Russia threatens us poultry imports over WTO accession

In a blatant power play, German Graf, The Minister of Economic Development of the Russian Federation bluntly informed the US Trade Representative Amb. Susan Schwab on August 8th that unless US acquiescence to the Protocol for entry of Russia to the WTO is received by the time of the late October meeting in Geneva, the Agreement of June 2005 on Tariff Rate Quotas would be set aside.

Quotas were summarily introduced by Russia in 2003, allegedly to support domestic production. The USA now stands to lose an assigned 75% of Russian poultry imports. During the first half of 2006 The Russian Federation imported 356,000 m tons of broiler legs valued at $185 million, representing a unit price of $519/ m ton. The quantity and total value for the first two quarters of 2006 were respectively 5.7% greater and 22.6% less than for the corresponding period in 2005. The unit price for broiler parts declined by 30% between 2005 and 2006. For the first half of 2006 the Russian Republic represented 28% of total US export volume of 1,240,000 m tons.

It is the contention of the US that entry of Russia to the WTO is contingent on resolution of outstanding problems relating to bilateral trade and intellectual property and independent on trade in meat and poultry. The US has adopted the position that reneging on the Tariff Rate Quota Agreement will complicate the finalization of bipartite negotiations between the Nations.

The Minister of Agriculture, Alexey Gordeyev expressed the opinion that the domestic industry could expand to compensate for any shortfall in supply of imported chicken. This is a highly speculative and politically acceptable but wildly optimistic assertion, given the current capacity of production and recurrent outbreaks of disease including AI which has yet to be controlled.

Before other exporters including Brazil indulge in schadenfreude over the US-Russia impasse they should recognize the principle of caveat vendor. Russia has proven to be an unreliable purchaser of meat and poultry. Agreements are regularly shredded and pseudo-science and red tape are invoked to impede shipments as it suits bureaucrats and their supporters.


By: Simon Shane