Russia Joins WTO - A 'Win-Win'?

GENERAL - World Trade Organisation (WTO) trade ministers agreed Russia’s application to join the global trade rules body last week, after 18 years of negotiation - but what does it mean for UK agriculture?
calendar icon 28 December 2011
clock icon 4 minute read
National Farmers Union

According to the English National Farmers' Union (NFU), Russia must ratify the deal within the next 220 days and will become a fully-fledged WTO member 30 days after it notifies the ratification to the WTO.

Russia is the 12th largest global exporter in merchandise and 18th largest global importer, but in terms of trade with the EU, Russia is the EU’s third largest source of imports (after China and US) and is the EU’s fourth largest customer after US, China and Switzerland.

However, the EU is Russia’s biggest trading partner with over 50 per cent of imports into Russia coming from the EU and is the No1 destination for Russian export goods. Trade with Russia is therefore very important for the EU and its industries.

Agricultural trade

In terms of agricultural trade, the EU exported over €9billion worth of products to Russia in 2010, making Russia the EU’s second most important customer in agricultural product trade. Key export products to Russia from the EU are fresh fruit ($1bn in 2010), beef meat ($973m), cheese ($907m), pork ($847m) and fresh vegetables ($718m). UK food and drink exports to Russia totalled £115m in 2010, representing a 19 per cent year-on-year increase.

Imports of agricultural markets doubled between 2005 and 2010 and with strong economic growth forecast, the demand for consumer-ready imported foods is expected to increase further.

In joining the WTO, Russia has agreed to undertake a series of important commitments to further open its trade regime and accelerate its integration in the world economy.

In August 2010, Russia imposed an embargo on grain exports after unprecedented heat waves and drought saw grain production slump to 61m tonnes. This export ban was subsequently lifted in July 2011, but such unilateral actions ultimately impact on the dynamics of international grain markets in the short term.

WTO membership for Russia gives all exporting countries more certain and predictable access to Russian markets, and Europe’s farmers and exporters will hope to benefit from this.

The details of the deal

Market access: Russia has agreed to lower its tariffs on a wide range of products. Average duties after full implementation of tariff reductions will be:

  • 14.9 per cent for dairy products (current applied tariff 19.8 per cent)
  • 10.0 per cent for cereals (current applied tariff 15.1 per cent)
  • 7.1 per cent for oilseeds, fats and oils (current applied tariff 9.0 per cent).

Tariff rate quotas (TRQs) would be applied to beef, pork, poultry and some whey products. Imports entering the market within the quota will face lower tariffs while higher duties will be applied to products imported outside the quota. The in-quota and out of quota rates are listed below with the out of quota rates in parentheses:

  • For beef 15 per cent (and 55 per cent)
  • For pork zero (and 65 per cent). The TRQ for pork will be replaced by a flat top rate of 25 per cent as of 1 January 2020.
  • 25 per cent (and 80 per cent) for some selected poultry products
  • 10 per cent (and 15 per cent) for some whey products
  • Some of these quotas are also subject to member-specific allocations.

Russia will reform its tariff regime for sugar in 2012, with a view to further liberalisation.

Agricultural subsidies: The total trade-distorting agricultural support will not exceed $9 billion in 2012 and will gradually reduce to $4.4 billion by 2018. To avoid excessive concentration of support on individual products, from the date of accession to 31 December 2017, the annual agricultural support going to specific products would not exceed 30 per cent of the agriculture support that is not for specific products. All agricultural export subsidies will be bound at zero.

Sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT):

  • All SPS measures would be developed and applied in the Russian Federation and the Custom Union, in accordance with the WTO Agreement.
  • Russia will ensure that all legislation related to technical regulations, standards and conformity assessment procedures complies with the WTO TBT Agreement.
  • Russia will develop and apply international standards on SPS measures through membership and active participation in the Codex Alimentarius, the World Organization for Animal Health (OIE) and the International Plant Protection Convention.
  • The reasons for suspension, cancellation, or refusal of an import permit would be consistent with international standards, recommendations, and guidelines as well as the WTO SPS Agreement.
  • Russia will negotiate veterinary export certificates that include requirements different from those of the Custom Union if an exporting country made a substantiated request prior to 1 January 2013 to negotiate such a certificate.
  • Except in case of serious risks of animal or human health, Rosselkhoznadzor, the Federal Service for Veterinary and Phytosanitary Surveillance, will not suspend imports from establishments based on the results of on-site inspection before it had given the exporting country the opportunity to propose corrective measures.
  • Russia will use international standards for the development of technical regulations unless they were an ineffective or inappropriate means for achieving the pursued objectives.

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