EU 'to Turn to WTO' over Russia's Foods Import Ban

Business | August 7, 2014, Thursday // 15:04|  views

The ban initiated by Russian President Vladimir Putin comes after the EU approved new sactions against individuals and entities, but also against entire sectors of the Russian economy. Photo by EPA/BGNES

The European Union is to refer Moscow's decision to restrict imports of food from the bloc to the World Trade Organization (WTO), a diplomatic source reveals.

Russia imposed earlier on Thursday a one-year ban comprising agricultural products coming from the EU, US, Australia, Norway and Canada, in what has been described as retaliation after a fresh round of Western sanctions targeting key sectors of the Russian economy.

"The politically motivated large-scale trade bans are a direct violation of the norms of the WTO which the Russian Federation is obliged to observe," Lithuanian Foreign Minister Linas Linkevicius told ITAR-TASS agency.

He explained the European Commission would first analyze the ban introduced by Russia and will then take a final decision.

A source from the Economic Development Ministry in Moscow was quoted as saying that Russia was basing its argument on Article 21 of the General Agreement on Tariffs and Trade (GATT), the document that led to the creation of the WTO.

The text says that a country retains the right to impose such measures if its national security is in jeopardy.

Authorities say the period of one year could be further extended.

A list of banned products has already been published.

Estimates of Russian news agency RIA suggest the move could result in up to EUR 12 B in losses for the EU.

Experts warn that consumers from Russia could also suffer, though President Vladimir Putin has downplayed such a scenario in the decree which introduced the ban.

The business outlet RBC Daily, however, reports Moscow is planning to use Latin American countries, with some of which it maintains thriving relations, as a substitute to Western exports. Russian officials are due to meet the ambassadors of Chile, Brazil, Argentine, and Ecuador to discuss the proposal.

The EU sold EUR 11.8 B worth of food products to Russia in 2013, with the country ranking second among the bloc's food export destinations, according to Eurostat Data.

Bulgaria, an EU member which exports wine, dairy and meat products to Russia (the country's ninth-largest export partner), is likely to be affected by the Kremlin's measures.

Dimitar Zorov, a member of the Bulgarian Association of Dairy Processors, warned after Moscow's announcement that the ban will have negative repercussions on Bulgaria.

"We are exporting dairy products to Russia. Despite the huge difficulties over the past 20 years that were related to political and not economical decisions, and also despite the fact that trade balance with Russia in dairy products is on the rise every year, a political decision is being taken that will impact negatively our economy," BGNES wire service quoted Zorov as saying.

Moscow, on the other hand, has long warned it would seek to boost its agricultural output, with President Putin arguing over the past years the country should become "the world's biggest food producer".

Prime Minister Dmitry Medvedev explained on Wednesday experts should now explore ways to improve farming and prevent price rises, according to the BBC.

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Tags: Linas Linkevicius, Bulgaria, sanctions, European Commission, US, EU, Norway, canada, Australia, WTO, ban, imports, food, Russia, Vladimir Putin, Dmitry Medvedev, Dimitar Zorov, Bulgarian Association of Dairy Processors


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