Brussels proposes to tax Russian grain to “dry up” Moscow’s revenues which allow it to finance the war in Ukraine

The European Commission proposed, Friday March 22, to impose customs duties on Russian agricultural products imported into the European Union (EU), which are currently exempt, to the great dismay of European farmers. “We have seen these imports increase significantly in 2023. These prohibitive tariffs will make them commercially unviable”preventing them from “destabilize” the European market, announced Trade Commissioner Valdis Dombrovskis.

“It will also help put an end to the Russian practice of illegally exporting stolen Ukrainian grain to the EU (…) and to dry up an important source of income allowing [à Moscou] to finance its war of aggression” against Ukraine, he underlined in a communicated.

Agricultural products coming from Belarus, a close ally of Moscow, will also be targeted. On the other hand, these high customs duties will not concern the transit via the EU of cereals and other agricultural products destined for third countries, for example in Africa or the Middle East, in order to “preserve global food security”, underlines the Commission. Fertilizers are also not targeted.

If the European Union taxes Russian agricultural products, “European consumers will suffer”for his part, denounced the Kremlin spokesperson, Dmitri Peskov, on Friday.

A 50% duty

Russia exported a total of 4.2 million tonnes of cereals, oilseeds and derived products to the EU in 2023 (including 1.5 million tonnes for cereals alone), for a value of 1.3 billion ‘euros. Volumes are much more limited for Belarus (610,000 tonnes, worth 246 million euros).

Under World Trade Organization (WTO) rules, most Russian agricultural products, particularly cereals, are so far exempt from customs duties in the EU, and the few taxed products are very lightly taxed. .

In the various sets of sanctions adopted against Moscow after the invasion of Ukraine in February 2022, the Europeans were careful not to target either the agricultural sector or fertilizers. They feared destabilizing grain trade around the world and weakening the food security of countries in Asia and Africa, very dependent on Russian agricultural power.

“The new tariffs are designed to be high enough to discourage current imports. Depending on the specific product, they will either increase to 95 euros per tonne or a 50% duty. depending on the products, explains the European executive. In addition, Russia and Belarus “will no longer have access to WTO cereal quotas granted by the EU, which offer better tariff treatment for certain products”he adds.

Faster process

This proposal, which comes against the backdrop of a movement of anger among farmers across Europe, will have to be ratified by a qualified majority of Member States, i.e. at least fifteen countries representing 65% of the EU population, but will not require not the approval of MEPs. An easier and faster process than the adoption of a total embargo, which would require the unanimity of the Twenty-Seven.

The current situation outraged kyiv: “We note that, unfortunately, Russia’s access to the European agricultural market remains unlimited”, “without restrictions”deplored the Ukrainian President, Volodymyr Zelensky, on Thursday during a videoconference with the Twenty-Seven.

“When Ukrainian grain is thrown on the roads [par des agriculteurs polonais mécontents], Russian and Belarusian products continue to be transported to Europe (…). It is unfair “he denounced.

For their part, the Czech Republic, Poland and the three Baltic states are calling for a complete ban on grain imports from Russia and Belarus.

“We consider it imperative to fulfill our moral obligation to block any potentially reinforcing activity” Russia, the agriculture ministers of these five states declared earlier this week, in a letter to the Commission consulted by Agence France-Presse.

Last month, Latvia already banned the import of food products from Russia and Belarus.

The volumes of Russian cereals imported by the EU remain at least ten times lower than those imported from Ukraine, and constitute only a tiny part of European consumption. However, European grain producers, particularly in France, are worried about seeing Russia drag down world prices and upset trade balances.

Encouraged by kyiv’s difficulties in delivering its cereals and oilseeds, Moscow has, in fact, launched a vast commercial offensive in Africa and the Middle East, among other things through highly publicized donations.