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Russia: Moscow Defends Its Meat Market

Moscow, 30 April 1998 (RFE/RL) -- An alliance of Russia's leading meat producers, consumer organizations and the Moscow city government has launched an attack on foreign meat imports, alleging the importers are falsifying product codes and selling at below-market prices.

The immediate target is processed meat exporters in Poland, Belgium, France, and Denmark. They are likely to be named in an anti-dumping complaint, under Russia's new trade defense legislation. This took effect in mid-April.

American meat exporters and traders are potential targets, as well, industry sources tell RFE/RL. This, the sources allege, is because American sausage and smallgoods exports to Russia are also using the same illegal code and price measures to lower the import duties they pay. However, the newly established Moscow meat coalition has decided not to attack imports from the United States. The reason is purely tactical, reveals one of the coalition backers, and is aimed at intensifying the pressure on the Europeans. "We want to make clear to the Poles and the European Union," the source said, requesting anonymity, "that if they don't comply with our laws, and stop the dumping, we will go to the U.S., Australia and New Zealand for alternative supplies."

According to Musheg Mamikonyan, Vice President for Production at the Cherkizovsky Meat Processing Works Ltd., Moscow's leading meat producer, foreign meat exporters are illegally reducing the import duty their products should pay on entry to the Russian market. This is done, he and government officials explain, by assigning the Russian customs code 0210, intended for miscellaneous raw meat, to processed meat products, sausages and other smallgoods.

Russian Customs allow this category of imports to pay a duty of 15 percent of the declared price. According to Mamikonyan, "products we know that cost $2.16 per kilogram to produce in 1994 are now being declared at the border to cost 43 cents per kilogram."

Legally, these products should be assigned the 1610 code, and pay duty of 0.4 ECU per kilogram.

Import figures presented by the Russian meat coalition this week show that, in 1994, 9,000 metric tons of meat and meat products were imported with the 0210 code. In 1997, this figure leaped to 232,000 tons. Breaking down this aggregate by country of origin, Russian sources say that 71,000 tons came from Poland; 54,000 tons from Belgium; 20,000 tons from France; and 18,000 tons from Denmark.

The figures presented by the meat coalition do not identify the volume of processed meat imports from the U.S. that claimed the 0210 code, and paid the lower duty. Official Russian Customs figures do show that total U.S. meat shipments, imported under the 1610 and 0210 codes, amounted to just over 84,000 tons in 1997. Of that, they say, about 50,000 tons probably landed illegally.

"The profitability of imported meats is 400 percent," claimed Mamikonyan, explaining that the imports are driving many of the smaller, less well capitalized Russian plants to the point of bankruptcy. "Profitability for domestic producers," he added, "is between ten-and-30 percent."

Alexander Polukeyev, director of the Samson Meat Processing Works of St Petersburg, said "we face the same problems. Poland and the Baltic states are exporting meat, using this possibility to change codes. At the same time, the producers get subsidies and state assistance." He also complained that product certification for Russian smallgoods is being withheld by European Union countries, in order "to close the market to our exports."

Officials acknowledged that an investigation of the illegal coding and price falsification of processed meat imports has been under way in the Russian government's Ministry of Foreign Economic Relations since last October. "There's some sort of inertia in the bureaucracy," Mamikonyan said.

The decision by the powerful Moscow city government to join the anti-import fight is bound to end this. According to Yevgeny Panteleev, the head of the city government's industry department, "the share of Russian producers on the Moscow market is decreasing, because importers enjoy special privileges." Panteleev said Moscow would use its influence to neutralize the import lobby. Hinting at the powerful political and commercial interests that are at stake, he said, "we see some (Russian) banks are engaged in promotion of imports at dumping prices."

Industry and government officials emphasized that in the confusion caused by the code and price violations, the distinction between raw meat and processed meat imports is being lost. A number of American raw meat traders say they are supporting the coalition, because they see the strengthening of the Russian meat plants as a precondition for increased orders for their products.

Bob Walker, director of the U.S. Agricultural Trade Office in Moscow, said that the 1997 total for U.S. exports to Russia of both raw and processed meat products (excluding poultry) was $217 million, a record. But he noted that in the first quarter of 1998, the raw meat sales are off by seven percent.

American processed meat exporters say that the volume of their exports to Russia, shipped directly, fell by less than 10 percent in 1997,compared to 1996. Offsetting that decline, they note, there was a gain of more than 16 percent in export tonnages shipped indirectly to Russia, through the Baltic states and Eastern Europe.

Peter Frank, director of Australia's trade office in Moscow, told RFE/RL the volume of inquiries for Australian meat has been growing rapidly in recent months. He said Australia's Trade Minister, Tim Fischer, will be visiting Moscow shortly, accompanied by Australian meat exporters, to try to increase their share of the import market.