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Russia blocking US meat over additives, West sees protectionism

Source: Thomson Reuters Foundation - Fri, 8 Feb 2013 06:37 PM
Author: Reuters
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* Russia veterinary body to ban U.S. beef, pork and turkey

* Russia cites use of growth stimulant ractopamine

* US says actions appear inconsistent with WTO commitments

By Melissa Akin

MOSCOW, Feb 8 (Reuters) - Russia's move to ban U.S. meat imports worth over ${esc.dollar}500 million each year, over a feed additive, will help domestic producers withstand an influx of cheap meat after Russia joined the World Trade Organization (WTO).

Western food producers believe protectionism, rather than concern about additives, is its primary purpose.

The influx has driven down pork prices in particular and threatens hundreds of millions of dollars of investment in modern pig farms to supply Russian consumers, who are eating more meat as oil-fuelled government spending drives up incomes.

Russia's Veterinary and Phyto-Sanitary Surveillance Service (VPSS), Rosselkhoznadzor in Russian, has said it will ban imports of U.S. beef, pork and turkey from this month because U.S. producers failed to agree to demands that their exports be certified free of a feed additive, ractopamine.

"Import is being restrained by the actions of Rosselkhoznadzor, and that is a stimulating factor for domestic production," Vladimir Labinov, the head of the livestock department of the Agriculture Ministry, said this week.

The United States made its opposition clear.

"These actions threaten to undermine our bilateral trade relationship," Andrea Mead, a spokeswoman for the U.S. Trade Representative's office, said last week.

"They are not consistent with international standards and appear to be inconsistent with Russia's WTO commitments."

Rosselkhoznadzor said U.S. producers had ample time to comply after warnings were issued early last year, well before Russia joined the WTO, over use of ractopamine, a growth stimulant used to produce leaner meat.

Brazilian and Canadian producers have promised to comply.

Some Russian officials say their country could have made more of the issue of the stimulant.

"We put ourselves at a technical disadvantage," Rosselkhoznadzor chief Sergei Dankvert told a meeting chaired by Agriculture Minister Nikolai Fyodorov. "We did not say anything, even though we knew about this ractopamine."

The United Nations Codex Alimentarius group has ruled ractopamine in meat was not harmful to human health at low levels, but some countries, such as China, still ban it.

A Western food industry source said the ractopamine ban was simple protectionism for domestic producers.

"It is part of the protectionist measures they are taking against all imports," the source said, adding the threat to bar other meats as well as pork was done for the sake of consistency.

"If you are going to take a decision on ractopamine, you have to be consistent."

It is not the first time Rosselkhoznadzor has faced accusations of protectionism.

The European Union complained openly of a "surge in protectionist measures" and lack of commitment to global trade rules last year after Russia banned imports of live animals from the bloc before its formal entry to the WTO.

PORK BARRIER

Protective tariffs on pork in particular were one of the final barriers to Russian entry to the WTO.

Producers' lobbies say their interests were sacrificed on a final drive by Vladimir Putin's government to join the trade body after nearly two decades of on-off talks.

Under Russia's agreements, pork could be imported duty free above quota after Russia officially joined the WTO in August 2012.

Those imports of pork nearly doubled from the same period of 2011 in the final four months of 2012, said Sergei Yushin, executive director of Russia's National Meat Association.

"I believe this has no impact on the market. The share of American pork in total imports is only 12 percent and importers have the right to use their tariff quota to buy pork from any other country," Yushin said.

"It cannot be viewed as an effective means of protecting Russian pork producers. Russia has made concessions on the pork market and I think it will have to negotiate to amend its obligations."

For producers in Russia, concessions on pork imports contrasted with the Kremlin's call for increased national self-sufficiency in meat as part of its 2010 food security doctrine, which says Russia should produce 85 percent of its own meat.

At the same time, imports of cheap pork have helped the government to beat back consumer price inflation, which ran in double digits for much of the two decades since the end of the Soviet Union.

Feed grain prices have soared to record levels just as Russia's herd has grown.

Since WTO entry, prices for pork in Russia fell from around 94 roubles (${esc.dollar}3.11) per kg of carcass weight to as little as 63 roubles in parts of European Russia where most meat is produced.

"In the United States and Europe, prices for meat are rising and ours are falling. This is not right because grain prices are rising," Sergei Mikhailov, the chief executive of a major Russian pork producer and processor, told the meeting.

"It points to fragmentary overproduction of meat." (${esc.dollar}1 = 30.2350 Russian roubles) (Reporting by Melissa Akin; Editing by Anthony Barker)

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