sure the European environment NGOs, some of whose members were physically assaulted by farmers last week, will now abandon their temporary marriage of convenience railing against dirty imports produced to lower standards.

The NGOs were had, were hijacked by the farm lobby who care more about that mythical beast the level playing field and less about the environment. They won’t get fooled again.

So there is little that is good that came out of last week except the end of naivety. As for the future? I am minded to quote the last lines of Julian Barnes’ novel The Sense of An Ending: ‘I see unrest, great unrest’.

 

John Clarke is a former Director for International Relations at the European Commission and senior EU trade negotiator. He previously headed the EU Delegation to the WTO and UN in Geneva. 

One Comment

  1. Agnieszka Gogolewska

    so true!

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