By Vestnik Kavkaza
Last week it was a year since Russia became the WTO member. The talks on accession lasted for 18 years and saw sharp discussion within the Russian business community. Discussions still continue today.
“In the 10 years prior to the actual date of accession, a lot of work has been done on the changes in the regulatory and legislative framework,” Roman Gubenko, a participant of EU negotiations on Russian accession to WTO, says. “The entire basis of our work has been changed in terms of legislation on the threshold of our accession to the WTO. Therefore, the effect of this has been obtained for each industry in advance, long before our actual accession.”
Andrey Dinilenko, a member of the Public Council under the Ministry of Agriculture of the Russian Federation, thinks that the problem is not the WTO. “The WTO is a system of strong competition, in which all parties agree on the rules of the game, where there are power moves, tough sanctions, and so on. That is, we simply joined an organization, where we agreed that we will compete on the relevant conditions of the industry. That is the most weak, frail milk farms were in a very puny, feeble industry, which is called "agriculture". We conducted a comparative analysis of the level of state support for the Republic of Belarus, the EU, the U.S. in term of milk production. We just have a very different level of support, I stress, state support. That makes us just by the level of support totally uncompetitive. What happens as a result of this? Later on, a processing plant, having seen the situation, when it becomes clear that cheaper milk powder is imported, milk fat is cheaper, is beginning to shift to other components. Therefore, butter as a result of the entry into the WTO got cheaper, then there is a level of protective measures. Accordingly, from all sides the milk producer receives a signal: "We do not need you." We currently have a record drop in the production of raw milk in Russia. According to our estimates, by more than 10% compared to last year, we fell in terms of production quality marketable milk. And most likely, we will lose about one million tonnes of milk. Accordingly, agricultural producers will get 15 billion rubles less. This means that, ultimately, the additional revenue of processing enterprises of 30 billion rubles of finished product. Accordingly, where does all this lead us? Our dear importers, seeing that we have such a situation, begin to raise prices of imported products. As a result, we already have for the first time in the summer officially registered by Rosstat a rise in prices for final products. Usually in the summer we always have cheaper milk.
As a result, according to our test purchases that we perform on a regular basis, the volume of counterfeits on the shelves is steadily growing, that is, the use of substitutes. Moreover, unfortunately even with milk fats we are in the same condition of perturbations because the counterfeit is made not from substitute milk fat, not from complex plant fats, which are twice as expensive as basic palm oil, but essentially from technical, crude palm oil. That is, from a product from which you could make candles, soap, but not dairy products.”
“The WTO is not an oil painting, it is a cartoon. And we're still only in the first frame,” Alexander Korbut, vice-president of the Russian Grain Union, says. “We will see the real impact in a few years, when the suppliers, importers, hopefully,our manufacturers and trade will have adapted to it. The main advantage of the WTO for agriculture, we have always said so, is that the state will be forced to change the mechanisms of support systems. There, a change, i.e. unrelated support, has been introduced. It is a green basket. The funny thing is, if you look the data of the Organization for Economic Cooperation and Development, everything is based on a common methodology. In fact, the support prices of agricultural products in our country are practically the same as in the EU and are higher than in the U.S. The price support. But everything is shifted to the "green basket". In the US it is tens of billions of dollars that go into the food aid program, domestic and foreign. This is a market. In Europe, it is project payments that we better don't compare, because the figures are fantastic. The issue is that we need to make this change more intense.”
According to Korbut, “from the point of view of our grain union, so far nothing has changed since we joined the WTO. As there were limitations on the part of some countries, so they remain. And the rest of the positions were quite competitive. The customs duties have been reduced from 120 to 45 euros. So you read "45 euros", it may seem a lot, but you can be patient, but it is only the customs duty for the developing countries that the World Bank determines and sets certain preferences. There are countries where we do have to reduce them to 0. In this regard, we have proposed, are currently are preparing additional materials on how to cancel the preferential treatment for all countries over rice. Essentially we are completely provided in rice. Imports that exist are long-grain rice imports, which we simply do not produce purely on economic indicators. We are already a major exporter of rice… The key problem is the lack of personnel. I do not see that some kind of clear, purposeful work on the preparation of personnel has been done, and this work should be carried out, from our point of view, by the state.”
