Kyiv Threatens Trade War with Hungary and Its Neighbors

If no agreement is reached on the normalization of trade relations, there will be retaliatory measures, warned Taras Kachka, Ukraine’s Deputy Economy Minister, reports Politico. The politician has expressed dissatisfaction with the slow progress in negotiations to extend Ukraine’s duty-free access to the EU market, which expires in June.

Mr Kachka envisaged retaliation from the part of Ukraine if certain EU member states obstruct talks, referring to Poland, Slovakia and Hungary, which continue to maintain national bans on Ukrainian products.

The lack of progress on revising the trade agreement will force us to take steps to equalize the trade balance. And unfortunately, those decisions will be the least pleasant for the countries that are now politically slowing down the negotiations on free trade,”

the deputy minister emphasized at an event last week organized by the Centre for Economic Strategy, writes Politico.

Speaking to the website on Friday, Taras Kackha said that Ukraine wants a cooperative solution. “We work only on a positive agenda with the EU. And I hope we will integrate Ukraine into the EU internal market ASAP,” he stated.

With the duty-free access of Ukrainian goods expiring in June, the European Commission has yet to decide on the next step. Politico reports that the most likely solution would be to update the 2016 free-trade agreement. However, this plan is currently opposed by France and Poland.

Mr Kachka dismissed concerns from countries like Poland and Hungary, saying that they are politically motivated rather than economic. Although he did not make it clear what countermeasures Ukraine could take if there would be trade barriers, Politico writes that it could mean restrictions on EU products going into Ukraine. This would pose a serious problem for European industries that rely on Ukrainian buyers.

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Hungary has long been opposed to allowing Ukrainian goods, especially agricultural products, to enter the European market.

In an interview last December with NAKlap, the newspaper of the Hungarian Chamber of Agriculture, Prime Minister Viktor Orbán said that Hungary would not support any measures that go against the interests of Hungarian farmers. Specifically, he criticized EU plans that open the market to Ukrainian agricultural products.

In February, at a joint protest by the agricultural chambers of the V4+ countries, Zsolt Papp, president of the Hungarian Chamber of Agriculture stated that they are ready to take action on the threat of trade liberalization with Ukraine. He recalled that

compared to 2020, the volume of vegetable products imported from Ukraine has now increased 30 times, and the volume of processed products has also increased several times, which is “devastating the European market.”

Ukraine’s accession to the EU could have serious, irreversible consequences, as it would make EU agricultural production impossible and deprive Member States, including Hungary, and Hungarian farmers of a significant share of EU agricultural subsidies, he added.

He pointed out that Ukraine’s accession would also have a serious impact on the EU’s common agricultural policy, as Ukraine has 41 million hectares of arable land. Thus, Ukraine would add 41 million hectares to the 157 million hectares of European land currently eligible for support, and would become the biggest beneficiary of agricultural resources, pocketing about a third of the CAP’s total budget from the common fund, cutting into the income of EU farmers, including Hungarian farmers, who have been complying with strict EU rules for many years.

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