Putting its words into action, the Russian government last week moved to slash the country’s 2012 import quotas for pork and poultry by thousands of tons. But experts say the move, though widely expected, could hurt Russia’s WTO accession talks and deal a blow to U.S. livestock and poultry exports to Russia. Starting next year, Russia plans to import about a third less pork and poultry, but may keep the quantity of imported beef at this year’s level, according to a government directive published on Thursday.
Russian Prime Minister Vladimir Putin signified his strong backing for the measure during a July 22 working visit to Novo-Stupino. Next year, he said, Russia will only import 350,000 tons of poultry, which represents the difference between the volume of domestic production and consumption. « We, that is, Russia, will consume 3.5 million tons of chicken and other poultry this year. And we will produce 3.15 million tons this year. So we will have a shortfall of approximately 350,000 tons of poultry. That is the amount we will import this year, » Putin said, according to a transcript posted on his Web site.
Putin went on to say that “pork consumption forecast for 2011 is three million tons and, taking into account domestic production figures, the shortfall of 600,000 to 650,000 tons will be plugged thanks to imports. » He added that « chicken production is expected to increase by 330,000 tons next year and pork imports will be substantially reduced because we expect to increase pork output. » While pork and poultry imports are normally subject to a 15 percent customs duty, those in excess of the quota will be subject to a prohibitive tariff of 75 percent of their customs value to discourage foreign meat exporters, Putin said.
Last week’s directive reduces quota allocations for the importation of poultry by 28.5 percent to 250,000 tons, 100,000 tons less than the quota for the current year. But for the first time, the government allocated a separate import quota of 80,000 tons for chicken minced meat, and experts say that would soften the sharp cuts in poultry imports by reducing it to just six percent. However, the deepest cut, close to 32 percent, will remain on import quotas for pork meat, a subject of intense negotiation between Russia and the United States. This will bring down import volumes from 472,000 tons in 2011 to 320,000 tons next year, according to the new directive.
Though Russia is not competitive in global markets for red meats and poultry, and its domestic production has not kept pace with consumption, top officials have repeatedly said that the growing volume of domestic production plus new imports would be enough to meet its domestic demand. Over the years, the expected growth in domestic supply has not been enough to plug the shortfall in imports, Kommersant daily said Friday. Despite the fact that pork production will only increase by 100,000 or 120,000 tons this year, according to the Ministry of Agriculture, the import quota for 2012 has been slashed by 152,000 tons, the newspaper said.
But such warning signs have not stopped the country’s pork and poultry producers from endorsing the latest measure, which some say reflects the current meat market situation in Russia. “Domestic poultry production is on the rise,” said Andrei Terekhin, the president of the Association of the Russian Poultry Meat Market Operators. “And the government has just made a clever move to regulate imbalances in the meat market by giving chicken minced meat a separate quota.”
The move, though, may still hurt Russia’s plans to join the World Trade Organization this year, experts say. Economic Development Minister Elvira Nabiullina told an economic forum in June that « significant disagreements on meat imports » between the United States and Russia remain and could push back Russia’s WTO accession plans for years. Russia, she said, is not satisfied with WTO conditions on meat imports, such as high quotas on imports of meat and resetting a number of customs duties, which may lead to dumping on the meat market and create difficulties for domestic meat producers, RIA Novosti reported.
Russia’s $1.2 trillion economy remains the largest outside the WTO, even though Russia has been negotiating its entry for 17 years. President Dmitry Medvedev, who has hoped that Russia would join the world trade body this year, said last week that Russia will not withdraw state subsidies for farmers if it joins the WTO. In past statements the Russian prime minister also suggested that Moscow may not join the world trade body if it poses considerable risk to domestic producers. Last month, Putin stated that Russia won’t budge on rules for vehicle assembly for major global manufacturers to win WTO entry.
Since 2003, when Russia first imposed tariff-rate quotas (TRQ) on meat and poultry imports, the United States and other meat-exporting WTO member countries have been expressing stiff opposition, claiming that the restrictions would slow the process of Russia’s accession to the WTO. The United States and others specifically argued that Russia was violating the “standstill” principle, under which countries applying for WTO membership are to refrain from imposing new trade restrictions during the accession process. Russia countered that it was imposing the restrictions to protect its domestic meat producers from import surges, a right that is enjoyed by WTO members.
Russia may well consider other parameters on livestock and poultry imports in its talks with WTO members if both sides show willingness to compromise, Putin said. « We have been conducting talks with the WTO for 15 years and intend to search for a compromise, » Putin said. « Agreements are always about compromises and we will be looking for compromises. » Musheg Mamikonyan, who leads Russia’s meat producers’ lobbying group, said he was fully satisfied with Russia’s progress in WTO negotiations. The current reduction in quotas, he said, will protect investments in a large number of domestic farms, including Miratorg, Prioskolye and Cherkizovo. “It will give new farms time to grow and adapt to the market,” Mamikonyan said.
source: http://russiaprofile.org/business/42057.html
By Tai Adelaja
