New EU Trade Policy: «Fortress Europe» and Challenges for Ukraine
The EU is shifting to a protectionist trade policy, creating a «Fortress Europe.» The Industrial Accelerator Act and new steel quotas, effective July 1, create barriers. This poses a challenge for Ukraine, limiting access to the European market, particularly for steel and agricultural products.
The European Union is shifting its trade policy, moving away from open trade principles towards an ideology of economic security and reciprocity. This is creating an «economic Fortress Europe» that will impact relations with trade partners, including Ukraine. Discussions about Ukraine's EU integration often overlook economic aspects, particularly the terms of access to the EU internal market. France has already said «no» to free access for Ukrainian agricultural products and Common Agricultural Policy subsidies.
A key element of the new policy is the EU Industrial Accelerator Act (IAA), presented by the European Commission in March and currently under consideration by the European Parliament and the Council of the EU. It aims to address challenges such as the declining share of manufacturing in EU GDP (from 17.4% in 2000 to 14.3% in 2025), a trade deficit with China of 360 billion euros in 2025, dependence on critical raw materials, energy scarcity, and the degradation of the GATT/WTO system.
The IAA introduces the «Made in Europe (Union Origin)» criterion for access to public procurement and aid in strategic industries (batteries, solar panels, wind power plants, nuclear, hydrogen energy, automotive, chemical). This criterion, combined with «low-carbon content» for energy-intensive industries, will become a powerful trade barrier that could block access to the European market for strategic rivals, as well as for Ukraine. Additional initiatives, such as the Regulation on countering «global overcapacity in the steel industry,» effective July 1, introduce permanent steel import quotas, halved. New quotas for Ukraine will be just over 60% of 2025 volumes.
The Carbon Border Adjustment Mechanism (CBAM) Regulation is being reviewed, extending its scope to new categories of goods (washing machines, refrigerators, motors). The European Commission is not applying the CBAM force majeure provision to Ukraine for the duration of the war. A new «trade differentiation» instrument is also being discussed to rebalance trade flows with third countries where a significant imbalance threatens the competitiveness of EU industry.