Russian agriculture and the WTO

Problems of Post-Communism

Volumn 54, Issue 4, 2007, Pages 46-59

  Wegren, Stephen K ^a  

^a SOUTHERN METHODIST UNIVERSITY   (United States)

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[No Author keywords available]

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EID: 35248864406     PISSN: 10758216     EISSN: None     Source Type: Journal    
DOI: 10.2753/PPC1075-8216540404     Document Type: Article

References (100)

1. See, for example, Anders Åslund, How Russia Became a Market Economy (Washington, DC: Brookings Institution Press, 1995);
2. Thane Gustafson, Capitalism Russian Style (New York: Cambridge University Press, 1999).
3. Not all views are complimentary. See Chrystia Freeland, Sale of the Century: Russia's Wild Ride from Communism to Capitalism (New York: Crown Business, 2000);
4. Jerry Hough, The Logic of Economic Reform in Russia (Washington, DC: Brookings Institution Press, 2001), http://brookings.nap.edu/books/ 081573753X/html;
5. Marshall I. Goldman, The Piratization of Russia: Russian Reform Goes Awry (New York: Routledge, 2003).
6. See Thomas Rutherford and David Tarr, "Russia's WTO Accession: What Are the Macroeconomic, Sector, Labor Market and Household Effects?" (2005), http://siteresources.worldbank.org/INTRANETTRADE/Resources/Topics/Accession/ Rutherford-Tarr_russia-macro-effects.pdf.
7. At the end of 2005, the WTO had 149 members. Former Soviet republics that were not members of the WTO at that time were Azerbaijan, Belarus, Kazakhstan, Tajikistan, Ukraine, Uzbekistan, and Russia. In 2006, Ukraine started the negotiation process for admittance, and that same year the United States signed off on Ukraine's accession. Most of the aforementioned countries had not reformed their economies significantly, whereas Russia, in contrast, has privatized more than 140,000 enterprises since 1992, lowered its import tariffs and simplified the tariff system by reducing the number of categories, and amended more than forty laws to bring Russian law into compliance with requirements of the WTO. See Harry G. Broadman, "Global Economic Integration: Prospects for WTO Accession and Continued Russian Reforms," Washington Quarterly 27, no. 2 (spring 2004): 79-98 (www.twq.com/ 04spring/docs/04spring_broadman.pdf).
8. Russia had hoped to finish the bilateral negotiations with the United States at the end of 2005. When that did not happen, the next target date was prior to or at the Group of Eight meeting in St. Petersburg in July 2006. When this deadline was missed, the next target date was the end of October 2006, but this self-imposed deadline was also missed. In late 2006, a 2007 entry was discussed, but estimates vary greatly. Given the lack of progress in multilateral talks, and the fact that both Georgia and Poland have threatened to block Russia's accession until negotiations resolve bilateral trade differences, it seems reasonable to predict that accession will not occur until sometime in 2008, at the earliest, and may take even longer.
9. For example, the average tariff on agricultural goods entering Russia is 21.5 percent, with a peak tariff of less than 100 percent. By comparison, the EU has an average tariff of 19.0 percent on agricultural goods, but a peak of 506 percent. The United States has an average tariff rate on agricultural goods of 9.9 percent, and a peak of 350 percent. See M. Ataman Aksoy and John Christopher Beghin, eds., Global Agricultural Trade and Developing Countries (Washington, DC: World Bank, 2005), p. 48 (http://siteresources.worldbank.org/ INTGAT/Resources/GATfulltext.pdf).
10. An additional factor is the rise of food unions in Russia. The unions, representing both producers and processors, advocate protectionist measures and provide a useful voice in the corporatist relationship with the government. See Stephen K. Wegren, Russia's Food Policies and Globalization (Lanham, MD: Lexington Books, 2005), pp. 81-87.
11. Keith Bush, "Russia's Accession to the World Trade Organization," October 2006, pp. 1-2. Report available to National Bureau of Asian Research (NBR) members.
12. See www.wto.org/english/thewto_e/acc_e/al_russie_e.htm.
13. Bush, "Russia's Accession," p. 2.
