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Opening up to Ukraine exports feared

SOME SECTORS of Slovakia’s economy fear the easing of restrictions on imports from Ukraine to the European Union. The tariff cuts proposed by the European Commission on March 11 might harm Slovak firms as Ukrainian products may become cheaper and more competitive.

SOME SECTORS of Slovakia’s economy fear the easing of restrictions on imports from Ukraine to the European Union. The tariff cuts proposed by the European Commission on March 11 might harm Slovak firms as Ukrainian products may become cheaper and more competitive.

The Slovak Food and Agricultural Chamber (SPPK) has voiced concern that food and agricultural products from Ukraine may do damage to new EU member countries, especially those bordering Ukraine. It may also complicate exports of Slovak food to countries in western Europe.

“As exports from Ukraine to Russia have all but stopped, we can presume that they will be redirected largely to European markets and the Visegrad Group countries [the Czech Republic, Hungary, Poland and Slovakia] in particular, while western Europe will get nothing of it or very little at best,” said SPPK spokesman Stanislav Nemec, as quoted by the TASR newswire, on March 18.

He added that Ukraine has in fact lost all options to use the Black Sea ports for exports, and as trade with Russia has been limited “what will ensue is a brand new distribution of Ukraine’s exports that will be aided by fewer impediments to trade with the EU”, as cited by TASR.

Nemec pointed to a report released by the US Department of Agriculture last year which noted Ukraine as an important player on grain markets.

“While Ukrainian farmers are not selling much of their grain right now and prefer to store it in the country as a safeguard vis-a-vis Ukraine’s falling currency, at least some of them will need to empty their inventories to make room for fresh crops within a couple of months,” Nemec said, as quoted by TASR, adding that it may push overall prices down.

Producers of food should also be afraid of the lifting of restrictions, Nemec said. Ukraine belongs to the five biggest producers of honey, and it may also import poultry and poultry products, Nemec said on March 20. Though Ukraine has its own system of controlling the quality of food, the EU has not experienced it yet as most exports went to Russia, he added.

Nemec also said that the tariff cuts come at a time when countries are preparing for a new seven-year budgetary period and drawing their long-term plans. The EC decision might seriously interfere with this process, as no analysis of its impacts has been done.

“We do not doubt that Ukraine needs help, but it should not be done at the expense of the business sector,” Nemec said, as quoted by TASR.

Except for SPPK, Slovakia’s Pharmaceutical and Chemical Industry Association (ZCHFP) is also bemoaning the removal of customs duties from 94 percent of Ukraine’s industrial exports to the EU.
“Ukrainian chemical producers are not forced to observe strict requirements of European chemistry legislation REACH or impacts of other EU laws, especially in the environment, regarding the limits for emissions production,” Roman Karlubík, head of ZCHFP, told TASR. He added that Ukrainians also have cheaper energy inputs and a cheaper labour force.

Slovak chemical products will face the price pressure of Ukrainian products which often do not fulfil the same quality parameters, but which are also more attractive for customers, he said.
“Regarding chemistry, Ukraine is an important exporter of refined oil and nitrogenous fertilisers,” Karlubík said.

Though Slovak firms understand the efforts of the EU to help Ukraine and support political steps leading towards political and economic stability, these steps should be done in a sensitive way, he added.

“Political decisions have to be carefully considered and if they cause the worsening of competitiveness of traditional European, as well as Slovak, producers, they have to be compensated with other measures,” Karlubík told TASR.

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