Explanatory Memorandum to COM(2025)34 - Modification of customs duties applicable to imports of certain goods from or exported directly or indirectly from Russia and Belarus - Main contents
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| dossier | COM(2025)34 - Modification of customs duties applicable to imports of certain goods from or exported directly or indirectly from Russia and ... |
|---|---|
| source | COM(2025)34  |
| date | 28-01-2025 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The purpose of the present proposal for a regulation, in line with the European Council conclusions of 17 October 2024 1 , is to increase the customs duties applicable to imports of certain agricultural goods that are currently classified under Chapters 1, 2, 4 to 24, 29, 33, 35, 38, 41, 43, 50, 51, 52 and 53 of the Combined Nomenclature (CN) as well as of certain fertilisers currently classified under Chapter 31 of the CN, originating in or exported directly or indirectly from the Russian Federation or the Republic of Belarus. The proposal significantly and with immediate effect increases the applicable import tariffs for the agricultural goods from the Russian Federation or the Republic of Belarus, while the tariff increases for the fertilisers will take place gradually, over a transition period of three years. In addition, those goods that originate in or are exported directly or indirectly from the Russian Federation or the Republic of Belarus would be barred from access to the Union’s tariff rate quotas.
In 2023, Union imports of the agricultural goods from the Russian Federation covered by the proposed regulation (‘the concerned agricultural goods’) amounted to 2.9 million tonnes, with a value of EUR 380 million (according to Eurostat data). The Union’s erga omnes tariffs (i.e. the currently applied most-favoured-nation tariffs) on those concerned agricultural goods vary greatly. No trade is taking place in agricultural goods that already incur high most-favoured-nation tariffs. By contrast, agricultural goods from the Russian Federation that incur no or only relatively low most-favoured-nation tariffs are still being imported into the Union because there is no substantial most-favoured-nation tariff barrier to their entry into the Union’s market.
In 2023, the types of fertilisers covered by the proposed regulation (‘the concerned fertilisers’) represented over 70% of overall fertiliser consumption in the Union. According to Eurostat, imports from all third countries amounted to 14 million tonnes, and these included imports from the Russian Federation that amounted to 3.6 million tonnes (worth EUR 1.28 billion) – so over 25% of the Union’s total imports (by tonnage). Union producers meet the rest of the Union’s demand for these types of fertilisers, and the Union’s exports to the rest of the world of these products totalled 8 million tonnes in 2023. For all the concerned fertilisers, the Union’s erga omnes tariffs (i.e. the currently applied most-favoured-nation tariffs) are set at 6.5%, which is a low rate and not a significant hindrance to importing them from the Russian Federation into the Union.
The current importation of the concerned agricultural goods and fertilisers constitutes a dependency on the Russian Federation which could, if not addressed, impair the Union’s food security and, especially in the case of fertilisers, make the Union particularly vulnerable to potential coercive actions of the Russian Federation. Imports of the concerned fertilisers from the Russian Federation are already increasing and this increase could accelerate if significant volumes are re-oriented to the Union, given that the Russian Federation produces very large volumes of the concerned fertilisers. Such potential increased imports from the Russian Federation would disrupt the Union’s market in those goods and harm the Union’s nitrogen fertilisers producers who are facing difficulties to compete with imports from the Russian Federation at a time when gas prices in the Union remain high. The long-term survival of the Union’s nitrogen fertiliser industry is crucial for the Union’s food security because the fertilisers in question are essential for plant growth and play a critical role in maintaining the ability of the Union’s agricultural sector to produce food. Therefore, addressing the growing dependency on imports of the concerned fertilisers from the Russian Federation and preserving the viability of an autonomous Union nitrogen fertiliser industry is vital to ensuring and maintaining the Union’s food security. The present level of imports of the concerned agricultural goods is not comparable with that for the concerned fertilisers, but the current state of relations between the Union and the Russian Federation means that dependency should be prevented from developing in the future. However, it is not possible to ensure that this does not happen if the tariffs on concerned agricultural goods remain at present levels.
