Voluntary Report - public distribution

**Date:** 12/30/2004

**GAIN Report Number:** RS4069

RS4069

**Russian Federation**

**Trade Policy Monitoring**

**Russia to Experience Delays in TRQ and Quota Distribution for Second
Straight Year**

**2004**

**Approved by:**

![](media/image1.wmf)Eric Wenberg

U.S. Embassy

**Prepared by:**

Mark Petry

**Report Highlights:**

The Russian Government has experienced delays in issuing full
implementing regulations for the 2005 poultry quota and beef and pork
tariff rate quotas (TRQ). Even if the necessary resolutions are passed
before the New Year holidays, most Russian imports of U.S. poultry and
pork will not resume until at least February 2005.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Moscow \[RS1\]

\[RS\]

**Executive Summary**: The Russian Government has hindered access for
the largest agricultural commodity imports for the second straight year
by delaying the issuance of implementing regulations for the 2005
poultry quota and beef and pork tariff rate quotas (TRQ). The Russian
press states that government resolutions that re-authorize the frozen
beef, chilled beef, and pork TRQs and poultry quota will soon be passed.
However, trade can only begin following secondary resolutions that
allocate import licenses to individual companies. Even if these eight
resolutions are passed before the New Year holidays, normal levels of
trade will not resume until February 2005.

**[Background]{.underline}**

Currently, the Russian Federation restricts market access for meat
products using separate tariff rate quotas for chilled beef, frozen
beef, and pork and a quota for poultry meat. In order to begin imports
of these products in 2005, the Russian Government must issue two
legislative measures for each commodity: an implementing resolution and
importer list. The implementing resolutions state the absolute volume of
the quota and TRQs and the over-quota tariff applied to beef and pork
imported outside of the TRQ. Additionally, the resolutions state the
volume of each commodity allocated to individual exporting countries.
Lastly, the import list is a separate document that outlines precisely
the volume each approved Russian importer is allocated and from which
countries the products can be imported.

As of December 30, though press reports have repeatedly suggested that
Prime Minister Fradkov is close to signing the implementing resolutions,
none of these documents has been published. The press reports that the
Ministry of Economic Development and Trade (MEDT) is continuing to face
a difficult opposition from the Ministry of Agriculture (MinAg)
regarding several parts of the resolution, including the concept of
country allocations.

A similar situation took place during the authorization of the 2004
quota that sheds some light on the possible repercussions of the current
situation. In anticipation of the 2004 TRQ and quota, the implementing
resolutions were published November 29, 2003 after lengthy discussions
of topics such as the country allocation and overall level of the pork
and beef TRQs. However, actual implementation became a problem in early
2004 as MEDT published and then removed three importer lists that
contained errors. Trade could not officially begin until the final list
was published and made effective in the first week of February 2004.

However, the real trade impact is difficult to estimate. Despite the
importer list problems in early 2004, some trade still took place. For
example, 35,000 metric tons (\$22 million) of poultry was imported by
Russia in January 2004, which is about one third of normal monthly
trade. In total, exports ran from between at only one-third to one-half
capacity for the first three months of 2004.

Nevertheless, this came as a surprise to many given that the final
official document giving importers the right to import was not published
until February. It is unclear exactly what happened, but trade contacts
state that the Ministry of Economic Development and Trade (MEDT) issued
"provisionary" import licenses to companies based the importer lists
that were rescinded. Essentially, it was known roughly the volume
importers were going to get, though not precisely how much. So in order
to maintain trade flows, a proportion of a company's final import
licenses were issued in January and February in order to maintain trade
flow. These provisionary licenses were enough to allow imports badly
needed by Russian consumers and meat processors. This process was likely
used until early March, when the first ships could physically arrive
from the more distant suppliers (U.S. and Brazil) following the
publication of the final importer list.

