BRUSSELS — European Union ambassadors agreed on Friday to allow Ukraine’s grains into the bloc free of tariffs for another year, while granting more than $100 million in aid for farmers in neighboring E.U. countries where crop prices have collapsed with the flood of cheaper imports.
Four of those countries — Poland, Bulgaria, Hungary and Slovakia — had recently enacted unilateral bans on Ukrainian food imports in an effort to contain the problem. But the bans frustrated officials in Brussels and Kyiv, and illustrated how the E.U. tariff waiver, enacted last year to support Ukraine against Russia’s invasion, had created unintended consequences that threatened to disrupt the bloc’s united front on the war.
“We have a solution which is addressing the concerns both of farmers in neighboring member states and Ukraine,” Valdis Dombrovskis, the E.U. trade commissioner, said on Friday in a video announcing the deal, which made some concessions for E.U. nations affected by the glut of grain. Mr. Dombrovskis said it would include a financial support package of 100 million euros, or about $110 million, for farmers in neighboring member states, from an E.U. emergency fund normally reserved to compensate them in case of natural disasters.
“In return, the neighboring member states will be withdrawing their unilateral measures,” he said, referring to the Ukrainian import bans.
The European Parliament is set to give formal approval next month, and Ursula von der Leyen, the president of the European Commission, hailed the agreement as “a deal that preserves both Ukraine’s exports capacity so it continues feeding the world, and our farmers’ livelihoods.”
The lifting of E.U. tariffs was originally conceived as an emergency measure in response to Russia’s invasion: a way to create cheap, secure land routes to let vital supplies of grains out of Ukraine and to alleviate a global food crisis, worsened by Russia’s naval blockade of Ukrainian ports on the Black Sea.
The United Nations and Turkey brokered a deal with Ukraine and Russia that allows the transport of grain from some of those ports, but that mechanism must be renewed every three months and Russia said this week that it was considering pulling out.
The European Union’s decision to lift tariffs on Ukrainian grain spurred shipments to enter neighboring countries by road. But the policy backfired for Ukraine’s nearest E.U. neighbors. Tons of Ukrainian grain, significantly cheaper than E.U. equivalents, flooded those markets and, instead of traveling onward, was stockpiled in warehouses, causing prices in those nations to plummet.
The pain was felt instantly in Poland and other countries, where governments that have supported Ukraine faced protests from farmers, an important political constituency.
On Friday, the four countries that had enacted bans on Ukrainian grain, and Romania, secured several concessions from the European Union in order to agree to the extension of the tariff-free policy, Mr. Dombrovskis said.
Under the agreement, he said, certain types of Ukrainian grains — among them wheat and sunflower seeds — will only be permitted to transit through those nations on their way to other destinations, and not to be sold there. Officials hope that this will soften the effects on farmers in Ukraine’s neighboring states.
Details are being finalized and are likely to be adopted in coming days, Mr. Dombrovskis said.
The extension of the tariff exemption comes as Russia puts renewed pressure on the Black Sea grain deal first enacted last July.
Speaking at a news conference at the United Nations this week, Russia’s foreign minister, Sergey V. Lavrov, said the pact was in a “deadlock.” He repeated the Kremlin’s complaints that while the agreement to allow grain ships to come and go from Ukrainian ports was accompanied by assurances that Russian agricultural products and fertilizers would also make it to world markets, Western sanctions imposed because of the invasion still compromised Russian sales.
The Black Sea deal has come within days of expiring twice before, in November and in March. Each time, Moscow agreed to extend the agreement, but the most recent extension came with a warning: It said the renewed deal would expire in 60 days, on May 18, if the United Nations failed to resolve “five systemic problems” around Russian agricultural exports.
Russian officials have said that the grain deal unfairly favors Ukraine at Russia’s expense. This month they made a number of demands, including reconnecting Russia’s agricultural bank to the SWIFT payment system, which facilitates cross-border payments; lifting sanctions against fertilizer companies and people linked to them; and lifting restrictions on maritime insurance.
“We are listening to the parties’ views, and we are trying to resolve disagreements through discussions at all levels,” Farhan Aziz Haq, a U.N. spokesman, said on Thursday.
He added: “The more food and fertilizer is supplied to the world markets, the more we can mitigate the devastating effects of the cost-of-living crisis and benefit vulnerable populations across the world. We hope that all sides acknowledge the global benefit and value of those agreements and commit to supporting their continuation.”
Many analysts are skeptical of Russia’s demands, saying that the Russian economy — which depends above all on oil and gas — has managed to weather sanctions through large currency reserves, careful economic management and energy sales to countries like China and India.
In the specific area of agriculture, Russian farmers have even seen some benefits from sanctions, because competitive Western products have been largely excluded from the domestic market, said Timothy Ash, a Russia expert at BlueBay Asset Management in London.
He added that Russian demands to lift restrictions on maritime insurance had less to do with exporting grain than with Moscow’s desire to facilitate seaborne oil exports. The European Union and Group of 7 countries have barred Western maritime insurance providers from insuring ships carrying any Russian oil priced above $60 a barrel.
“The Russians are just trying to use the Black Sea grain deal to get leverage to soften sanctions on Russia more generally,” he said.
Cora Engelbrecht and Liz Alderman contributed reporting.
