New EU tariff rate quotas for Ukraine: effect on exports
At the end of June 2025, the EU and Ukraine completed negotiations under the mandate of Article 29 of the Association Agreement on new tariff rate quotas (TRQs) for Ukrainian products. The new TRQs are likely to come into effect this autumn.
New vs old TRQs. Compared to the old TRQs applied under the DCFTA before June 2022, the new TRQs offer substantial adjustments. Four TRQs are abolished, and 26 enlarged, with the most significant changes set for honey, sugar, barley groats, and bran. Duty-free exports could increase by up to USD 630 m per year compared to the old TRQs setup.
New TRQs vs ATMs. Still, the new TRQs fall short of emulating the temporary duty-free access provided by the autonomous trade measures (ATMs), applied from June 2022 to June 2025. Ukrainian exports to the EU are estimated to decline by USD 1,144 m per year compared to 2024, with wheat exports accounting for the majority of the reduction. Other products suffering losses will be barley, poultry, eggs, sugar, apple juice, and honey. Although Ukrainian exporters are expected to reorient shipments to non-EU markets, total exports in nominal terms will contract by USD 253 m per year due to differences in prices and transportation costs between the EU and alternative destinations.
The new TRQs setup
The expiration of the ATMs in June 2025 prompted the EU and Ukraine to revise the outdated “old” TRQs, which were embedded in the DCFTA and agreed upon more than a decade ago. The talks under the mandate of Article 29 of the Association Agreement were swiftly completed at the end of June 2025, and the new TRQs will take effect in the autumn of 2025, following approval by the EU Council and the EU-Ukraine Association Committee in the Trade Configuration.
The new TRQs offer substantial modifications, as compared to the old setup. First, four TRQs were abolished entirely, and the coverage of another six TRQs was reduced. As a result, exports of yoghurt, mushrooms, grape juice, protein concentrates, and several other products, mostly manufactured food, have become duty-free on a permanent basis. Second, 26 TRQs were expanded, partly based on trade volumes from 2022 to 2024. The most substantial revision was for honey, sugar, barley groats, and bran. Third, products were reshuffled between TRQs to reduce crowding out within TRQs. In particular, a new TRQ on flour was established by reallocating this product from the existing “grain” TRQs on wheat, barley, and maize. Also, several TRQs were merged. The only TRQs with no modifications are those for beef, pork, and lamb, shipments of which are not made due to food safety restrictions, as well as TRQs on cigars and cigarettes.
New vs old TRQs
According to our estimates, if all new TRQs are fully utilised, the potential expansion of Ukraine’s duty-free exports to the EU would amount to USD 630 m per year. That is a 35% increase compared to the old TRQs setup. Ukrainian exporters could earn up to USD 165 m per year, fetching higher prices under the duty-free regime. Moreover, unlike the ATMs that had to be approved annually, the new TRQs reinstate long-term predictability into the EU market access conditions. As such, they not only influence the short-term orientation of exports but also could impact long-term investment decisions.
New TRQs vs ATMs
At the same time, although the new TRQs offer a considerable expansion compared to the old TRQs, for several products, they stay well below actual Ukrainian exports in 2024 under ATMs. The estimated reduction in Ukraine’s exports to the EU amounts to USD 1,144 m per year. Seven TRQs will bear the losses: wheat, barley, poultry, eggs, sugar, apple juice, and honey. Wheat exports will drop by USD 894 m per year, accounting for four-fifths of the total. Other noticeable reductions are expected for sugar, poultry, barley, and apple juice.
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For wheat, sugar, and barley, the new TRQs will be binding; i.e., exports are estimated to cease after the new TRQ level is reached.
Reorientation
As the new TRQs are insufficient to maintain the 2024 level of exports to the EU market for key products, we estimated the potential for Ukraine’s exports to be reoriented to non-EU markets for wheat, barley, poultry, eggs, sugar, apple juice, and honey.
Our estimate is based on two components:
- Price wedge, i.e. the difference between the unit value of UKR exports to the EU and non-EU markets, and
- Transport costs, i.e. the difference between the expenses required for shipping one ton to the leading destination in the EU and the leading destination outside the EU
Our estimate incorporates both desk research and interviews with exporters of these products. Based on that, we find that the yearly reduction of USD 1,144 m in exports to the EU will be partially offset by reoriented exports of USD 891 m to other destinations. Thus, the estimated yearly reduction in total exports (in nominal terms) amounts to USD 253 m, which is equivalent to 0.6% of Ukraine’s total exports in 2024. Higher transport costs for shipping wheat outside the EU explain most of the reduction in total exports. However, lower prices on alternative markets play a key role in reducing total exports for poultry, sugar, and apple juice.
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Conclusions
The TRQs revision under Article 29 mandate will soften the impact of the ATMs expiration on Ukraine’s exports to the EU. Fewer TRQs will cover fewer products, thus exports of more food products will become duty-free on a permanent basis. The remaining TRQs, with few exceptions, have been expanded, and products were reshuffled among TRQs to mitigate the crowding-out effects. Moreover, the new trade regime increases the long-term predictability of the EU market access.
At the same time, the new TRQs do not provide the same level of market access as ATMs. For seven products —namely, wheat, barley, poultry, eggs, sugar, apple juice, and honey —new TRQs are well below the 2024 export volume. Still, as Ukraine’s exporters are expected to ship all volumes that they could not sell to the EU to other destinations, the compound impact of two policy changes – the termination of ATMs and the revision of TRQs – will result in only a moderate drop in Ukraine’s total exports compared to 2024.
Veronika Movchan is the Research Director of the Institute for Economic Research and Policy Consulting
This newsletter is based on the Policy Study “New EU tariff rate quotas for Ukrainian products: effect on exports”.