The proposed tariff measures would ensure that the Russian Federation does not benefit commercially from continuing to export to the Union. This would be consistent with the Union’s interests and with the Union’s law and policies, especially those applied towards the Russian Federation and the Republic of Belarus in the context of the Russian’s Federation’s unprovoked and unjustified aggression against Ukraine and the support which the Republic of Belarus continues to provide to thereof.
The Republic of Belarus exports limited quantities of the concerned agricultural goods and fertilisers (EUR 92 million of agricultural goods and EUR 29.6 million of fertilisers in 2023). It is therefore not an important producer or exporter of those goods. The scope of the proposed regulation nevertheless includes the Republic of Belarus due to its close political and economic ties to the Russian Federation and in order to prevent the illegal and fraudulent channelling of imports from the Russian Federation through the Republic of Belarus that could occur if the Union tariffs on imports of concerned goods originating in or imported from the Republic of Belarus were to remain unchanged. Given the continuing rapprochement and increasing trade between the Republic of Belarus and the Russian Federation, it is appropriate to treat the concerned goods from the Republic of Belarus in the same way as those from the Russian Federation.
The proposed regulation would increase tariffs for the concerned goods originating in or exported directly or indirectly from the Russian Federation or the Republic of Belarus to a level high enough to halt the importation of these goods. For all the concerned agricultural goods, tariffs on imports from the Russian Federation and the Republic of Belarus to the Union would increase by an ad valorem duty of 50%. To avoid the entry of the concerned agricultural goods originating in or exported directly or indirectly from the Russian Federation or the Republic of Belarus into the Union market at the lower rates applicable under Union tariff rate quotas, it is also necessary to exclude goods originating in or exported directly or indirectly from the Russian Federation and the Republic of Belarus from the application of reduced tariffs under those quotas. For the concerned fertilisers, on top of the existing ad valorem duty of 6.5%, the tariff would be subject to an additional specific duty that would gradually increase, starting at EUR 40 or EUR 45 per tonne, depending on the type of fertiliser (corresponding to approximately 13% in ad valorem equivalent), to a prohibitive level of EUR 315 or EUR 430 per tonne respectively, three years after the start of the proposed regulation’s application (a level of about 100% in ad valorem equivalent). Within the three-year transitional period, these prohibitive level tariffs will also be introduced in the event goods from the Russian Federation and the Republic of Belarus are imported above certain specified volumes.
The proposed regulation is not expected to negatively affect global food security. Firstly, the increase in Union tariffs would apply only to imports into the Union and would therefore not affect the transit of the goods concerned from the Russian Federation or the Republic of Belarus through the Union territory to third countries. Secondly, the increase in the Union’s import duties is expected to substantially reduce the flows of these imports into the Union, thereby actually increasing the quantities of concerned goods available to third countries – and particularly to developing countries.
• Consistency with existing policy provisions in the policy area
The imposition of import tariffs on the goods concerned pertains to the Union’s Common Commercial Policy laid down in Articles 206 and 207 of the Treaty on the Functioning of the European Union (TFEU). It corresponds to ‘changes in tariff rates’ as provided for in Article 207(1) TFEU and builds on the option of denying most-favoured-nation treatment to products originating in the Russian Federation that was reflected in the ‘Joint Statement on Aggression by the Russian Federation against Ukraine with the support of Belarus’ made by the Union and several other Members of the World Trade Organization in Geneva on 17 March 2022 2 . This has already been put into practice in several regulations, including the regulation through which the Union has imposed higher tariff rates on imports of certain agricultural goods from the Russian Federation and the Republic of Belarus 3 .
