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Russian experts on WTO accession

Interfax, 27.11.06

Russia has protected its right to control the quality of pork and beef delivered from the United States at bilateral talks on Russia's accession to the World Trade Organization, Russian Agriculture Minister Alexei Gordeyev told Interfax on November 19.

"We insisted on guaranteeing the security of pork and beef deliveries. An agreement was reached that Russia will set strict control over the quality of products, taking into consideration possible risks brought about by fleshworm and Mad Cow diseases in the U.S.," the minister said.

This primarily deals with the fact that Russia protected the right to inspect U.S. exporters and authorize them to deliver products to Russia, he said.

"Should there be violations or even suspicions as far as the delivery of low-quality and dangerous products are concerned, we have the right to stop the import of such products, according to international veterinary standards," Gordeyev said.

In addition, the Agriculture Ministry reached an agreement with the Economic Development and Trade Ministry and the Federal Customs Service on providing veterinary and phytosanitary laboratories at border checkpoints where meat is imported with modern equipment that will enable them to carry out expert analyses and quickly determine whether the imported meat is safe and of high quality.

Commenting on the results of the talks in relation to agriculture as a whole, Gordeyev said that “only the first stage has been passed, and the second stage – talks on a multilateral basis – is significantly fundamental.”

“It’s important for us to retain the negotiating position announced by the Russian government on Russia’s right to [have a certain] level of state support for agricultural and, accordingly, a level of protective duties on food imports,” he said.

At present, this position protects the interests of Russian producers and is a mechanism that allows for reacting to the actions of unfair exporters as well as resisting dumping policies and the policy of large preferences that create an imbalance on the market, he said.

Gordeyev expressed hope that the wide range of mechanisms that the WTO uses will start being applied to Russia in the near future.

“This is particularly important in relation to agriculture since this branch is very specific and vital for the country. [This branch] ensures not only economic but social stability and the health of the nation,” he said.

The government needs to significantly strengthen its trade policy on both the domestic and foreign market in the near future and the appropriate ministries and agencies need to prepare a wide range of mechanisms that would contribute to the resolution of important tasks, he said.

The Russian Economic Development and Trade Ministry has published a statement detailing a number of agreements included in the protocol on the conclusion of bilateral talks on Russia's accession to the World Trade Organization signed by the Economic Development and Trade Minister German Gref and U.S. Trade Representative Susan C. Schwab.

"In the talks with the U.S., the standard Russian position was implemented in full, according to which, from the date of Russia's accession to the WTO, no duty is reduced, and the liberalization of tariffs on separate positions is to be implemented during transitional periods. These periods will be between one and seven years long. They take into consideration the sensitivity of specific positions for domestic sectors of industry," it says.

The tariff quotas for beef, pork, and poultry imports will exist as at present until 2009. After this, and following the conclusion of talks with the interested suppliers, their period of validity can be extended. "The period of prolongation is not restricted and depends on our position," the statement says.

"If Russia itself decides to give up tariff quotas, it will maintain a sufficient tariff protection of its meat market, higher than the current quotas," the statement says.

The compromise in the talks on the issues of veterinary control is founded on the principles that the U.S. government ensures the veterinary security of the produce delivered to Russia in accordance with the principles of the International Epizootic Bureau and Russian veterinary requirements. Russia permits U.S. product imports and has the right to check U.S. enterprises on the basis of procedures agreed with the U.S., it says.

Russia is also liberalizing the conditions for supplies to the Russian market of some fodders, vegetables and fruits that do not grow in Russia. The imports of raw-materials lacking for food industries will be facilitated.

The alcohol duty will remain unchanged. Duty tariffs on foreign wines, cognacs, champagnes and whisky will go down from 20% to 12%.

After Russian accession to WTO and the expiration of the transitional period, the average weighted tariff of Russian duties for farm produce will fall approximately 3%. A similar 3% reduction will concern industrial commodities import tariffs.

The Institute for Agricultural Market Studies (IKAR) general director Dmitry Rylko said a number of Russian agricultural sectors have already been functioning based on WTO standards for several years.

“Without noticing ourselves, we have been working on the meat market based on WTO requirements for a long time and the situation won’t change much before 2009 [when the U.S.-Russian agreement on poultry import quotas expires]. Everything will proceed according to the ‘schedule’ passed in April 2004,” when the agreement was signed, Rylko told Interfax.

