EU moves toward duty-free import quotas for Ukrainian grain

PARIS, April 9 Wed Apr 9, 2014 12:31pm EDT

PARIS, April 9 (Reuters) - The European Union this week moved a step closer towards the launching of duty-free imports of Ukrainian grains as part of a package of trade benefits to cement Kiev's historic shift away from Russia.

The 28-nation bloc is planning to give Ukraine manufactured products and other exports open access to its half billion consumers even before a proposed bilateral free-trade accord comes into force later this year.

In agriculture, however, the European Union set quotas on the volumes of duty-free imports of certain farm products including grains, meat, sugar and milk products to ensure that EU farmers are not harmed by the unilateral trade action.

"As part of the political and financial support that the EU decided to give to Ukraine, a Commission regulation was passed on April 8 opening tariff-rate import quotas for Ukrainian grains," French farm office FranceAgriMer, which had a representative at the meeting, said in a note on Wednesday.

EU ministers still must sign off on the EU's unilateral trade measures, a step officials said could come later this month.

Once approved, the duty-free quotas would be open until Oct. 31 for the import of 950,000 tonnes of Ukrainian wheat and flour, 400,000 tonnes of maize and 250,000 tonnes of barley, FranceAgriMer said.

Under the full free-trade deal, the quota volumes would rise within five years to 1 million tonnes for wheat, 650,000 tonnes for maize and 350,000 tonnes for barley, an EU official said.

MAIZE IMPORTS

The new quotas for Ukraine would be in addition to the EU's existing tariff-rate quotas for shipments from all countries of wheat, maize and barley. The maize quota is currently duty free, while wheat and barley imports under the quotas pay tariffs, after being duty-free in the two previous seasons.

The first half of the annual maize quota was exhausted in January, but another 138,994 tonnes will be open from July 1.

Ukraine's 2013/2014 grain exports are likely to reach an all-time high of 33 million tonnes, against 23 million last season, its farm minister said last month.

The exclusive quotas for Ukraine could potentially boost its position in the EU grain market, but FranceAgriMer said it expected Ukrainian volumes to shift from the existing quotas towards the new ones, rather than add up under both.

Maize has accounted for nearly two-thirds of Ukraine's grain exports so far this season, with shipments continuing at a fast pace despite political turmoil, ministry data showed.

The European Union is the top destination for Ukrainian maize, with southern Europe and the Netherlands among its top clients. It provides more than half of the EU's total maize imports, analyst Strategie Grains said.

Eurostat data showed that the bloc imported 7.5 million tonnes of maize from Ukraine last season, around 1 million tonnes of wheat and less than 50,000 tonnes of barley. (Additional reporting and writing by Sybille de La Hamaide; editing by Jane Baird)