EU Will 'Shoot Itself in the Foot' With Tariffs on Russia, Belarus Grain Imports
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Despite eagerly cobbling together package after package of sanctions targeting Russia over the Ukraine crisis, Brussels has up until now resisted pressure from Poland and the Baltic states to restrict Russian and Belarusian food imports.
Officials in Brussels will be “shooting themselves in the foot” by imposing tariffs on grain imports from Russia and Belarus, Arkady Zlochevsky, President of the Russian Grain Union, told Sputnik.
“In effect, they will create complications for their own consumers, and not for us; they [grain tariffs] will not really affect us,” he said.
The EU is gearing up to slap tariffs on grain imports from Russia and Belarus, according to the Financial Times. The European Commission is ready to levy a duty of 95 euros per ton on cereals from the two countries, with tariffs of 50 percent on oilseeds and derived products, according to quoted EU officials.
Brussels hopes that the duty, set at the maximum level allowed by World Trade Organization rules, "will lead to an increase in prices by at least 50 percent and destroy demand,” added the report. It indicated that these figures still needed to be finalized. The tariffs would cover only produce for consumption within the 27-member EU bloc, and not grain bound for other destinations in Asia and Africa.
Unlike the self-harming sanctions that the EU has been slapping on Russia over Ukraine, tariffs would only require majority EU support, the FT pointed out, which is why EU trade commissioner Valdis Dombrovskis is likely to opt for the measure.
EU commission president Ursula von der Leyen said on Friday that she was “evaluating the possibility of introducing restrictions on the import of agricultural products from Russia”.
But the introduction of a duty would not hurt Russian grain exporters, Zlochevsky explained.
“For the grain market this is not critical at all. Moreover, the main volumes that Russia supplied pertained to durum wheat, export of which is currently under an internal government ban,” said the expert.
Last year, Russia introduced a temporary ban on durum wheat exports until May 31, 2024, in an effort to enhance food security and stabilize the domestic price of goods made from it, which include spaghetti.
It will be enough for Russia to simply redirect the volumes of supplies that went to Europe to more promising markets in the Middle East and Africa, Russian media reports have suggested.
But for some European processors, the ban on the import of Russian agricultural products could become extremely unpleasant for the markets of Italy and Spain. This season, Russia set a record for grain exports — primarily durum wheat — to Italy, where it is used to produce pasta.
As for oilseeds and derived products, about two-thirds of the rapeseed meal and one-third of the sunflower meal that Russia exports are supplied specifically to EU countries, Russian media say.
“This [tariff] will affect either oilseeds or various meal, which is a derived product of oilseed processing," Zlochevsky said. "However, there are limited markets for the latter. Take [Russia's] linseed flax: it is supplied to the European Union and China. If the EU cuts off this supply option or imposes a tax, then only China remains. So this measure will likely affect oilseed processors, and not cereal growers.”
The FT report also highlighted that the total EU imports of Russian grain, oilseeds and products processed from them reached a record mark of 4 million tons in 2023, adding up to 1 percent of the total consumption in the EU.
Russia's Federal Customs Service does not currently publish detailed statistics, notes Finam FG analyst Ignat Ivanov. But of those 4 million tons that Russia supplied to the EU, about 70 percent, according to Ivanov, were oilseeds, and only 30 percent were wheat.
According to European Commission statistics on grain trade, published at the end of February, Russia is consistently among the top-ranking countries exporting grain to the EU. In the first half of the current agricultural year (July-December 2023), according to preliminary data, about 17 million tons of grain were imported into the EU from third countries. Of these, 50 percent came from Ukraine (8.5 million tons), another 16 percent was imported from Brazil (2.8 million tons), and 8 percent from Canada (1.3 million tons). Russia accounted for 6 percent of European grain imports (1 million tons).
EU sanctions packages against Russia have avoided targeting food imports up to now, but some individual countries have raced ahead. Latvia was the first, imposing a unilateral ban on agricultural and animal feed imports from Russia and Belarus at least until 2025 in February.
Polish Prime Minister Donald Tusk warned that Poland could follow suit, but would “prefer that we decide together, as the whole EU, on sanctions on Russia and Belarus on food and agricultural products.”
It was also claimed that the introduction of an import duty on Russian grain would have a “calming factor” on months-long farmer protests across the EU.
After the Ukraine conflict escalated, the EU lifted all tariffs and quotas on Ukrainian foods, justifying the move as necessary to ease global supply, including to Africa. But later it emerged that most Ukrainian food exports went to Europe alone, helping to counteract food price rises in the bloc caused by sanctions on Russia. To shield their farmers, the countries of Eastern and Central Europe, including Poland, reached a compromise with the EU to temporarily ban Ukrainian agricultural products. The ban was later extended.
But what kind of consequences can tariffs on Russian, Belarus grain imports have for European countries?
“They [Brussels] are making the best of a bad business — a classic option,” Zlochevsky suggested.
“They need to report that measures have been taken: ‘There, we have slapped duties on Russian supplies.’ But take a moment to compare the volumes. Since the beginning of this year, our supplies to the EU totaled 108,000 tons, while Ukraine’s imports amounted to 2,400,000 tons,” he said.
Furthermore, the European Union reached a provisional agreement on granting Ukrainian food producers tariff-free access to its markets until June 2025, the European Parliament said in a statement on Wednesday. But there is an “emergency brake” on eggs, poultry, sugar, oats, maize, groats and honey. The latter signifies that tariffs could be imposed if imports exceeded the average levels in 2022 and 2023.
As Brussels falls over backwards to extend a favorable regime for Ukrainian supplies for another year while targeting Russia’s supplies, it will not be Moscow that will bear the brunt of this. The EU-Ukraine solidarity will continue to backfire on the continental bloc's farmers.
“Just as European farmers suffered, so they will continue to suffer,” Zlochevsky concluded.
The EU and other West-aligned countries supporting the NATO proxy war in Ukraine have increasingly weaponized trade. Russia, on the other hand, has honoured its commitments to supply grain to African states.
On July 18, the Black Sea Grain Initiative, which provided for a humanitarian corridor to allow exports of Ukrainian grain over the past year, expired after Russia chose not to extend its participation in the scheme.
Moscow has repeatedly criticised the deal as its provisions regarding Russia have not been fulfilled. However, Russia is able to replace Ukrainian grain and will continue to supply grain and fertilizers to African countries despite sanctions, Russian President Vladimir Putin said last year.
Russia sent 200,000 tonnes of wheat to African countries such as Burkina Faso, Zimbabwe, Mali, Somalia, the CAR and Eritrea from November 2023 to January 2024, Russian Foreign Ministry spokeswoman Maria Zakharova said this January.
