Ukraine threatens legal action against EU if grain curbs drag on – POLITICO

Ukraine is threatening to take Brussels and EU member countries to the World Trade Organization if they fail to lift restrictions on its agricultural exports to the bloc this month.

The country’s grain exports — its main trade commodity — are currently banned from the markets of Poland, Hungary and three other EU countries under a deal struck with the European Commission earlier this year to protect farmers from an influx of cheaper produce from their war-torn neighbor.

The glut, triggered by Russia’s invasion of Ukraine and its blockade of the country’s traditional Black Sea export routes, has driven a wedge between Ukraine and the EU’s eastern frontline states which have been among the strongest backers of Kyiv’s military fightback.

The restrictions, already extended once, are due to expire on September 15. Amid speculation that Commission President Ursula von der Leyen will let them lapse, Poland and Hungary have threatened to impose their own unilateral import bans, in violation of the bloc’s common trade rules.

“With full respect and gratitude to Poland, in case of introduction of any bans after [September 15], Ukraine will bring the case against Poland and the EU to the World Trade Organization,” Taras Kachka, Ukraine’s deputy economy minister, told POLITICO.

Kyiv has argued that the restrictions violate the EU-Ukraine free-trade agreement from 2014.

Kachka’s comments backed up a warning this week from Igor Zhovka, a senior aide to President Volodymyr Zelenskyy. If Brussels fails to act against the countries that violate the trade agreement, Kyiv “reserves the choice of legal mechanisms on how to respond,” Zhovka told Interfax-Ukraine.

The Ukrainian foreign ministry said Kyiv reserved the right to initiate arbitration proceedings under its association agreement with the EU, or to apply to the WTO.

“We do not intend to retaliate immediately given the spirit of friendship and solidarity between Ukraine and the EU,” explained Kachka. But, he added, the systemic threat to Ukrainian interests “forces us to bring this case to the WTO.”

Crisis warning

Russia’s war of aggression and partial occupation has cut Ukraine’s grain production in half, compared to before the war, while Moscow’s withdrawal in July from a U.N.-brokered deal allowing safe passage for some seaborne exports has raised concerns that EU-backed export corridors won’t be able to cope.

The bloc’s agriculture commissioner, Janusz Wojciechowski, struggled to explain to European lawmakers at a hearing on Thursday how Brussels would handle the situation after September 15.

Wojciechowski, who is Polish, also appeared to sympathize with the right-wing government in Warsaw, which has latched on to the fight over Ukrainian grain as a campaign issue ahead of mid-October general elections in which it is seeking an unprecedented third term.

The curbs should be extended at least until the end of the year; otherwise “we will have a huge crisis again in the five frontline member states,” Wojciechowski said, adding that this was his personal position and not that of the EU executive.

The Commission’s decision in April to restrict imports to the five countries, which came with a €100 million aid package, met widespread disapproval from other EU governments and European lawmakers for undermining the integrity of the bloc’s single market.

Kachka, in written comments sent in response to questions from POLITICO, said there was no evidence of price deviations or a significant increase in grain supplies that would justify extending the import restrictions. Kyiv had engaged in “constructive cooperation” with the Commission, the five member states, as well as Moldova, a key transit hub for Ukrainian exports to the EU.

“We got a lot of support for ensuring better transit of the goods through the territory of neighboring member states, including Poland and Hungary,” Kachka said. “During [the] last two months we significantly advanced cooperation with Romania on transportation of goods from Ukraine.”