Tensions escalate over Ukrainian grain
But also — Starmer in France, Dombrovskis in China, Climate, Justice
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The Briefing
Tensions over Ukrainian grain exports to the European Union climaxed last week. Hungary, Slovakia and Poland unilaterally adopted an embargo on several types of Ukrainian grain. The situation quickly deteriorated between Ukraine and Poland, the latter being an early ally of Ukraine regarding the Russian invasion.
BACKGROUND • The increase in Ukrainian agricultural exports to the EU follows the liberalisation of trade with Ukraine, adopted in May 2022 — and extended until June 2024 — to support the country in its war against Russia. Custom duties on Ukrainian imports into the EU have been abolished in May 2022.
Between May and September 2023, the European Commission authorised five Member States — Poland, Bulgaria, Hungary, Romania and Slovakia — to adopt restrictions on Ukrainian cereal exports to protect their farmers from an influx of cheap Ukrainian agricultural products.
On 15 September, after much hesitation, the Commission decided to put an end to these restrictive trade measures, much to the dismay of the five Member States. "Market distortions in the five member states bordering Ukraine have disappeared," the Commission said.
In response, Poland, Hungary and Slovakia adopted a unilateral (and illegal) embargo on several Ukrainian cereals, defying the Commission. Bulgaria and Romania have decided not to follow suit, but farmers' protests could well change that.
UNGA & WTO • At the annual United Nations General Assembly (UNGA), Ukrainian President Volodymyr Zelensky commented on the Hungarian, Polish and Slovak decisions with bitterness. "Some in Europe are playing solidarity in a political theatre, turning grain supply into a thriller (...) These countries are actually helping to prepare the ground for Russia," he told all delegations.
Ukraine also filed a complaint against the three countries at the World Trade Organization (WTO). Specifically, Ukraine requested "consultations", the first step in the WTO dispute settlement procedure. Consultations are a non-judicial phase during which the parties have 60 days to try to reach an agreement between them.
In the meantime, Slovakia has accepted the compromise solution proposed by Ukraine. This is based on Ukrainian export control through export licenses. The complaint concerning Slovakia was therefore withdrawn.
POLAND • Conversely, an escalation of tensions between Poland and Ukraine has taken place. On the set of the Polish channel Polsat News, Polish Prime Minister Mateusz Morawiecki regretted the Ukrainian attitude.
"We were the first to do a lot for Ukraine and that is why we expect it to understand our interests (...). We respect all their problems, but for us, the interests of our farmers are the most important thing," he said.
"I warn the Ukrainian authorities (...). If they escalate the conflict in this way, we will add more products to the import ban in Poland," he added.
Poland also announced it would stop exporting weapons to Ukraine. Several members of the government, however, tempered the Prime Minister's remarks, explaining that no decision on long-term support for Ukraine had been taken.
It is therefore difficult to know whether this is a punchy announcement — which the Polish prime minister is fond of — or whether Poland is really at a turning point in its support for Ukraine, which political analysts find hard to believe.
ELECTIONS • The attitude of the Polish Prime Minister is also to be seen through the prism of the Polish parliamentary elections which are fast approaching. On 15 October the Law and Justice Party (PiS) will try to win a third mandate.
To win the election, the PiS is counting on the support of rural residents, who make up 40% of Poland's population. Poland's firmness vis-à-vis Ukrainian imports is a way of not offending the 1.3 million or so Polish farmers a few weeks before the elections.
Slovaks will also go to the polls in October to elect their next government. The big question is whether former prime minister Robert Fico will return to power, potentially pushing Slovakia towards an illiberal Hungarian-accented stance on the EU stage. Fico, who is known to be pro-Russian, could also strengthen the Russophile tendencies of a Slovak population less and less in favor of supporting Ukraine.
COMMISSION • Faced with this situation, the European Commission is in an tricky position.
On the one hand, the embargo on Hungary and Poland infringes European law as trade is an exclusive competence of the EU. This would allow the Commission to launch infringement proceedings against both countries under Article 258 TFEU.
On the other hand, the FT revealed a document suggesting that the European Commission could defend Poland and Hungary at the WTO, precisely because trade is an exclusive competence of the EU. The situation is comical, to say the least.
