The U.S. supported Russia’s efforts to achieve WTO membership because the integration of Russia into the WTO system would require it to accept established, enforceable, multilateral agricultural product trade rules. Sanitary and phyto-sanitary (SPS) issues related to meat imports from the U.S. have been particular problems in recent years. A recent status report on enforcement by the U.S. Trade Representative (USTR) to Congress explains what has happened since Russia joined the WTO.
Russia joined in August of 2012, but U.S. and Russia each invoked non-application of the WTO Agreement with respect to the other because the U.S. Congress had not extended Permanent Normal Trade Relations to products from Russia. That was completed in December and both countries filed letters withdrawing their notices of non-application and consenting to have the WTO Agreement apply between them.
Russia must implement the WTO Agreement on Sanitary and Phytosanitary Measures (SPS Agreement) and the specific commitments in its Working Party Report. Russia committed to change, if necessary, its SPS measures to be consistent with international standards, recommendations, and guidelines or provide a risk assessment to justify its more stringent requirements. The USTR report notes they have raised concerns in various WTO meetings about Russia’s implementation of particular SPS obligations.
Since joining the WTO, Russia had adopted a zero tolerance for ractopamine, a feed additive that shifts energy use from fat growth to promoting the growth of lean muscle protein, a standard more stringent than Codex’s maximum residue level (MRL) for pork and beef. Russia recently published what it claims is a scientific justification for its measure on ractopamine. The USTR is working with the U.S. industry and other interested stakeholders in reviewing the information. Russia also has a near zero tolerance for tetracycline residues, more stringent than Codex’s MRL, but has failed to provide WTO Members an adequate risk assessment.
In November 2006 as part of Russia’s WTO accession negotiations, the U.S. and Russia agreed for Russia to grant U.S. regulatory officials the authority to certify new U.S. establishments and ones that had remedied a deficiency to export meat and poultry. Russia also agreed to meet specific deadlines for responding to U.S. requests to list facilities that U.S. authorities had determined to be in compliance to export to Russia. Russia has not recognized consistently USDA’ authority to certify additional U.S. facilities, and there have been delays in responding to U.S. requests to update the list of U.S. facilities approved to export to Russia. The U.S. has met with Russia to discuss these issues.
All of these issues were made more complicated on January 1, 2010, when Russia, Kazakhstan and Belarus began implementing a Customs Union by adopting a common external tariff. Russia transferred authority over many aspects of its foreign trade regulations to the Customs Union, including import tariff levels, nontariff import measures, customs policies, and the development of technical regulations and sanitary and phytosanitary measures.
The information in the enforcement update is nothing new for followers of U.S.-Russian trade relations. More information on SPS issues with Russia is provided in the USTR’s 2013 Report on Sanitary and Phytosanitary Measures released in March. Other issues discussed include veterinary certificates, agricultural biotechnology, pathogen tolerance, beef and BSE, dairy products, poultry meat, grains and oilseeds, and pet food and animal feed.
Russia’s SPS actions have had a real impact on U.S. exports. In late 2012, Russia announce a ban on importing U.S. beef, pork, and beef and pork by-products until the U.S. provided guarantees that they are ractopamine-free. According to data from the Foreign Agricultural Service of USDA, U.S. exports of fresh/chilled/frozen beef, veal and variety meats in the first four months of 2013 were down 99 percent in value from the first four months of 2012 and fresh/chilled/frozen pork exports were down 78 percent for the same time periods. In 2012, U.S. beef exports to Russia were $296 million, 18 percent of U.S. agricultural exports to Russia, and pork exports were $260 million, 16 percent of total exports.
The leading export category for the U.S. to Russia in 2012 was poultry meat, mostly chicken, at $310 million, 19 percent of exports. The three largest export categories, poultry meat, beef and pork, accounted for 54 percent of the value of U.S. agricultural exports to Russia and all three have been part of various SPS issue disputes with Russia before it joined the WTO and continue to be areas of concern.
It is no secret the Russian government is providing subsidies to expand livestock production. According to a transcript provided by the U.S. agricultural attaché in Russia of a nationwide video conference in April on supporting Russian livestock and poultry production led by Prime Minister Dmitry Medvedev, during 2008 – 2012 almost $3.4 billion were allocated to support livestock farming. Production of cattle on a live weight basis, increased by one-third compared to 2007; production of poultry by 82%; and pork production by almost 30%. Medvedev said Russian markets have become more open and transparent, and but increased imports has resulted in prices as much as 30% lower. Most livestock producers are incurring substantial financial losses. Approximately $1.9 billion has been allocated for the industries in 2013.
Some market participants have already suggested filing a case at the WTO against Russia on SPS issues for livestock and poultry. With a stable population and slow growth in personal income, reductions in imports are needed to offset the increased production. It may be too early to win a case against a country that has been a WTO member for less than a year, but Russia as a WTO member behaves a lot like Russia before it became a member. SPS restrictions allow imports to be limited while Russia meets its WTO market opening commitments. The USTR should keep pushing Russia to meet all of its commitments.
Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org). Follow us: @TruthAboutTrade on Twitter | Truth About Trade & Technology on Facebook.