Poland's blockade of Ukrainian borders for the import and transit of Ukrainian agricultural products is caused by a number of political and economic aspects, and may not be lifted so quickly. However, the European Commission's involvement in the negotiations is a positive development.
"The EU is actively discussing the blockade issue, and this is a positive signal. However, what has been happening between Ukraine and Poland in economic terms since May, in particular the import ban, shows that not everything can be resolved quickly. Recently, we received an update that Poland is not going to lift the ban on imports of a number of Ukrainian goods. Why is this happening? There are several aspects to understand. The first one is political. Today, a new coalition government has been formed in Poland, and over the past 10 years, the previous government has managed to consolidate many of its "own" people, including among NGOs, which continue to act in the old way despite the new instructions of the Cabinet of Ministers," explained Denys Marchuk, the UAC Deputy Chairman.
One of the factors is an economic one, a plan of preferences for Polish domestic producers.
"If you look at the requirements once again formulated by Polish farmers, they include subsidies for corn cultivation, the possibility of extending the lending system on preferential terms, and the opportunity for Polish producers to work fully within the limits of the taxes that exist today. In fact, we see a situation that is expected to be resolved in the near future. Because there were statements from Poland that they were ready not only to verbally support Polish producers, but also to sign the agreement. Relevant communications took place between Ukraine and Poland at the level of deputy ministers and the Poles keep emphasizing that they are looking for a way out of the situation," added Denys Marchuk.
The factor that will greatly hinder the lifting of the blockade on the borders with Ukraine is the reluctance of Polish producers to give way to Ukrainian goods in the Eurozone markets.
"An important point to keep in mind and not to expect that everything will be resolved quickly is that in recent decades, the Poles have been quite active in monopolizing the Eurozone market in terms of selling their products. At the same time, even in a difficult time for Ukraine, our producer is still competitive and is successfully starting to sell its products on the European market. Poles see a lot of competition from Ukrainian goods. All the benefits they have received in recent years-subsidies, support-have given them the opportunity to be present on the market. Ukrainians, on the other hand, enter the market without support, only at the expense of quality and slightly lower prices. That is why one of the ways the Polish side decided to close part of the Eurozone markets to Ukrainian products was to illegally use border blocking methods. Such methods are illegal, as they contradict all Eurozone norms, Ukraine's agreements with the EU, and the principles of European integration that we have committed ourselves to in the context of Ukraine's political accession to the EU in the future," the UAC Deputy Head emphasized.
The European Commission has the opportunity to take concrete measures to lift the blockade.
"The European Commission's position should not be just a bureaucratic response, but should be followed by certain steps. These could be fines, sanctions, including political decisions that would encourage the Polish side to take a more active approach to the blockade problem. For example, with regard to the import ban, we understand that it is not such a large share of Ukraine's economy. But if you look at the transit ban, it is a large volume, and moreover, this ban creates difficulties for the usage of the Eurozone infrastructure in the context of exporting Ukrainian products to third countries," said Denys Marchuk.
Ukraine is already suffering significant losses as a result of the blockade, but its continuation threatens to result in non-fulfillment of contracts in 2024 and bankruptcy of Ukrainian enterprises.
"The financial losses from the blockade are enormous, and if we add the import ban that started in May to the blockade, it's already several billion euros. The blockade alone, according to the Association of European Carriers, has resulted in losses of more than EUR 1.5 billion. We are losing both funds and prospects. Ukrainian producers, distributors, and logistics companies have been able to build commercial relations with other countries. But when the borders are blocked, we cannot fulfill contracts for 2024, and many have lost their sales prospects for 2024 because of the queues at the border. This is an indirect loss for Ukrainian business. If the blockade of the Ukrainian-Polish borders continues, we will see bankrupt businesses, including those in the agricultural sector," summarized Denys Marchuk.
European chains that did not receive Ukrainian products on time due to the border blockade will accept the Polish equivalent. That is, the reasons for the blockade are deeper than just getting subventions for corn growing, as Polish farmers claim.
Friday, 5 January 2024