Ukraine at talks with EU may reject subsidies to soften Green Deal requirements

Ukraine is ready to consider the possibility of rejecting agrarian subsidies of the EU in exchange for mitigation of the requirements of the EU green deal during the EU accession talks.

Source: an anonymous Ukrainian top official cited by Reuters, as reported by European Pravda

Details: The integration of a huge Ukrainian agricultural sector into the EU will likely be quite sensitive from both the political and the economic points of view.

Kyiv might obtain the right for the €96.5 bn of subsidies within the framework of Joint Agrarian Policy of the EU for seven years if current rules of the EU are applied to the EU countries after its extension.

Yet the European Green Deal, which sets the rules of agricultural activity for 27 EU member states for decades to come, may make doing business more complicated for Ukrainian farmers than if they worked without the EU subsidies.

"It seems to me that the ideal negotiating strategy (is to achieve) fewer restrictions on trade, fewer restrictions on the environment (for Ukrainian farmers) and we are willing to trade this for subsidies," the official said.

"We must protect our competitiveness, we must not make bureaucracy that would stop development, especially in our conditions, just to get 10 environmental certificates for some small thing, for example," a Ukrainian representative added.

The negotiations are held during a sensitive time when farmers all over Europe have been out in the streets protesting in the last few weeks. They protest against the EU Green Deal rules concerning the protection of animals and pesticides use, as well as against the necessity to leave 4% of agricultural land fallow.

Paying subsidies to Kyiv may also lead to cutting subsidies on agriculture for existing EU member states by approximately 20%, as reported by the Financial Times last autumn.

The mitigation of harsh ecological norms, new subsidies and decrease of taxes are main demands of the protesting farmers in the EU. They think that such steps will protect them from external rivals, such as Ukraine.

Many Ukrainian farmers believe that the EU accession will give them access to large subsidies which will increase their harvests and bring more income. Yet some officials say that subsidies may make it worse for Ukraine.

"I think it is a problem. Subsidies in agriculture very often play a bad role when they become a painkiller and you get used to them," a Ukrainian official said.

Ukrainian farmers could become less dynamic with subsidies, a source thinks. "When you live in a system of subsidies, you are tied to them. If you have a subsidy for carrots, then only carrots will be planted," he noted.

Background: In mid-January Ursula von der Leyen, President of the European Commission, announced that within the preparation for Ukraine’s EU accession talks the Commission initiates the pre-accession legislation screening process and creates a draft negotiating framework.

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