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EU to analyze Russia’s food import ban

August 07, 2014, 14:47 UTC+3 BRUSSELS
It is early to say whether the EU will take measures in response to the Russian ban on food imports from Europe, the source says
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© AP Photo/Amel Emric

BRUSSELS, August 07. /ITAR-TASS/. The European Union will start analyzing Russia’s ban on food imports as soon as the official list of banned products is published to study response measures and file lawsuits to the World Trade Organization, an EU source said on Thursday.

A meeting of the EU Council may be convened at a required level in the coming days, if necessary, the EU source said.

 

Waiting for Russia’s list of banned food imports

It is early to say whether the EU will take measures in response to the Russian ban on food imports from Europe, the source told.

“First, it is necessary to see and analyze the official list of products that Moscow intends to ban. After that, decisions will be made both at the European and the national level,” the source said.

At the same time, the European diplomat said that the EU would “seek justice” through the WTO.

“Politically motivated large-scale trade restrictions are a direct violation of WTO rules, which Russia pledged to comply with,” the diplomat said. “These measures will be thoroughly analyzed, and then relevant claims will be submitted to the WTO.”

The European diplomat said that the Russian leadership’s decision to impose a ban on food imports would deepen Russia’s international isolation.

 

Billions of euros in losses

The Russian ban on food imports from the European Union is an “irresponsible measure” that can lead to billions of euros in losses for European as well as Russian consumers, the source told ITAR-TASS.

Russia’s ban can be considered as a measure that aims to further heighten tension in relations between Russia and western countries. Estimates show that damage may reach several billion euros both for European producers and Russian consumers, he said.

In his view, food prices will rise for Russian consumers as they will have to pay for transport expenses when cheap and high-quality European products are replaced with supplies from other regions.

 

Russia’s first response to western sanctions

Infographics Economical sanctions against Russia Economical sanctions against Russia
The USA, EU, Canada and Australia have introduced sanctions against Russia over its involvement in the Ukrainian crisis. Infographics by ITAR-TASS
Russia’s President Vladimir Putin ordered on August 6 to ban or restrict for one year the imports of agricultural produce, raw materials and foodstuffs from countries that joined the economic sanctions against Russia over its stance on Ukraine.

In his order on special economic measures to ensure Russia’s security, Putin instructed the government to specify a list of food imports, which will be restricted or banned and also urged to take measures to restrain the food price growth in the country.

“The document is currently being prepared,” spokeswoman for the Russian prime minister Natalia Timakova said, without specifying the list of food imports, which would be banned or restricted.

US-made poultry, a major item of US food exports, will be among banned products, a representative of Russia’s agricultural watchdog Rosselkhoznadzor said.

Fruit and vegetable imports from Europe may also be banned, Rosselkhoznadzor said.

Russia’s draft document on the ban of European food imports mentioned powered milk, butter, raw materials for cheese production and mass-produced cheese, a source familiar with the draft told ITAR-TASS.

The imports of these products will be suspended from Germany, the Netherlands and Scandinavia. Premium-quality cheeses were not included in the draft list, the source said.

The restrictions on foods imports have been Russia’s first response to sanctions imposed against it by the United States, the European Union, Canada and Japan over its stance on Ukraine. Russia may subsequently take other measures in response to western sanctions.

Sources familiar with the Russian government’s plans said that Russia might halt a part of European charter flights and extend trans-Siberian routes for EU air carriers.

 

Russia’s largest partners

The EU is Russia’s largest trade partner and exported food products worth $7.4 billion to Russia in 2013. Overall, Russia imported food products worth $43 billion in 2013. The other western countries that have imposed sanctions export several times less to Russia: $713 million from the United States, $398 million from Canada, $241 million from Australia and $6.7 million from Japan.

The United Sates imposed the first round of sanctions against Russia on March 17, immediately after Crimea was re-integrated into the Russian Federation.

The Russian authorities have not taken any retaliatory measures up until the last wave of western sanctions targeting Russia’s Sberbank, VTB Bank, Russian Agricultural Bank and equipment supplies for the oil industry.

Rosselkhoznadzor earlier announced bans on the delivery of a whole range of foodstuffs from some counties and the United States for sanitary reasons. Rosselkhoznadzor representatives said, however, that the bans were not related to the western sanctions.

Import substitution

The Russian president has instructed the government to work out measures jointly with sectoral organizations and trade chains to expand the supply of domestic goods and set up procedures for monitoring commodity markets.

Some sectoral lobbyists and business representatives have welcomed the government’s measures, saying that food imports have long been an impediment to the development of the domestic agriculture.

“If both the government and business use wisely this opportunity, then this will provide a strong support and a good opportunity for the development of agriculture, agricultural and commodity producers,” Opora Rossii Small and Medium Business Association President Alexander Brechalov told ITAR-TASS.

At the same time, the Russian government intends to increase food supplies from other regions to offset banned imports from the countries that have imposed sanctions against Russia.

Rosselkhoznadzor said after Putin’s order on retaliatory measures that it would hold negotiations on expanding imports from Ecuador, Brazil, Chile, Argentina and Turkey.

Russian retailers have said that Russia’s ban on food imports may spur price growth but the effect can be assessed not earlier than autumn.

Rosselkhoznadzor head Sergei Dankvert has said that larger agricultural produce supplies from Brazil will help avoid a price rise on the Russian market. The Russian Central Bank, which earlier pointed to inflation risks posed by the bans on the import of some foodstuffs, has declined to comment on possible consequences of Russia’s restrictive measures.

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