To reduce its economic dependence on Russia, the EU has imposed higher tariffs on fertilisers and agricultural products. The aim is to reduce Russian revenue, but it could impact on food prices in the EU, which worries farmers.
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00:00The EU continues to reduce its economic dependence on Russia.
00:18Higher tariffs are expected to be applied to fertilizers and some agricultural products.
00:23The regulation also aims to reduce Russia's economic revenues that can lead to rising food prices in the EU, which is a concern for farmers.
00:34A dilemma that we will discuss in this week's EU Decoded.
00:37The tariffs will apply to products from Russia and its neighboring ally Belarus, which has facilitated the military action against Ukraine.
00:46Russia supplies 25% of the EU's nitrogen fertilizers worth 1.3 billion euros per year.
00:52From July 1st, these fertilizers will be subject to tariffs ranging from 6.5% this year to levels close to 100% by 2028.
01:03In addition, 50% tariffs will be imposed on agri-food products from both countries, such as meat, dairy, fruit and vegetables.
01:12European fertilizer producers are happy to have a bigger market share.
01:17However, farmers are worried that the prices of these products will increase, since Russia is a major global producer and sells them at cheaper prices.
01:26Let's hear what some Europeans think about this issue.
01:30According to this issue, the price of these products will increase, because without these products, the production will be very limited.
01:38Now, we are looking for other solutions. We are looking for organic work.
01:41We are looking for agricultural products and such.
01:43So if the military measures are not going to result, the economic measures will have to enter in function.
01:52It's a prejudice for all the parts, for the Russia that can't put fertilizers,
01:59for the European people who need fertilizers and they don't have experience to use.
02:04It's going to be a compensation, because who can't be the agricultor and the consumer final
02:10is going to be in charge.
02:12Euronews reporter Gerardo Fortuna will help us understand the impacts of these measures.
02:18The US imposed barriers on imports of Russian goods since the full-scale invasion of Ukraine three years ago.
02:26Why now the focus on fertilizers?
02:29There's a strong moral and strategical rationale.
02:33Russia imposes 23.5% export tax on fertilizers,
02:40which means that by buying these products, the EU is indirectly financing the war in Ukraine.
02:48And of course, by imposing tariffs now, the main goal is to make it unattractive for Russians to export these products,
02:55but also to European farmers to buy these products.
02:58European fertilizers sector welcomed the moves, saying that they have been badly hit since the war.
03:06What is at stake for the domestic sector in terms of producing fertilizers?
03:12The European fertilizers manufacturers are deeply concerned about the Russian imports because, of course, they are cheaper,
03:20particularly the nitrogen-based ones.
03:22And despite the war, there has been an increase of imports from Russia.
03:27There's also an environmental aspect because the production of fertilizers has roughly half of the carbon intensity of the Russian manufacturing of fertilizers.
03:39So by importing these fertilizers from Russia, we also drive emissions up.
03:43On the other hand, farmers are worried. Why are they so worried?
03:48And can the European Commission assume some mitigation measures for them?
03:52You have to balance the geostrategic interests with the real things that farmers are suffering.
04:00Of course, by imposing tariffs, you distort the market and you eventually drive prices up.
04:06There are some mitigation measures.
04:08At the moment, they are not considered good enough by European farmers to cope with the expected increase of prices.
04:17The most likely scenario is that farmers will be squeezed by the increase in production costs
04:23and the impossibility to raise the final price for consumers.
04:29Europe remains highly import-dependent.
04:32For nitrogen fertilizers, imports accounts for 32% of demand.
04:37To reduce the risk of price spikes, the EU could reduce tariffs on other fertilizer suppliers, such as the U.S. and countries in North Africa and Central Asia.
04:46Finally, the tariffs will not affect the transit of fertilizers and agri-food exports from Russia and Belarus to third countries
04:53in order to avoid disruption of supplies, especially to developing countries.
04:58Our guest is MEP Enese Vaedere from Center-Right EPP Group and rapporteur on this regulation.
05:06Will the EU fertilizers producers have enough time to ramp up their production in order to meet demand and to avoid price spike of these products?
05:18You know, our fertilizers producers in European Union already now have lost a lot of their plants.
05:27They stopped their activities due to these cheap imports from Russia.
05:31And now, as we calculated, there's at least 3 million tons spare capacity over the 8 million tons which has been exported to other countries.
05:44If something happens, we can also turn to another mitigation sources, for example, to lift some export and import duties from other countries.
05:56Farmers here rising food prices in terms of their own production. So, can this be avoided or offset somehow?
06:07Commission is obliged to monitor every month prices because prices, this is also our interest.
06:14You, me, you are paying for agricultural products and if the prices rise, we will be paying more.
06:21So, Commission is obliged to monitor every month and to do something if this price increase will be dramatic.
06:31This could be subsidies or other types of supplies?
06:33Could be subsidies. From the beginning of the war already, if I am not mistaken, some 500 billion euros have been spent already to help the farmers.
06:47Commission knows what to do.
06:48The US recently decided to cut all Russian fuel imports by 2028. Should the EU think about other ways in order to choke Russia's economy?
07:01You know, in my eyes, we have to do much more.
07:06And I am enthusiastic and I provided also the plan for European Commission how to confiscate the sources of Russian assets, which are mostly in Belgium's bank.
07:19Now we can use for Ukraine only profit from these assets, but confiscation of these assets could help Ukraine more.
07:26Wonderful. Thank you very much, Madam.
07:28Gas is an essential ingredient for fertilizer production, so the EU is indirectly targeting this Russian asset as well.
07:38However, Russian is the world's largest producer of fertilizers, with its main markets being Brazil, India, the US, China and Indonesia.
07:47Even so, for the EU, these are not only economic imperatives, but also ethical ones, given the war in Ukraine.
