Ukraine Warns of ‘Damaging’ Consequences if EU Delays Duty-Free Deal Renewal

Ukraine warned that the European Union should not hesitate in renewing the Autonomous Trade Measures (ATM) accord, otherwise the country would lose a large amount of foreign currency revenues that it uses to fund its military. 

The policy suspending import duties and quotas on Ukrainian exports to the EU, also known as “the free trade regime,” was extended by the European Union for the period from June 6, 2024 until June 5, 2025. 

Previously, the EU removed tariffs and quotas on Ukrainian imports to support the country during Russia’s full-scale invasion in 2022. 

The current agreement expires in June 2025, and The EU has yet to confirm whether it will be renewed, Financial Times wrote.

Ukraine has sounded the alarm bells over timing issues. “The message is very simple: our producers need predictability over exports, [the] EU can’t start negotiations one week before the current regulation expires,” a Ukrainian official told FT. 

“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,” FT wrote. 

Ukraine also relies on exports to secure crucial foreign currency to fund its military efforts. This could become a serious issue, especially as uncertainty over future US military aid grows.

According to government data cited by FT, exports to the EU during the tariff suspension contributed nearly 10% of Ukraine’s $41 billion export revenue in 2024.

Ukraine’s economy could lose around €3 billion if the EU reinstates tariffs, Ukrainian Centre for Economic Strategy estimated.

Poland, Hungary, Slovakia, and Bulgaria oppose the extension, citing concerns about its impact on their economies, FT wrote.

“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 full-scale war,” Ukrainian Finance Minister Serhiy Marchenko told FT.

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

Which countries oppose Ukraine’s expanded access to the EU market?

Poland, Hungary, Slovakia, and Bulgaria are among the countries that oppose tariff-free trade with Ukraine. Two years ago, they imposed unilateral bans on Ukrainian grain and other food imports, defying EU trade rules, FT wrote.

When the EU last extended tariff-free trade, some countries – including Poland, France, and Hungary – pushed for an “emergency brake” mechanism.

Under this system, if Ukrainian imports of certain products – such as eggs, sugar, oats, and honey – exceed set limits, tariffs are automatically reinstated.

“EU officials recognize that there is little appetite in Warsaw to expand trade liberalization 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,” FT wrote. 

Kyiv Post sources familiar with the situation also said that Polish politicians do not want a fight with the farmers so as not to lose its electorate. 

The European Union first approved the Autonomous Trade Measures with Ukraine on June 4, 2022. After the European Council voted to expand the free trade regime for another year on April 23 in 2024, the EU enabled the extension of the duty-free regime. 

The policy suspended import duties and quotas on Ukrainian and Moldovan exports to the EU. 

After Russia mined the Black Sea when invading Ukraine in 2022, Ukraine was not able to export its grain products through the Black Sea. Russia’s invasion provoked a food crisis in African and Middle East countries, many of which imported the majority of their grain from Ukraine. 

Railways and roads became an alternative, before Ukraine – having expelled Russian ships from the Black Sea with a deft military campaign – relaunched a grain corridor at sea toward the end of 2023.  

But at the same time, truckers and farmers in Poland began blocking the border, angered by what they said was Ukraine’s use of a wartime easing of border restrictions to gain market share. They were also angry at cheap Ukrainian food imports.

Losing this source of revenue would be a heavy burden for Ukraine’s budget. “Without support from the United States we’d be in a very dramatic situation… because we cannot easily substitute it,” Marchenko told FT.