Kyiv is calling on the European Union to extend the duty-free trade agreement, which expires on June 5, 2025. The Ukrainian government warns that if it is terminated, the country's economy could suffer "truly devastating" consequences, as exports to the EU bring in almost 10% of foreign exchange earnings.
The agreement to remove tariffs and quotas on Ukrainian exports was agreed by the EU after Russia's full-scale invasion in 2022. It was intended to support Ukraine's economy, which has been under severe pressure from the war. However, some EU member states have now begun to express concerns about the impact of the measure on their domestic markets.
According to the Financial Times, Ukraine has repeatedly asked Brussels to extend the agreement, as it is critically important for economic stability and financing defense efforts.
Why is this important for Ukraine?
Finance Minister Serhiy Marchenko emphasized in an interview with the Financial Times:
“The European Union is our key trading partner, and that is why it would be very devastating for us if we [were] in the situation that existed before the war.”
Exports to the EU provide Ukraine with vital foreign exchange, which is used to finance the state budget, social benefits and military needs. In 2024, export revenues to the EU under “autonomous trade measures” accounted for almost 10% of the country’s total foreign exchange earnings (about $41 billion).
Despite its strategic partnership with Ukraine, the European Union faces internal pressure from agricultural and industrial lobbies demanding to limit competition with Ukrainian producers. Poland, Hungary, and Slovakia are particularly active in this regard, where farmers have repeatedly protested against the import of cheaper Ukrainian agricultural products.
Brussels has not yet made a final decision, but time for negotiations is limited. Ukraine hopes that the EU will continue duty-free trade and not jeopardize one of the country's main sources of economic stability.