In 2009, Russia will face complicated negotiations on the meat import regime, but the country will hold the talks as a WTO member, he said.

Import tariffs on white sugar and raw sugar have been agreed upon with WTO member countries for the period until 2012, he said.

On the one hand, he said, WTO membership will keep many branches from setting higher import tariffs, and the rates will be lowered slightly in a number of branches. “The procedure is painful but not fatal, particularly if we manage to maintain a decent level of overall support to agriculture in the final stages of the negotiations,” he said.

“On the other hand, joining the WTO will allow for more aggressively protecting the interests of domestic food exporters both on the internal market and abroad. Along with growth in food imports, exports are increasing as well and are totaling millions of dollars,” he said. For example, Russia set a record for vegetable oil exports in 2005 and last year’s record could be surpassed this year, he said.

At the same time, Rylko said that, despite the signing of an important bilateral agreement with the U.S., the negotiations still aren’t completed. More bilateral talks still need to be held and Russia still must go through the official procedure of joining the WTO, he said. “The detailed specifics of Russia’s negotiating position have yet to be disclosed, but based on the information that the negotiators have been releasing to the public, it can be assumed that there won’t be any serious worsening of the standing of domestic agricultural producers in any area of the talks compared to what they have right now,” he said.

At present, Russian agriculture receives some $4 billion from the budget, and the Russian delegation is insisting that the government have the opportunity to spend $9 billion on agriculture, he said. “No serious drop in import tariffs is envisioned, either, although it should be taken into account, of course, that our tariffs really aren’t that high compared to other countries,” he said.

In order to work properly as a WTO member and to fully use the advantages of membership in the organization, Russia must prepare qualified lawyers, economists and specialists in international affairs in the proper timeframe, he said. “At present, there isn’t a ‘critical mass’ of specialists who concentrate on agriculture in the country,” he said. In addition, he said all instruments and programs for state support to agriculture need to be rethought and ‘repackaged’ in order to strengthen measures of direct support and make them more efficient, that is, support should come from the budget and not from import tariffs, he said.

The completion of talks between Moscow and Washington on Russia's accession to the World Trade Organization will have a positive impact on poultry production in both countries, said Albert Davleyev, head of the Russian office of the USA Poultry and Egg Exporting Council (USAPEEC) and vice president of the International Poultry Development Program (UIPDP).

"The agreement will have a positive effect on the situation on the markets [of both countries] and mutual cooperation between Russian and U.S. poultry producers because it lays out the status of both import quotas and import tariffs, which will make it possible to forecast the development of the situation on the Russian market several years in advance," he told Interfax.

Moreover, he said, the document sets specific limits for veterinary and other requirements in relation to supplies from the U.S. and other countries. "This will allow U.S. investors and financial institutions, which have been looking at Russia as a potential market for growth in poultry production for a long time, to be more active in introducing new technologies and to support the more than impressive level of growth in Russian poultry production," he said.

Russia's accession to the WTO does not pose any threat to Russian poultry producers, he said. "First of all, the import tariff hasn't dropped by a single percentage point, this was an important achievement of the Russian negotiating delegation, and, secondly, the import quota has been set for the period until 2009, and the opportunity to extend this regime in the future has been preserved," he said.

Under these conditions, the market will become more predictable and stable, Davleyev said. "It is precisely this stability that will allow Russian poultry producers and importers to correctly set up a system for the distribution, marketing and promotion of goods from the market to the end consumer. The concern of domestic poultry producers will likely switch in the near future from protecting themselves to, let's say, developing new methods and strategies of work with wholesalers and large retail operators," he said.

In the next 5-10 years, Davleyev said, "the poultry market will develop rapidly and could lead to Russia exporting domestic poultry products. It is here that Russia will fully be able to feel the advantage of its accession to the WTO."

USAPEEC President Jim Sumner and National Broiler Council Vice President William Roenigk also offered praise for the agreement. They said in a joint statement that the two sides managed to successfully complete the complicated negotiations and sign an agreement that guarantees the observance of honest trade regulations. Their respective organizations will provide Russian with the maximum assistance in reaching final agreements on the WTO and on joining the world trade community, they said.

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