Assuming that the Prime Minister will sign the implementing resolution
before the Russian New Year holiday, it is very unlikely that MEDT will
be able to compile the importer lists prior to the next full work week
for the Russian Government (January 10). Thus, Russian importers will
not be able to start contracting U.S. product until mid-January. As a
result, it seems unlikely that full shipments of U.S. poultry and pork
will be arriving in Russia until mid-February. However, if the
implementing resolutions are not signed until after the holidays, the
wait will be longer.

  ------------ ------------------------- ------- ---------- ----------- ----------- ----------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
  **Russian                                                                                                                                                                       
  Poultry                                                                                                                                                                         
  Imports**                                                                                                                                                                       

                                                                                                **2004**                                                                          

               **Quantity (MT)**                 **2000**   **2001**    **2002**    **2003**    **Jan.**   **Feb.**   **Mar**   **Apr**   **May**   **Jun**   **Jul**   **Aug**   **YTD**

  **0207**     **POULTRY MEAT,OFFAL**            687,898    1,375,025   1,375,039   1,188,379   34,936     54,813     66,361    97,849    80,397    99,682    100,926   98,822    633,786

  ** **                                                                                                                                                                            

  **020714**   **CHCK CUT+ED OFL,FRZ**           558,539    1,147,949   1,056,599   981,664     25,927     45,545     56,274    79,641    65,036    80,632    77,327    81,737    512,120

  **020712**   **CHICKEN,WHOLE,FROZN**           21,255     62,636      147,032     90,385      6,674      2,293      5,510     6,104     8,663     10,461    13,990    8,326     62,021

  **020727**   **TRKY CUT+ED OFL,FRZ**           104,698    160,854     163,730     108,432     2,123      6,439      3,722     10,526    5,374     7,509     7,847     6,234     49,775

  ** **        **OTHER**                 ** **   3,407      3,587       7,677       7,898       212        535        856       1,386     1,295     984       1,721     2,454     9,442

                                                                                                                                                                                  

               **Value (Million USD)**           2000       2001        2002        2003        Jan.       Feb.       Mar       Apr       May       Jun       Jul       Aug       YTD

  **0207**     **POULTRY MEAT,OFFAL**            367        750         811         696         22         32         38        57        48        60        62        59        379

  ** **                                                                                                                                                                            

  **020714**   **CHCK CUT+ED OFL,FRZ**           293        611         599         554         15         26         31        45        36        46        44        47        289

  **020712**   **CHICKEN,WHOLE,FROZN**           15         48          115         75          6          2          5         5         8         9         12        7         55

  **020727**   **TRKY CUT+ED OFL,FRZ**           57         88          91          62          1          4          2         6         3         4         5         4         30

  ** **        **OTHER**                 ** **   3          3           6           5           0          0          0         1         1         0         1         1         5

                                                                                                                                                                                  

  **0207**     **POULTRY MEAT,OFFAL**            2000       2001        2002        2003        Jan.       Feb.       Mar       Apr       May       Jun       Jul       Aug       YTD

  **1**        United States                     504,275    1,062,943   748,949     735,318     22,513     39,528     43,550    65,950    52,359    61,299    53,551    59,151    397,901

  **2**        Brazil                            15,193     94,004      295,200     194,053     8,445      3,590      7,949     8,441     16,149    22,708    28,854    24,300    120,436

  **3**        Germany                           17,500     43,751      56,446      53,668      818        2,332      4,516     9,283     5,485     4,866     6,728     6,525     40,553

  **4**        United Kingdom                    32,768     15,270      27,577      23,785      720        72         1,027     529       567       1,356     2,627     2,569     9,468

  **5**        Poland                            2,004      2,293       3,865       18,126      689        1,901      1,871     1,843     1,308     1,323     1,449     2,039     12,424

  **6**        France                            44,746     71,000      91,225      75,336      375        6,346      2,983     7,453     1,872     5,458     4,089     1,564     30,140

  **7**        Belgium                           23,299     40,766      47,864      16,445      660        365        1,416     1,844     1,134     569       1,510     1,454     8,952

  **8**        Netherlands                       27,278     19,999      31,855      6,282       0          40         67        274       0         154       731       747       2,012

  **9**        Canada                            2,687      6,410       21,945      16,390      98         0          151       250       781       993       398       149       2,820

