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Russia: Acting Trade Minister Defends Import Strategy For WTO

Moscow, 18 May 1998 (RFE/RL) -- Russia has submitted a detailed market-access offer in its negotiations to join the World Trade Organization (WTO). The proposed maximum duty levels would more than double current import duties on imports of poultry, meat, fish and prepared foodstuffs. The market-access offer was presented to the WTO in Geneva in March, and contains almost a hundred chapters, set out in 21 separate product sections.

Known as bindings, the offer proposes the maximum duty levels which the Russian government will accept, if its application for membership in the WTO is accepted. The proposed binding on poultry, for example, which is the single largest U.S. export to Russia and is now approaching $1 billion a year, would be 75 percent, compared to a current duty level of 15 percent. Frozen beef imports dutiable at 15 percent would be bound at 45 percent. The binding on frozen fish would be 50 percent; the current duty is 10 percent.

The newly named Acting Trade Minister, Georgy Gabounia, defended the proposal in a RFE/RL interview, acknowledging that agricultural tariff ceilings have been set high intentionally, "but that doesn't mean we would jump to these levels. We are not going to close the market. We want competition. We can't afford destruction of domestic industries, especially in agriculture."

Gabounia has been Russia's chief trade negotiator with the WTO, and his promotion to ministerial level is still subject to change. He has said he won't stay in government, unless he gets a mandate for effective negotiations with countries that are demanding lower Russian tariffs, at the same time as they are imposing higher duties and quantitative limits on Russian trade. "Russia's trade weighted tariff average at present is 14 percent. But you have to look at import penetration, not at tariff levels. In many cases, imports are running at 50 percent of the market," he said.

U.S. officials inaugurated a new Agricultural Trade Office in Moscow last week, along with an Agricultural Trade Advisory Council, comprised of Russian importers and American exporters. Bob Walker heads the new office; Asif Chaudhry oversees the team of U.S. Department of Agriculture representatives in Moscow. The Americans express concern at the high tariff bindings which Gabounia's ministry has proposed.

The U.S. has also joined other agricultural producers in Europe, as well as Argentina, Australia and New Zealand in urging the Russians to lower their bids, in order to speed up the WTO accession talks.

New Zealand's Trade Minister Lockwood Smith was the first foreign trade minister to meet Gabounia in Moscow, since he took over the reorganized ministry. Smith said he had told Gabounia the Russian bindings are unrealistic and counterproductive. In a speech to the State Duma's Committee on Economic Policy, Smith also cited New Zealand's experience in eliminating import tariffs as a way of stimulating domestic growth.

Australia's Trade Minister, Tim Fischer, had been due to visit Moscow, but he canceled at the last minute, when the Russian government asked for a postponement, claiming there was no minister of Fischer's deputy prime ministerial rank to receive him. In food product trade, both New Zealand and Australian exports to Russia -- primarily butter and meat -- are currently experiencing boom growth rates of 60 percent and more.

One of the most experienced American lawyers in Moscow, Brian Zimbler, warned in a speech to a commodity trade conference in Moscow last week that Russian customs policy is too changeable to rely on in many cases. "Experience shows," Zimbler says, "that (reduced duty) privileges may be difficult to use in practice, and may eventually be challenged, withdrawn, or restricted by the Russian authorities."