14. At the time of this writing, negotiations were still open with Georgia. At the end of January 2007, President Mikheil Saakashvili acknowledged that it was in Georgia's long-term interest to have Russia in the WTO, but the two sides still had border and trade issues to resolve. See www.wto.ru/ru/news. asp?msg_id=19038 (January 29, 2007).
15. See www.wto.org/english/thewto_e/acc_e/acces_e.htm.
16. See Bush, "Russia's Accession," pp. 5-7.
17. Regarding IPR, see Sherman Katz and Matthew Ocheltree, Intellectual Property Rights as a Key Obstacle to Russia's WTO Accession, Carnegie Papers, no. 73 (October 2006), www.carnegieendowment.org/files/cp73_katz_final. pdf. The Russian government and its chief WTO negotiator, Maksim Medvedkov, claimed that legal steps have been and continue to be taken to crack down on pirated software and music CDs. The United States claimed that enforcement of IPR laws was inconsistent at best, and called for jail sentences for violators. See www.izvestia.ru/economic/article3097835.
18. Financial Times (March 30, 2006): 7.
19. Oksana Yablokova and Stephen Boykewich, "Schisms Emerge at Petersburg Summit," Moscow Times (July 17, 2006), www.themoscowtimes.com/stories/2006/07/17/003.html.
20. Marketwatch (July 15, 2006), available to NBR members.
21. "Russia May Suspend Its Application to Join WTO," Washington Post (September 6, 2006), www.washingtonpost.com.
22. "Delegations of Russia and U.S. End Bilateral Talks on Russia's Accession to WTO," www.wto.ru/en/news.asp?msg_id=18264/; Financial Times (November 11-12, 2006): 1.
23. White House press release, November 19, 2006 (www.whitehouse.gov/news/ releases/2006/11/20061119-4.html).
24. "USTR Says Russia's Bid to Join WTO Has Slowed Since Pact with U.S. Last Fall," International Trade Daily (February 16, 2007), www.wto.ru/ru/news.asp?msg_id=19254/;
25. RIA-Novosti (June 9, 2007), http://en.rian.ru/world/20070609/66994318. html.
26. "End of Jackson-Vanik Forecast," Moscow Times, www.themoscow-times.com/stories/2007/02/22/001.html.
27. Data from www.ustr.gov.
28. Data from www.usmef.org/TradeLibrary/Statistics05.asp.
29. I borrow this term from Stephen Hanson.
30. See Simon J. Evenett and Carlos A. Primo Braga, "WTO Accession: Lessons from Experience," World Bank Trade Note 22 (June 6, 2005), p. 2 (http://siteresources.worldbank.org/INTRANETTRADE/Resources/Pubs/ TradeNote22.pdf).
31. Ibid., p. 7.
32. See Wegren, Russia's Food Policies and Globalization, pp. 81-87.
33. See Krestianskie vedomosti, nos. 17-18 (April 2006): 2.
34. RIA-Novosti (October 6, 2006), http://rian.ru/economy/taxes/20061006/ 54567904.html.
35. See www.nfu.org/issues/trade/negotiations-wto.
36. See "The U.S. Pork Industry Supports Zero for Zero on Pork in the World Trade Organization Agriculture Negotiations," 2006, www.nppc.org;
37. "Russian Pork Barriers Still an Obstacle to WTO Deal," October 20, 2006, both available to NBR members.
38. Financial Times (July 8-9, 2006): 6.
39. Sergei V. Kiselev, "Razvitie agroprodol'stvennykh rynkov i problemy vstupleniia Rossii v VTO" (Development of Agricultural Markets and Issues of Russian Entry into the WTO), Ekonomika selskokhoziaistvennykh ipererabatyvaiushchikh predpriiatii, no, 7 (July 2005): 19.
40. S. Kiselev and R. Romashkin, "Regionalnye aspekty selskokhoziaistvennoi torgovli v kontekste vstupleniia Rossii v VTO" (Regional Aspects of Agricultural Production in the Context of Russian Entry into the WTO), APK: ekonomika, upravlenie, no, 3 (March 2005): 53. For a broader discussion of the problems for Russian agriculture (in particular) from entry into the WTO
41. see Sergei V. Kiselev, ed., VTO i selskoe khoziaistvo Rossii (The WTO and Russian Agriculture) (Moscow: Teis, 2003).
42. A. Shutkov and V. Tarasov, "Vygodno li Rossii vstuplenie v VTO?" (Will Russia Benefit from Joining the WTO?), APK: ekonomika, upravlenie, no. 9 (September 2005): 6-7;
43. Krestianskie vedomosti, no. 36 (September 2005): 3. Other sectors that will be harmed include food processing, light industry, and agricultural machine building.
