More of a symbolic step from the EU: expert on raising customs duties on Russian and Belarusian goods

From 1 July, the EU will significantly increase duties on certain Russian and Belarusian agricultural products. Will this open up more favorable conditions for Ukrainian goods?

Valentyn Lytvynov, an analyst at the Food and Land Use Research Centre of the Kyiv School of Economics, spoke about this on Hromadske Radio.

«Agricultural products in the structure of Russian exports in monetary terms accounted for a maximum of 3% in the best years. It is not normal for Russia to export a lot of mineral products. Metals, chemicals, precious stones, and metals are the most important for Russia. Agricultural products do not play a major role, although Russia holds quite high positions on world markets, especially in grains, oilseeds, and processed products.

Here they are our direct competitor. They had most partners among the following countries: China, the Emirates, Kazakhstan, Turkey, Uzbekistan, and Jordan. A special place is occupied by Egypt. In our exports, too, because it is the gateway to Africa. European countries have never had a large share in Russian agricultural exports, mainly because they grow a lot themselves and have traditional trade partners of their own: Ukraine, Brazil, etc.«

According to Valentyn Lytvynov, the increase in duties on some Russian and Belarusian agricultural products is a political rather than an economic step.

«In 2023, the Russian Federation supplied grain to European markets worth 450 million euros. This is not significant money for Russia or the EU. But the introduction of such restrictions as a political gesture is important. Whatever one may say, 450 million euros is money, taxes. This money would somehow end up in the Russian military-industrial complex.

It was a bit of political schizophrenia. Because on the one hand, European countries are helping Ukraine, on the other hand, they are trying to limit Ukrainian exports, but at the same time, they continued to buy agricultural products from Russia. In 2023, Russia supplied almost the largest amount of grain to the EU in five years.«

An analyst at the Centre for Food and Land Use Research at the Kyiv School of Economics says that even a slight increase in the price of products (including duties) automatically leads to these products becoming uncompetitive in a particular market.

«Accordingly, in this case, Russia will not be able to export to European countries at market prices. Another issue is that they can subsidize such exports to European countries and work at a loss in order to supply something and possibly exert political influence. But from an economic point of view, this makes no sense. Moreover, there are other countries that are ready to buy their products. We predict that Russian agricultural exports to the EU will stop altogether, and they will simply reorient themselves to other markets.«

Will this open up new opportunities for Ukraine?

Valentyn Lytvynov believes that the increase in duties on some Russian and Belarusian agricultural products will most likely have no impact on anyone. The market will balance itself. This is more of a symbolic step, a step of solidarity with Ukraine.

On 24 June, the Council of the European Union approved the 14th package of economic and individual restrictive measures (sanctions) in response to Russia’s armed aggression against Ukraine. This was reported by the press service of the EU Council.

Among other things, the EU will ban the transshipment of Russian liquefied natural gas in the EU for the purpose of transporting it to other countries. This includes both ship-to-ship and ship-to-shore transportation, as well as transshipment operations. This will not affect imports but only re-exports to third countries via the EU.

In addition, the EU will ban new investments, as well as the provision of goods, technology, and services for the completion of liquefied natural gas projects under construction, such as Arctic LNG 2 and Murmansk LNG. Restrictions are being introduced on imports of Russian gas through EU terminals not connected to the natural gas system.

To counter the re-export of munitions found in Ukraine or critical to the development of Russian military systems, it was decided that EU operators selling such munitions to third countries should introduce due diligence mechanisms to identify, assess, and mitigate the risks of re-export to Russia.