EC mulls punishing Poland for blocking transit of Ukrainian trucks

EC mulls punishing Poland for blocking transit of Ukrainian trucks
The EC is considering punitive actions against Poland after local truckers block the border for Ukrainian trucks / bne IntelliNews
By bne IntelliNews November 20, 2023

Ukrainian truckers are facing daily losses of €300 due to the ongoing blockade of the Polish border by Polish truckers, according to the Association of International Motor Carriers, UBN reported on November 20.

The blockade, which started earlier this month, has resulted in a 90% reduction in border traffic and has both economic and political implications.

Polish truckers are protesting against the end of a permit system last year that restricted the number of Ukrainian trucks that can cross the border. They complain that the large increase of Ukrainian trucks traversing Poland on their way to EU markets has significantly reduced the amount of work for Polish truckers, already hurting from the loss of deliveries to the Russian market, due to sanctions.

The blockade is a grassroots protest and not official Polish policy, but it comes in the context of another trade dispute between Ukraine and Poland: a ban on the import of Ukrainian grain imposed by Warsaw, which crashed the local Polish grain markets in April.

While Warsaw is a steadfast supporter of Ukraine in its fight against Russia, trade relations have been prickly due to the impact of Ukrainian trade flowing out of the war-torn country to EU markets after most restrictions on Ukraine’s export to the EU were suspended after the start of the war.

The blockade of the border has raised concerns, and if the Polish authorities do not resolve the border blockage issue promptly, the EC may take punitive measures against Poland. The EC emphasises the need for the free movement of goods, especially for the transportation of trucks through the “corridors of solidarity.”

Ukraine is running a massive budget deficit and is desperate for foreign exchange earnings from exports at a time when Ukraine’s funding is in increasing doubt as US support wanes.

The EC is currently assessing whether the actions of the Polish authorities constitute a violation of the EU regulation on the liberalisation of trade with Ukraine, which includes provisions for transport visa-free access. This regulation is in effect until June 30, 2024.

Negotiations are underway with all parties involved in the conflict, but the EC's official stance is that restoring a system of permits or quotas for road transport is not legally possible, as it contradicts an agreement on road transport between Ukraine and the EU. Brussels, not the EU’s sovereign governments, has control over trade policy and sets the rules. However, Warsaw has already defied an order by Brussels to lift the ban on grain imports, after a temporary ban expired on September 15.

Ukraine relies significantly on its trade with Poland, with 11.5mn tonnes of goods exported this year (61% through Poland) and 13.8mn tonnes of goods imported (42%). The ongoing border blockade has disrupted these trade flows and incurred substantial financial losses for Ukrainian carriers.

The dispute threatens to widen, after five other Central European countries demanded that Brussels revise the transport agreement with Ukraine to restrict the number of trucks going through their countries as well.

On November 20, members of the International Road Transport Union (IRU) from Hungary, Poland, Slovakia, the Czech Republic and Lithuania will send a joint letter to the President of the European Commission, Ursula von der Leyen, calling for a review of the transport agreement with Ukraine, Bloomberg reported.

The current agreement expires in June 2024, which "seriously distorts the market and causes irreversible damage to Hungarian and EU carriers,” according to the trucking union.

Some IRU members will also send letters to their governments.

The freight carriers want this deal cancelled or, at the very least, not extended.

This will make it possible to return to the implementation of bilateral agreements between individual EU countries and Ukraine.

The European Commission has emphasised that re-introducing permits or quotas for road transport from Ukraine is legally impossible, as it would violate the current agreement between the EU and Kyiv.