44. On the U.S. side, in September 2006 the leaders of the House Financial Services Committee wrote the Bush administration that the financial services proposal forwarded by the Russian government was unacceptable and arguing that it was not in the best interests of the United States to conclude negotiations with such shortcomings. International Trade Daily (September 19, 2006), available on-line to NBR members. In October 2006, a bipartisan group of congressional representatives and senators - the Congressional Anti-Piracy Caucus - wrote to President Bush and advocated holding up Russia's entry until it improved the enforcement of intellectual property rights.
45. See Washington Internet Daily (October 16, 2006), available to NBR members.
46. Selskaia zhizn (November 22, 2005): 1.
47. Krestianskie vedomosti, no. 20 (May 2005): 3.
48. Krestianskie vedomosti, nos. 1-2 (January 2006): 2.
49. Speech accessed at www.mcx.ru/index.html?he_id=335&news_id= 2501&n_page=5;
50. and Krestianskie vedomosti, nos. 1-2 (January 2006): 2.
51. Krestianskie vedomosti, no. 14 (April 2006): 2.
52. ITAR-TASS (October 20, 2006), www.wto.ru (News: Sergei Latyshev, "Russia not ready for WTO membership for next few years").
53. RIA-Novosti (October 31, 2006), www.rian.ru.
54. Financial Times (May 22-23, 2004): 5.
55. RIA-Novosti (April 4, 2006), www.rian.ru.
56. For an excellent analysis of the 1996 chicken war, see Glenn C. W. Ames, "Non-Tariff Barriers and Political Solutions to Trade Disputes: A Case Study of U.S. Poultry Exports to Russia," Review of Agricultural Economics, 20, no. 1 (spring/summer 1998): 238-47.
57. See Wegren, Russia's Food Policies and Globalization, pp. 143-44.
58. "Russia introduces temporary restrictions on importation of poultry from the USA," RIA-Novosti (September 11, 2006), www.rian.ru.
59. "Russian Agricultural Sanitary Inspectors Rescind Import Restrictions on Poultry from Maryland," RIA-Novosti (October 11, 2006), www.rian.ru.
60. Selskaia zhizn (December 27, 2005): 1.
61. Krestianskie vedomosti, nos. 39-40 (December 15-31, 2002): 2.
62. Ibid., nos. 1-2 (January 1-31, 2003): 2.
63. In the short term, if Russian domestic producers could not meet rising consumer demand, domestic prices would increase, which in turn would improve profitability, stimulate investment, and presumably increase domestic production over the longer term. In fact, data show that retail prices did increase for meat and poultry in 2003 and 2004. But the pattern is not clear, as prices for meat and poultry increased less than the consumer inflation rate for all consumer goods and for all food goods in 2003, but faster than the consumer inflation rate and for all food goods in 2004. Moreover, in 2004, despite import quotas, the beef industry remained unprofitable, while the poultry industry snowed a profit for the first time. See V. Maslova, L. Schastlivtseva, and N. Tiapkin, "Osnovnye factory stabilizatsii rynka zhivotnovodcheskoi produktsii," APK: ekonomika, upravlenie, no. 3 (March 2006): 29, 31.
64. Krestianskie vedomosti, nos. 10-11 (24-30 March 2003): 2.
65. Ibid., no. 37 (September 2003): 2.
66. Ibid., nos. 40-41 (October 2003): 2;
67. no. 42 (October 2005): 4;
68. no. 28 (July 2006): 5.
69. Ibid., nos. 17-18 (May 2005): 3.
70. Moscow News, www.mosnews.com.
71. Allan Mustard, "Russian Federation Trade Policy Monitoring Meat Tariff Rate Quota Decree Issued," GAIN Report no. RS5084 (December 13, 2005), www.fas.usda.gov/gainfiles/200512/146131752.pdf.
72. Krestianskie vedomosti, nos. 23-24 (June 16-30, 2001): 14.
73. In fact, about 60 percent of chicken hindquarters are consumed domestically in the United States, and 40 percent are exported.
74. Wegren, Russia's Food Policies and Globalization, p. 142.
75. "Results of Bilateral Negotiations on Russia's Accession to the World Trade Organization: Agricultural Goods Market Access, November 19, 2006," www.ustr.gov/assets/Document_Library/Fact_Sheets/2006/ asset_upload_file346_9977.pdf.
76. "Results of Bilateral Negotiations on Russia's Accession to the World Trade Organization: Non-Tariff Measures Affecting U.S. Agricultural Trade, November 19, 2006," www.ustr.gov/assets/Document_Library/Fact_Sheets/2006/ asset_upload_file991_9978.pdf.
77. See Stephen K. Wegren, "Russian Agriculture During Putin's First Term and Beyond," Eurasian Geography and Economics 46, no. 3 (April/May 2005): 224-44.
78. According to official statistics, the arable land used for agricultural production declined from 210 million hectares in 1992 to 194.6 million hectares in 2004. Rossiia v tsifrakh (Moscow: Rosstat, 2006), p. 221.
