Ukraine Proving An Unreliable Trade Partner As China Sourced Goods To Poland Are Refused Transit
Kiev displaying a lack of pragmatism as Estonia can provide alternative routes to EU as regional tensions mount
The inconsistent approach by Ukraine to its international obligations has taken another strange turn with it blocking rail shipments transiting the country from entering Poland. This has come at a time when Ukraine is reaching out to the EU and United States to assist with diplomacy as concerns perceived threats from Russia.
Poland’s state railway operator claims that its Ukrainian counterpart has been blocking rail shipments to the country for weeks in an “unprecedented” move. It notes that Poland is the only country targeted and argues that the decision breaches international trade agreements.
Andrzej Olszewski from the board of Polish State Railways (PKP), a state company, said on Tuesday (January 18) that supply chains through Ukraine have been blocked since 30 November 2021 because of the ban. He said PKP was “struggling” with its operations on the Polish-Ukrainian border and was unsure how long the situation would last.
The decision by Ukrainian Railways (UZ) reportedly blocks all shipments sent from 15 countries, including China, Russia, and Kazakhstan, to Poland with transit through Ukraine.
Kiev has claimed that the situation has resulted from renovation work on the railways. It also says that Poland has not been taking back empty wagons as required, leading to them “accumulating on the Ukrainian side”. The news comes shortly after Ukraine itself accused Poland, Kiev’s second largest trade partner of violating their free trade agreement by rejecting Kiev’s request to expand freight permits.
The news will frustrate Beijing, which signed off agreements to help Ukraine develop road, rail, and other infrastructure developments on June 30th last year. Ukraine is a member of the Belt and Road Initiative, and Chinese investors have been putting in US$2 billion per annum the past three years to help develop supply chains and ease congestions. Ukrainian political issues impacting on China sourced supplies to EU markets will not be seen as helpful to diplomatic, trade or investment relations and will lead China to look at alternative routes bypassing the Ukraine should the situation continue. Kiev will also lose out as it will lose valuable transit fees in an economy that is already suffering and is spending much-needed revenues on US weapons systems rather than its supply chain trade obligations.
That will have been discussed at Chinese Foreign Minister Wang Yi’s virtual meeting yesterday with Estonia’s Foreign Minister Eva-Maria Liimets, with Estonia taking a rather more conciliatory approach to Beijing than its neighbor Lithuania. Estonia can provide multimodal transport solutions to access Poland by sea and assist Chinese goods avoid Ukraine, a route which may become more useful should conflict emerge.
Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. The firm assists British and Foreign Investment into Asia and has 28 offices throughout China, India, the ASEAN nations and Russia. For strategic and business intelligence concerning China’s Belt & Road Initiative please email email@example.com or visit us at www.dezshira.com