What Reasons Ukrainian Agro-Export Ban Suppporters Have

Thursday, 31 August 2023

Polish farmers found themselves in a difficult position following the opening of the EU market for Ukraine.

In August, Poland and several other neighbouring countries announced their intention to extend the ban on Ukrainian grain import. However, it was was supposed to expire on September 15. At least two countries – Poland and Hungary – threaten to extend the ban at the national level.

But if Ukrainian farmers can produce grain more cheaply, why should their advantage be artificially undermined by import restrictions?

Perhaps Polish farmers need to recognise this and not hinder natural economic processes?

Yana Okhrimenko, Senior Economist at the Center for Economic Strategy, analysed the reasons of opponents and supporters of the ban extension. The article Two Views on the Grain Dispute: Arguments Defending the Positions of Ukraine and Poland discusses which arguments will carry more weight for Brussels.

The Polish Perspective (and its allies)

Food security. Total dependence on foreign products undermines this security and creates significant risks.

Therefore, Polish farmers, who have fewer competitive advantages compared to Ukrainian ones, cannot migrate to new sectors, leaving everything to Ukrainian farmers.

Ukrainian grain exports to Poland have increased significantly since the large-scale invasion, but Ukraine is still in a state of war, so who will guarantee that Ukrainian farmers can supply sufficient grain volumes?

Unfair Eurointegration. The higher cost of Polish grain is a payment for compliance with EU norms (whose leadership supports Ukraine and opposes the ban.)

Voices of farmers. The work and well-being of a significant portion of Poles depend on whether the Polish agricultural sector survives the competition with Ukrainian (much cheaper) grain.

The argument of banning free international trade in order to "protect our workers" is common among populist politicians, so it's not surprising that it's voiced in Poland right before the elections.

The Ukrainian Perspective (and Euroinstitutions)

Disproportionate benefits from free trade. Under the current restrictions, Ukrainian exporters gain relatively little compared to European (including Polish) export sectors.

Legal norms. Unilateral bans on Ukrainian grain directly violate the principles of the EU's internal market.

Contradictory signals from European partners. The stage of free trade is intended to make Ukraine's transition to higher levels of EU integration as smooth as possible.

Therefore, the question arises about the goal of the Association Agreement between Ukraine and the European Union. If the main goal is to create conditions necessary for Ukraine's membership, banning the import of Ukrainian goods clearly contradicts it.

Slowing consumer inflation in Poland. The import of relatively cheap Ukrainian grain, given accelerated inflation rates in the EU, could help lower food prices without resorting to more radical measures. Thus, Polish consumers would only benefit.

Supporting the Ukrainian economy during the war.

Economic changes are painful but relentless. Perhaps the Polish economy could gain more from potential economic diversification (which Ukrainian agricultural exports could provide) than from trade protectionism.

As we can see, Ukrainian arguments appear more persuasive. However, the current discussion allows us to consider the prospects of Ukrainian integration into the European community from a slightly different angle.

Ukrainian membership in the EU depends not only on meeting formalised requirements but also on ensuring mutually beneficial and painless economic and political integration.

If you notice an error, select the required text and press Ctrl + Enter to report it to the editors.