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The EU has always believed that the EU works best when countries seek to join or trade with it, not necessarily after joining. The theory goes that over the course of the lengthy accession process, applicant governments would reduce their public debt, expose dusty corners of their economies to the sanitizing effects of single-market competition, and introduce the labor and environmental standards that Europe thinks it’s famous for, as well as Rule of law. More distant countries that are not eligible to join can gain market access and European values by signing preferential trade agreements.
Events this week suggest that confidence may be a little too much. Poland, Hungary and Slovakia have announced they will block food imports from Ukraine, in flagrant violation of EU and global trade rules. Ukraine is the most politically significant candidate for EU membership since 2004, when the first wave of former Soviet bloc countries, including these three countries, joined the EU. Countries have not fully demonstrated the rule of law training modules they have adopted to qualify for membership.
Not prepared to sit down and shut up for the sake of European unity, Ukraine immediately threatened direct retaliation and filed lawsuits against the three countries at the World Trade Organization.Given the strategic imperative to closely embrace Kyiv and the EU politicians’ comments last year on Opening the market to Ukrainian imports After the Russian invasion, this looks really bad.
It’s worth stressing that deliberate illegality may have been staged in part for the benefit of worried farmers, especially since both Poland and Slovakia hold elections within this month. If so, the conflict could still be resolved without the need for an extraordinary trade war or even a lawsuit at the WTO. Given the potential impact of competition from Ukraine’s world-class food producers, the government’s problems are not a figment of the imagination.
But there have been attempts to resolve the issue, and ultimately failed agreements. Four eastern European EU member states – the current three villains plus Bulgaria – blocked Ukrainian grain imports earlier this year. In May, the EU negotiated a messy and expedient interim deal involving country-specific import restrictions (extended to Romania) that itself violated the principles of single market unity. The restrictions were lifted last week in exchange for Ukraine agreeing to voluntary export curbs, but Warsaw, Budapest and Bratislava reneged on their EU side of the deal.
Of course, the Polish and Hungarian governments’ long-standing attitude towards the rule of law in their countries, including fair elections and independent judiciaries, has long been a source of concern to the European Commission and other EU member states. Their antics shake up the conventional wisdom that EU membership sets countries on an irreversible journey to liberal democracy.
Ironically, given Ukraine’s weak state capacity and widespread corruption, the implications of this for Ukraine’s own WTO accession are obvious. But even for Poland’s Law and Justice government and Hungary’s Viktor Orban, such blatant disregard for the EU’s single market and foreign trade commitments, despite Brussels loosely changing the rules, is a new starting point.
To be sure, the EU is not alone in having difficulty coordinating trade and geopolitical strategies. The United States finds itself constrained by Congress and public opinion from signing any substantive preferential trade agreements, even in the Asia-Pacific region that might help curb China’s influence. But the United States does at least have significant hard power: Kiev still relies heavily on its military support. For the EU, trade remains one of its main tools for exerting influence abroad, even as its geopolitical ambitions have expanded rapidly since the Russian invasion.Yet another spoonful of irony in the crisis surrounding Ukraine trade agreement The conflict with the EU ultimately led to Vladimir Putin’s annexation of Crimea in 2014.
While the EU has gone further and faster than at any time in its history in imposing trade and financial sanctions on Moscow, it has also exposed internal weaknesses. A handful of member states have restrained the EU from tightening controls, notably Greece, which opposes new trade restrictions on Russia to help its shipowners.
To be clear: Blocking Ukrainian grain exports will not undermine Kiev’s war effort, nor will it cause President Volodymyr Zelensky to abandon EU membership in disgust and switch to Putin’s arms. But it is troubling that the biggest challenge to the EU’s credibility in decades has not produced a more coherent and rules-bound response.
Ukraine’s peculiarities – a vast, poor country with weak governance but ultra-competitive farmers – have always made it difficult to integrate into the EU. As part of joining a union, it is likely that the obligations and privileges that come with joining a union will have to be revisited and new categories of membership may be created. This requires a lot of ingenuity and goodwill. It is not the right thing for Ukraine’s three neighbors to undermine the agreement and openly undermine EU and international law for their own short-term interests.
alan.beattie@ft.com
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