• Consistency with other Union policies
The proposed increases in customs duties on certain agricultural goods and fertilisers originating in or exported directly or indirectly from the Russian Federation and the Republic of Belarus listed in this proposal would be consistent with the restrictive measures taken by the Union against these countries following the Russian Federation’s unprovoked and unjustified military aggression against Ukraine and the support which the Republic of Belarus continues to provide to the Russian Federation’s aggression. The tariffs increases in this proposed regulation would therefore comply with the requirement under Article 21(3) of the Treaty on European Union to ensure consistency between the different areas of the Union’s external action. They would also comply with Article 207(1) TFEU, which provides that the Common Commercial Policy is to be conducted in the context of the principles and objectives of the Union’s external actions.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The legal basis for the proposal is Article 207(2) of the Treaty on the Functioning of the European Union.
• Subsidiarity (for non-exclusive competence)
The Common Commercial Policy is, in accordance with Article 3(1)(e) of the TFEU, defined as an exclusive Union competence, so the subsidiarity principle does not apply.
• Proportionality
This proposed regulation is necessary in order to implement the Common Commercial Policy, with the objective of decreasing the Union’s imports from the Russian Federation and the Republic of Belarus. This reduction is driven by concerns that these imports deepen the existing dependencies and therefore have a negative impact on the Union’s food security. The proposed regulation is consistent with the principle of proportionality and does not go beyond what is necessary in order to meet the objectives of the Treaties, in particular the need to ensure that the concerned agricultural goods and fertilisers originating in or exported directly or indirectly from the Russian Federation and the Republic of Belarus do not disturb the Union market for those goods and the proper functioning of the Customs Union. Those goods should therefore not have access to the Union market on terms that are as favourable as the terms that apply to imports of such goods from other third countries. Proportionality is ensured by the fact that the proposed regulation would increase the Common Customs Tariff duties applicable to imports from the Russian Federation and the Republic of Belarus and by the fact that this is necessary to limit such imports where the current tariffs are either set at zero or are low. The increase is necessary to reduce the ability of the Russian Federation and the Republic of Belarus to weaponise their exports to the Union. The proposed increase of tariffs limits the exercise of certain fundamental rights, but does so only to the extent necessary to achieve its objectives.
• Choice of the instrument
This proposal is in accordance with Article 207(2) TFEU, which envisages Common Commercial Policy measures for enacting changes in tariff levels in the form of a regulation.
3. RESULTS OF EX POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex post evaluations / fitness checks of existing legislation
Not applicable.
• Stakeholder consultations
Not applicable.
• Collection and use of expertise
Not applicable.
• Impact assessment
In light of the current ability of the Russian Federation to use its export of certain agricultural goods and particularly the concerned fertilisers to destabilise the Union markets, negatively affect the Union’s food security and undermine the Union’s unity in supporting Ukraine; as well as in light of the Republic of Belarus’ support for the Russian Federation’s actions, it is important for the proposed regulation to enter into force urgently in order to increase as soon as possible the duty rates applicable to concerned goods from the Russian Federation and the Republic of Belarus. No impact assessment has therefore been carried out for the proposed regulation. It is expected that the proposed measure will significantly reduce the importation into the Union of the concerned goods originating in or exported directly or indirectly from the Russian Federation and the Republic of Belarus, and that this will result in further diversification of sourcing those goods away from the Russian Federation and the Republic of Belarus.
• Regulatory fitness and simplification
The measure does not disproportionately increase the regulatory burden on companies and public authorities.
• Fundamental rights
The proposal is consistent with the Union’s human rights policy and with the Charter of Fundamental Rights. Where the imposition of import duties affects, in the Union, the freedom to engage in international trade as part of the freedom of professional activity, the right of property or other fundamental rights including equal treatment, this imposition can be considered a legitimate action by the Union that is in conformity with the Charter of Fundamental Rights. This is because this action is taken in conformity with the requirements for the action to be taken on the basis of a proper legal basis; by the competent authorities; and in pursuit of the legitimate objective of placing at a commercial disadvantage imports of certain goods from the Russian Federation and the Republic of Belarus in order to foster diversification of supplies away from those two countries by promoting more Union domestic production and alternative imports from other third countries. The proposed regulation would also prevent serious disturbances of the relevant markets and weaponisation of exports of the concerned goods by the Russian Federation and the Republic of Belarus; and would ensure the proper functioning of the Union’s markets in a manner that would be consistent both with the Union’s current external action measures and with the principle of proportionality. Specifically, with regard to equal treatment, the fact that increased import duties are imposed on importers of certain agricultural goods and fertilisers originating in or exported directly or indirectly from the Russian Federation or the Republic of Belarus – but not on importers of goods that neither originate in nor are exported directly or indirectly from the Russian Federation or the Republic of Belarus – responds to one of the Union’s external action objectives. This is the Union’s legitimate policy objective of reducing such imports from the Russian Federation and the Republic of Belarus, and of protecting the Union’s markets from an abuse of the trade in the concerned goods that is intended to destabilise the Union’s markets or the Union’s political stability and solidarity.
