According to EC estimates, the move will cost the European Union (EU) about €500m per year, of which about €400m is accounted for by the agricultural sector. For pork, beef and poultry the European authorities plan to establish quotas within which imports will be carried out free of duty.
"The final decision on the matter has not yet been taken, but we expect the EU will remove barriers before the economic section of the Free Trade Zone agreement is signed, which is scheduled for the end of May, just after the Presidential election. This step will allow Ukraine meat producers to increase meat exports to the EU by up to 200,000t per year, starting with poultry," noted Ukraine’s Ministry of Agriculture and Food.
The EU may open its markets as early as next week. However, EU authorities will be paying close attention to ensure products from other countries, filed under the guise of Ukrainian products, are not supplied to the EU. If too many such products are detected, the decision to open the market could be cancelled, say EC officials.
Also, analysts doubt that Ukrainian meat producers will really take a significant share of the European meat market.
"In fact, it is unclear who will conquer and who will be conquered. What matters is that the removal of trade barriers would be beneficial for large companies like MHP Agromars and APK-Invest, which have good margins and account for a significant market share [of Ukraine’s meat industry]," commented analytical agency Agrorukom. "However, businesses with low profitability will not be able to deliver their products for export and it will be difficult for them to compete with European products – even in Ukraine itself. After complete removal of the barriers, many of them would not be able to withstand such competition."
In addition, by integrating with the European community, Ukraine may lose access to the markets of the Customs Union. Earlier, Russian President Vladimir Putin said Russia would be forced to think about protecting its own market if the Ukrainian authorities signed the Free Trade Zone agreement with EU.
"We will be forced to close our market," said Putin. "Opening Ukraine’s market to European goods and the simultaneous adoption of EU technical standards could lead to Ukrainian products being pushed out of their domestic market.
"So where would these products go? We fear that they would be squeezed into our market – the Customs Union, the markets of Russia, Kazakhstan and Belarus. But this would create problems for our economy," added Putin.