79. The number of people employed in agriculture declined from 10.1 million in 1992 to 6.8 million in 2004. Trud i zaniatost v Rossii (Moscow: Goskomstat, 1995), p. 20;
80. ibid. (Moscow: Rosstat, 2006), p. 198.
81. It is estimated that 60-70 percent of agricultural machines and equipment are worn out.
82. I. Ushachev, "Ustoichivoe razvitie agroprodovolstvennogo sektora: Osnovnye napravleniia i problemy" (Stable Development of the Agricultural Sector: Basic Trends and Problems), APK: ekonomika, upravlenie, no. 4 (April 2006): 6.
83. See S. Mitin, "Neobkhodima tekhnologicheskaia modernizatsiia selskogo khoziaistva" (The Necessity of Technological Modernization of Agriculture), APK: ekonomika, upravlenie, no. 9 (September 2006): 2.
84. A. Serkov, "Kratkosrochnyi prognoz razvitiia agropromyshlennogo kompleksa" (Short-term Prognosis for the Development of the Agricultural Sector), APK: ekonomika, upravlenie, no. 6 (June 2006): 20.
85. A.V. Gordeev, "Aktualnye problemy razvitiia selskogo khoziaistiva Rossiiskoi Federatsii" (Real Problems of Developing Agriculture in the Russian Federation), Ekonomika selskokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 8 (August 2005): 4.
86. A. Gorbatov and A. Migel, "Zakrepliaemost spetsialistov na sele" (Retaining Specialists in the Countryside), APK: ekonomika, upravlenie, no. 11 (November 2002): 24.
87. E. Sheludchenko, "Glavnyi factor uspekha - liudi" (The Main Factor of Success - People), APK: ekonomika, upravlenie, no. 1 (January 2002): 29.
88. For example, two Russian scholars hold that it would be easier and cheaper to increase annual agricultural output to 10 centners of grain per hectare or 2,000 kilograms of milk per cow than to 30 centners of grain per hectare or 5,000 kilograms of milk per cow. See G. V. Bespakhotnyi and N.G. Baryshnikov, "Napravleniia perestroika sistemy subsidirovaniia selskogo khoziaistva" (The Direction of Restructing the Subsidization System in Agriculture), Ekonomika selskokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 12 (December 2006): 1.
89. Selskaia zhizn (February 10-16, 2005): 3.
90. From a political angle, the National Project is a way to bolster rural electoral support for United Russia and a quid pro quo to the agricultural sector for the concessions Russia made in the WTO negotiations.
91. Expenditures include: R7.45 billion in 2006 and R7.18 billion in 2007 to develop animal husbandry, and R6.6 billion in 2006 and R9.37 in 2007 to stimulate small farming enterprises and various types of cooperatives. In 2006 alone, the funding for the project amounted to 20 percent of total state expenditures on agriculture. E.V. Serova and O.V. Shik, "Natsional nyi proekt 'Razvitie APK' " (National Project: Development of APK) (2006), www.iet.ru/afe/apk/jan06.pdf.
92. For examples at the regional level, see A. Semin, "Prioritetnyi natsionalnyi proekt: Vzgliad iz regiona" (Priorities of the National Project: The View from a Region), APK: ekonomika, upravlenie, no. 4 (April 2006): 11-14;
93. V. Serov, "Tekhnicheskoe perevooruzhenie i resursosberegaiushchie tekhnologii v APK" (Technological Re-equipping and Resource-Saving Technology in the APK), ibid., no. 5 (May 2006): 9.
94. An early description of the program in agriculture was published in October 2005, See Selskaia zhizn (October 25, 2005): 1, 3, 4, The program is available at www.mcx.ru/index.html?he_id=909/.
95. A third policy area, indicated by Gordeev in April 2006, is to provide adequate housing for young specialists in the countryside as part of the general personnel policy in agriculture. "Vystupleniia Ministra" (April 7, 2006), www.mcx.ru.
96. Interview in Rossiiskaia gazeta (April 27, 2006), www.mcx.ru/index.html?he_id=981&news_id=2746&n_page=1/.
97. Grain, oilseeds, root crops, and dairy are likely not to suffer under international competition.
98. Semin, "Prioritetnyi natsionalnyi proekt," p. 11.
99. Bespakhotnyi and Baryshnikov, "Napravleniia perestroika sistemy," p. 1.
100. See V.I. Tarasov, "Problemy adaptatsii agropromyshlennogo kompleksa pri vstuplenii Rossii v VTO" (The Problem of Adaptation in the Agricultural Sector upon Entry into the WTO), Ekonomika selskokhoziaistvennykh i pererabatyvaiushchikh predpriiatii, no. 9 (September 2006): 15.