4. BUDGETARY IMPLICATIONS
The proposed regulation would have no financial impact on expenditure and only a very limited financial impact on revenue. Upon full application of the proposed regulation, the collection of increased customs duties corresponding to the proposed increases would be expected to be minimal (close to zero) because the proposed increase in duties is likely to reduce the import flows from the Russian Federation and the Republic of Belarus to negligible volumes.
Conversely, some budget losses could be expected because the own resources generated for the Union’s budget would probably decrease. The exact value of the budget losses would depend on how the imports from the Russian Federation and the Republic of Belarus would be replaced. On the one hand, replacing these imports by domestic production within the Union or by preferential imports (particularly of fertilisers from Algeria and Egypt) would result in a reduction of own resources. On the other hand, replacing them with increased imports from other third countries that are not preferential partners would not reduce own resources because these extra new imports would generate the same level of Common Customs Tariffs as the imports from the Russian Federation and the Republic of Belarus that they would be replacing. Once the proposed regulation is fully in application, the effect on the Union budget’s traditional own resources is therefore estimated to be a loss of up to EUR 84 million (i.e. 75% of the total 2023 tariff revenue of EUR 112 million) in a scenario where all the existing Union imports from the Russian Federation and the Republic of Belarus are replaced by the Union’s domestic production and preferential imports.
The loss of revenue in traditional own resources upon full application of the measure would be compensated by the Member States’ Gross National Income (GNI) based on resource contributions. However, it is expected that, during the first three years of application of the proposed measures, additional tariff revenues linked to higher tariffs on the remaining imports of nitrogen-based fertilisers from the Russian Federation or the Republic of Belarus would partially or possibly even fully offset the revenue losses associated with lower imported volumes. One could therefore expect that, during this initial three-year period, the net loss of revenue for these goods in traditional own resources would be close to zero.
The legislative financial statement sets out the budgetary implications of the proposed regulation in greater detail.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
On-line reporting on the development of Union imports of concerned agricultural goods and fertilisers originating in or exported directly or indirectly from the Russian Federation and the Republic of Belarus is available on dedicated websites of the European Commission (Eurostat) 4 .
• Explanatory documents (for directives)
Not applicable.
• Detailed explanation of the specific provisions of the proposal
The proposed regulation would prevent certain agricultural goods and fertilisers originating in or exported directly or indirectly from the Russian Federation and the Republic of Belarus from accessing the Union market on terms that are as favourable as the terms that apply to imports of those goods from other origins. It would do so by raising import duties on all those goods – by an ad valorem duty of 50% for agricultural goods and by gradually increasing tariffs on fertilisers by a level starting at EUR 40 or EUR 45 per tonne (depending on the type of fertiliser) until the additional tariff reached the level of a prohibitive tariff of up to EUR 315 or 430 per tonne three years after the start of application of the restrictive measures. Within the three-year transitional period, these prohibitive level tariffs will also be introduced in the event goods from the Russian Federation and the Republic of Belarus are imported above certain specified volumes. In addition, those goods that originate in or are exported directly or indirectly from the Russian Federation and the Republic of Belarus would also be barred from benefiting from the Union’s tariff rate quotas for those goods. Those tariff rate quotas provide access to the Union market at a lower tariff level than the proposed new tariffs.