Three years prior, Ukraine was granted the privilege of tariff-free exports to the EU. However, it appears that Europe is now returning to the pre-war tariff quotas that were in place. As a result, some Ukrainians are questioning whether the EU continues to be a reliable and stable ally. Indeed, Russian leader Vladimir Putin is heavily banking on our partners becoming weary of providing financial aid and market access to us. Unfortunately, the EU seems to be reverting to the pre-conflict trading standards with Ukraine.
When Russia initiated its full-blown incursion into Ukraine in February 2022, the nation’s export activity was seriously hampered due to Russian mines in the Black Sea. In response to this crisis, the EU decided to waive tariff rate quotas for 36 classes of Ukrainian goods under the Autonomous Trade Measures (ATM). This policy served as a financial buoy for Ukraine in the midst of conflict. These measures were enacted for three years, ending on June 5, 2025.
During this period, Ukraine saw a significant increase in its exports to the EU, with revenues jumping from $2.3 billion in 2021 to a staggering $4.7 billion. Consequently, the EU’s contribution to Ukrainian exports rose to 42% by the year 2024.
However, not all businesses were prepared for this abrupt shift in policy. Some had made substantial investments to align with European standards, only to see their export opportunities hampered by quotas. This sudden shift was triggered when several of Ukraine’s neighboring countries, including Poland, Romania, and Hungary, lobbied to halt the unrestricted trade policy.
As a result of yielding to these pressures, Ukraine is now facing varying degrees of loss across different product groups. Projections of annual export losses stretch anywhere from $77 million to a staggering $3.5 billion. However, going back to the pre-war trading rules could potentially decrease Ukraine’s reliance on the EU and its political fluctuations.
The trading landscape is certainly shifting. Some view this as a positive advancement, a step in the right direction. However, the optimism hasn’t completely alleviated the concerns of the Ukrainian business sector. At present, Ukrainian enterprises face total uncertainty about future trade regulations with the European Union.
The question arises: why is the EU reverting to the pre-war policy? It seems that with the expiration of the ATM, trade between Ukraine and the EU will adhere to the regulations under Article 29 of the Association Agreement and the Deep and Comprehensive Free Trade Area (DCFTA), both ratified in 2014 and made effective in 2017.
Future discussions will be based primarily on the DCFTA agreement. However, these discussions look promising, promising improved conditions for Ukrainian producers. These negotiations are in progress and are projected to wrap up by the end of July.
The Ukrainian agribusiness club (UCAB), a top agrifood business association, has anticipated a loss of approximately €3 billion ($3.4 billion) if the EU reinstates tariffs. However, there may be circumstances under which Ukraine could garner benefits – ultimately, this depends on the outcome of future negotiations.
The optimal scenario for Ukraine would be the full liberalization of tariffs. This could result in a $290 million increase in exports for the nation. This scenario would not only lead to increased exportability but also grants long-term certainty which, in turn, could fuel investment in further production.
Despite the changing dynamics, the Ukrainian government remains optimistic as they hope for positive outcomes. They are confident that the EU will not abandon Ukrainian farmers in these trying times.
The EU continues to be Ukraine’s main trading partner. However, it remains to be seen whether these recent changes will lead to an increase or decrease in skepticism about business relationships.
As the situation unfolds, only time will truly tell how these trade relationship dynamics between the EU and Ukraine will play out. Meanwhile, for Ukraine, the focus is on maintaining resilience and adapting to these changing trade landscapes.