Joint Statement

We, the Ambassadors of the Federal Republic of Germany, the Kingdom of the Netherlands, and the United States of America wish to convey our concerns regarding the implementation of grain export restrictions by the government of Ukraine. The Ukrainian government's efforts over the past month to limit exports of wheat, barley, and corn have unnecessarily disrupted the normal functioning of markets. The restrictions on exports are causing serious damage to Ukraine's economy, its investment climate, and its reputation as a reliable trading partner.

Ukraine's grain traders are already facing losses in excess of one hundred million dollars, while farmers have been denied access to world market prices and have incurred storage costs for unsold grain. Although the Government of Ukraine has promised that these polices are temporary, we believe that the situation on the grain market is now at a critical juncture, and recommend an immediate repeal of grain export restrictions. In the wake of the Economic Court's decision overturning the government's quota policy, we understand that all export of grain has come to a standstill.

Our countries strongly support Ukraine's efforts to achieve prosperity and economic security by attracting foreign investment and integrating more fully into the world economy. We regret that the government has undertaken policies that seem to undermine those efforts. The export restrictions are inconsistent with the spirit of Ukraine’s laudable efforts to join the World Trade Organization (WTO).

We are particularly concerned by the negative long-term consequences this policy could have on Ukraine's investment climate. Grain traders in Ukraine have invested nearly one billion dollars into the economy to build and upgrade important infrastructure, such as port facilities, silos, grain elevators, and processing plants. These companies are also significant employers, accounting for approximately 15-20 thousand jobs in Ukraine. They have helped modernize and develop the Ukrainian agricultural sector, have made significant contributions to the communities where they do business, and are among Ukraine's largest corporate taxpayers. Some of these companies have already been forced to begin laying off workers and reducing their operations in Ukraine. The financial losses they are now enduring because of the trade restrictions come at a time when grain traders have received only a fraction of the VAT refunds that are due them. At present the State Tax Administration owes grain traders at least $130 million in VAT refunds.

It is regrettable that the government of Ukraine decided to interfere with the grain market rather than making extra efforts to work with the firms in the sector to address any potential supply problems. We are also concerned that the government's decisions on how to allocate the quotas among traders did not proceed in a fair and transparent manner.

While we understand the Ukrainian government's concerns for food security, the justifications for grain export restrictions have not been convincing. Estimates from a variety of credible sources indicate that this year's wheat harvest is in line with normal historical averages at around 14 million tons. Despite the availability of wheat, the State Grain Reserve made no new purchases grain in the month since the export restrictions were announced.

We also fail to understand how food security can explain the government's decision to limit exports of feed grains such as barley and corn. Ukraine's barley crop, according to all available estimates, is significantly higher this year than last year. Ukraine’s farmers should be able to take full advantage of international markets to sell that crop.

We recommend that the government of Ukraine repeal the harmful export restriction policies.