  **10**       Hungary                   ** **   2,471      2,321       2,294       1,179       0          20         214       242       3         79        27        81        665
  ------------ ------------------------- ------- ---------- ----------- ----------- ----------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------

  ------------ -------------- -- ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
  **Russian                                                                                                                                                    
  Pork                                                                                                                                                         
  Imports**                                                                                                                                                    

                                                                             **2004**                                                                          

               **Quantity        **2000**   **2001**   **2002**   **2003**   **Jan.**   **Feb.**   **Mar**   **Apr**   **May**   **Jun**   **Jul**   **Aug**   **YTD**
               (MT)**                                                                                                                                          

  **0203**     PORK,FRESH OR     212,759    367,998    602,010    533,871    17,654     14,212     40,723    44,077    38,225    38,176    31,318    34,972    259,359
               FROZEN                                                                                                                                          

  ** **                                                                                                                                                         

  **020321**   FROZEN            87,372     183,357    301,929    266,729    9,651      5,740      20,427    26,310    26,485    24,040    20,339    20,276    153,270
               CARCASSES                                                                                                                                       

  **020329**   FROZEN CUT        72,314     138,028    238,026    228,899    7,690      7,699      16,366    11,681    8,880     11,318    8,152     11,488    83,273
               BONELESS                                                                                                                                        

  **020311**   FRESH             46,159     41,277     55,756     29,632     294        614        3,550     4,946     2,365     2,515     2,507     2,827     19,618
               CARCASSES                                                                                                                                       

  **020322**   FROZEN            953        1,694      1,358      1,805      0          39         119       135       118       118       120       242       890
               CUTS+BONES                                                                                                                                      

  **020319**   FRESH CUTS        5,563      3,282      4,856      6,786      20         120        261       1,005     377       186       200       140       2,308
               BONELESS                                                                                                                                        

  **020312**   FRESH             398        359        85         20         0          0          0         0         0         0         0         0         0
               CUTS+BONES                                                                                                                                      
  ------------ -------------- -- ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------

  ------------ -------------------- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------
  **Russian                                                                                                                                                                     
  Beef                                                                                                                                                                          
  Imports**                                                                                                                                                                     

                                                                                              **2003**                                                                          

               **Quantity (MT)**       **1999**   **2000**   **2001**   **2002**   **2003**   **Jan.**   **Feb.**   **Mar**   **Apr**   **May**   **Jun**   **Jul**   **Aug**   **YTD**

  **0202**     BEEF, FROZEN            522,029    270,714    420,844    469,141    495,031    10,313     10,111     30,935    35,825    40,437    41,184    50,806    53,818    273,429

  ** **                                                                                                                                                                          

  **020230**   CUTS BONELESS           198,142    104,399    232,297    325,928    387,030    8,763      6,918      26,584    31,364    36,444    36,194    43,388    47,091    236,747

  **020210**   CARCASS,WHOLE/HALF      139,406    121,714    73,265     96,397     95,827     1,357      2,938      4,351     4,460     3,990     4,982     6,769     6,719     35,566

  **020220**   CUTS WITH BONE          184,481    44,601     115,283    46,816     12,174     192        255        0         0         3         8         649       9         1,116

  ** **                                                                                                                                                                          

  **0201**     BEEF FRESH, CHILLED     9,360      11,449     34,671     35,459     10,015     0          423        1,186     1,874     1,473     1,533     2,009     2,110     10,609

  ** **                                                                                                                                                                          

  **020130**   CUTS BONELESS           125        88         12,094     34,212     9,891      0          405        1,185     1,872     1,454     1,494     1,957     1,949     10,317

  **020120**   CUTS WITH BONE          9,123      11,321     22,525     1,229      124        0          18         1         2         19        38        39        147       264

  **020110**   CARCASS,WHOLE/HALF      111        40         53         18         0          0          0          0         0         0         0         14        14        28
  ------------ -------------------- -- ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- --------- ---------

Data Source: Customs Committee of Russia, World Trade Atlas