The European Union will not extend the suspension of import duties on Ukrainian exports set to expire in June, a move that could cost Kyiv billions in revenue, two sources familiar with the matter told Kyiv Post.
The EU’s Autonomous Trade Measures (ATM), adopted in the summer after Russia launched its full-scale invasion of Ukraine in 2022, removed tariff rate quotas on 36 categories of Ukrainian import goods to provide support to the country during the war. The current EU pause on duties on imports from Ukraine is active until June 5, 2025.
But the EU will not extend Ukrainian import duty-free status for another year, the sources, who asked for anonymity to discuss sensitive topics, told Kyiv Post. “It won’t be extended, that decision has already been made,” one source said.
Earlier this week, the European Delegation to Ukraine confirmed to Kyiv Post that Ukraine will transition from the ATM framework to the trade regime under Article 29. “This process aims to ensure economic stability and predictability for farmers and businesses in both Ukraine and the EU,” Nicolò Gasparini, spokesperson for the EU Delegation to Ukraine, told Kyiv Post by email.
Ukraine relies on exports within the ATM framework to secure crucial foreign currency to fund its military efforts. The country’s war-torn economy could lose around €3 billion ($3.4 billion) if the EU reinstates tariffs, Ukrainian agribusiness club estimated.
A second source confirmed that no EU renewal was coming and said that the Union will instead attempt to regulate commerce with Ukraine using the free trade agreement that came into action in 2017. “Instead, negotiations are currently underway under Article 29 of the Association Agreement regarding the revision of provisions related to tariff rate quotas,” the second source said.
Ukrainian media outlet European Pravda also reported last week that the EU will halt ATM regime extension, citing a source from Brussels.
Representatives from Ukraine’s Ministry of Economy did not immediately respond to a request for comment from the Kyiv Post.
Autonomous Trade Measures versus Article 29
Poland, Hungary, Slovakia, and Bulgaria are among the countries that oppose tariff-free trade with Ukraine, according to The Financial Times. Two years ago, they imposed unilateral bans on Ukrainian grain and other food imports, defying EU trade rules.
When the EU last extended its duty-free trade regime, some countries – including Poland, France, and Hungary – pushed for an “emergency brake” mechanism. Under this system, if Ukrainian imports of certain products – such as eggs, sugar, oats, and honey – exceeded set limits, tariffs would be automatically reinstated.
However, Poland appears to be the main driver behind the EU’s decision not to renew the ATM this year, Kyiv Post sources said, adding, “Poland just won’t give it a rest with these elections.”
Halting the Autonomous Trade Measure will decrease Ukraine’s agricultural export revenues. After the policy’s expiration, the EU will reimpose a tariff rate quota on the 36 categories of goods.
Unlike the US tariffs, tariff rate quotas mean tariffs are reimposed when Ukraine’s export volumes exceed a certain level.
“We do not have quotas for Ukrainian wheat and barley under ATM, whereas the free trade agreement limits wheat exports to 1 million tonnes. We exported 7.3 million tonnes last year,” the first source told Kyiv Post.
The EU recently activated the “emergency brake” mechanism, imposing tariff quotas on sugar imports from Ukraine. The tariff quotas caused producers to refocus on Asian and Middle Eastern markets, Kyiv Post previously reported.
The “emergency brake” on Ukraine’s sugar exports to the EU decreased from 97% of output in 2023 to just 40% last year. Some Ukrainian sugar producers complained that the EU no longer wants their production.
Without the ATM, Ukraine’s agricultural exports will become a subject of tariff rate quotas under Article 29 of the EU-Ukraine Association Agreement.
A potential silver lining
Until June 5, Ukraine will benefit from the duty-free trade policy, allowing limitless exports. This brought opportunities, but also political uncertainty.
Instead, switching to a free trade agreement may bring Ukraine an advantage – predictability, Veronika Movchan, research director of the Institute for Economic Research and Policy Consulting, told Kyiv Post.
Under Article 29 of the free trade agreement, Ukraine and the EU could reach a compromise establishing less restrictive tariff quotas or fully lifting them for all goods that are not considered sensitive, according to Movchan.
“I also don’t like not extending Autonomous Trade Measures, because we will lose export volumes. But a revision of the agreement under Article 29 would be a better outcome,” Movchan told Kyiv Post. “It makes the situation more predictable, lowers tensions, and reduces the costs associated with implementing changes and constantly lobbying for them.”
The EU primarily imports Ukrainian grain products, oil, and meat. In 2024, the value of two-way trade of agriculture goods between Ukraine and European Union nations reached a record $17 billion in volume, the Ukrainian National Scientific Center’s Institute of Agrarian Economics reported.
Poland and Romania have pressured the EU the most vocally to decrease Ukraine’s agricultural exports – despite being Kyiv’s largest agricultural trading partners in 2024 alongside Spain, the Netherlands, Germany, Italy, France, and Belgium.
Sending “half of agricultural exports to one trade partner is risky, including the fact that several countries in the EU are hostile towards Ukraine’s agricultural exports,” Roman Neyter, research associate at Kyiv’s School of Economics (KSE), told Kyiv Post. “It needs to be diversified.”
Now, Ukraine stands to suffer billions in losses by prioritizing its trade relationship with the EU over other economic partners. How Kyiv and Ukrainian businesses will make up for the higher costs of trade with Europe remains to be seen.
[CORRECTION: This article was corrected on April 18 to clarify which trade items would be affected by the tariff quotas and how this may impact Ukraine’s economy.]
[CORRECTION: This article was corrected on May 22 to clarify the source of around €3 billion of Ukraine’s losses if the EU reinstates tariffs.]