About 98% of the customs duties that Ukrainian iron, steel, farm produce and machinery exporters pay at EU borders will be removed by a proposal backed by European Parliament on Thursday. This unilateral measure will boost Ukraine’s struggling economy by saving its manufacturers and exporters €487 million a year.
"The European Parliament has supported an EU path for Ukraine for many years. This is our first chance to demonstrate our support in practical terms, to help Ukraine during its current economic crisis in the face of dwindling currency reserves and increased pressure from the Kremlin", said rapporteur Pawel Zalewski (EPP, PL).
"As Putin closes Russian markets for Ukrainian exports, we are opening them" he added.
The European Parliament backed his proposal by 531 votes to 88, with 20 abstentions.
Which tariffs will be cut?
This unilateral trade measure, set to apply from May 2014, will remove 94.7% of EU tariffs currently charged on industrial goods imports from Ukraine and reduce them for the remaining handful of industrial goods.
It will also remove EU tariffs on over 80% of Ukraine’s farm produce exports. However, the EU will restrict the amounts of “sensitive” products, such as cereals, pork, beef, poultry, and processed food, that may be imported tariff free, so as not to harm the interests of EU producers of these products.
A temporary and unilateral measure
This EU trade “preference” measure does not require Ukraine to reciprocate by removing its own customs duties on imports from the EU, but will require it not to raise them.
EU imports from Ukraine will nonetheless have to comply with EU rules on origin labeling and the Ukrainian authorities will have to ensure that third country goods disguised as Ukrainian ones do not enter the EU via Ukraine.
The measure also entitles the EU to reimpose tariffs if imports from Ukraine flood the EU market in volumes that cause, or threaten to cause, serious difficulties to EU producers of the same goods.
It would apply from the date when it is finally approved until 1 November 2014, or until the EU-Ukraine association agreement, including a deep and comprehensive trade deal which foresees bilateral liberalization of trade, enters into force.
The measure still requires the formal approval of the EU Council of Ministers. EU foreign policy chief Catherine Ashton has already announced that the preferences “will start to be applied within a few weeks”.
Procedure: Co-decision, first reading agreement