IN BRIEF • One thing is certain, the attitude of Poland and Hungary undermines the EU's credibility in international trade. This is not the first time that both Member States have breached European law — their repeated attacks on the rule of law are well established.
The tensions caused by Ukrainian grain exports are also a foretaste of the difficulties that Ukraine's integration into the EU brings. If it joined the EU under these current rules, it would become the first recipient of Common Agricultural Policy (CAP) funds.
Inter alia
BREXIT • Last Tuesday at the Élysée palace in Paris, Emmanuel Macron received Keir Starmer, leader of the British Labour Party. On the eve of King Charles III's state visit, this meeting was part of Macron’s regular dialogue with European political actors. For his part, the leader of the Labour opposition is seeking to consolidate his international standing before the general elections scheduled for early 2025.
This visit was coupled with a recent clarification of the Labour line on the future of EU-UK relations. Starmer announced he wants to use the review clause of the trade and cooperation agreement between the EU and the United Kingdom — concluded after Brexit — to make substantial changes in the event of a Labour victory in 2025.
Assuring that collaboration with Brussels in terms of security, innovation and research is not mutually beneficial, he criticised the agreement negotiated by Boris Johnson, "too close" to open up all areas where synergies exist. While the United Kingdom no longer applies the Dublin Regulation — which governs asylum applications within the EU — he also indicated that he wants to negotiate with Brussels a plan to readmit migrants to the EU.
Long a supporter of a new referendum on Brexit, the Labour Party leader has therefore clarified his European line, ruling out a possible reintegration into the single market while pursuing a proactive policy of rapprochement with Brussels.
CHINA • EU Trade Commissioner Valdis Dombrovskis visited China in recent days for the tenth EU-Beijing High-Level Economic and Trade Dialogue. Delivered on Saturday 23 September in Shanghai, his speech was eagerly awaited after Commission President Ursula von der Leyen announced the opening of an anti-subsidy investigation into Chinese electric cars during her latest State of the Union address.
Although Dombrovskis recalled the Union's attachment to the principle of free trade, he stressed the importance of fair competition: "'Fair' is the key word here. We welcome global competition. But it must be conducted fairly," he said. He also pointed out that the EU wants a “derisking” vis-à-vis Beijing, not a “decoupling”— nothing very new on that front.
CLIMATE • The European Parliament and the Council have reached a provisional agreement on new rules to ban advertisements that refer to a "carbon-neutral" or "environmentally friendly" product. These claims will now be banned when they cannot be proven or are based on carbon offset schemes.
These offset systems, which often involve planting trees, are considered ineffective compared to the immediate reduction of a company's carbon emissions.
"Generic" environmental claims will now have to be supported by concrete evidence of the company's environmental commitments and product characteristics.
The directive still needs to be approved by Member States and the Parliament's plenary session. EU countries will then have two years to transpose the directive accordingly. Changes are therefore expected by 2026.
JUSTICE • On 22 September, the Paris prosecutor's office requested a trial against the National Front (now National Rally, RN) and twenty-seven people linked to the party, including Jean-Marie and Marine Le Pen.
They are suspected of having participated in a "concerted and deliberate" embezzlement of European public funds between 2004 and 2016. The estimated damage to the European Parliament amounts to €6.8 million. The Modem is also in the sights of justice with a trial required for similar reasons while the investigation into the France Insoumise remains under investigation.
The investigation was launched in March 2015, at the request of the European Parliament, after referring the case to the European Union's Anti-Fraud Office (OLAF) for possible irregularities committed by the Front National concerning the wages paid to parliamentary assistants. The latter are accused of having in fact worked almost exclusively for the RN. Marine Le Pen has been under investigation since June 2017 for embezzlement of public funds and was heard by investigating judges in 2019.
The prosecutor's office is asking for a trial for complicity and concealment of embezzlement of public funds against the RN with the possibility of imposing a fine of up to one million euros and an additional penalty of ineligibility of a maximum of ten years.
What We’ve Been Reading
In a memo for the EPC, Fraser Cameron explains that there is an urgent need to start the debate on the reform of the European institutions, a necessary prerequisite for the enlargement of the Union.
This edition was prepared by Guillaumé Renée, Clément Albaret, Marwan Ben Moussa, Kimia Vaye, Maxence de La Rochère and Augustin Bourleaud. See you next week!