In January 2014, four cases of wild boar affected by African Swine Fever (ASF) were identified in Lithuania and Poland, near the Belarusian border. Russia reacted immediately: only five days later it banned all imports of livestock, fresh pork and certain pig products coming from the European Union. What seemed to be an unfortunate and isolated local problem in Lithuania and Poland turned into a major bilateral issue in EU-Russia trade relations. The EU has in the meantime resorted to the World Trade Organization (WTO) dispute settlement procedure.
The impact on the sector in the EU
Since the meat ban started at the end of January, the EU meat producing industry has been losing around €4 million per day. In particular, the EU’s eastern member states, in Russia’s immediate neighbourhood, have suddenly been deprived of one of their key export markets. For example, Lithuanian pork producing companies are predicted to lose approximately LTL 14 million (€4 million) each month, and the losses of the Latvian meat industry are also likely to be considerable. The Polish farmers selling their products to meat brokers are suffering the most from the import ban; according to the daily Dziennik Gazeta Prawna, their prices went down 15-20% in February 2014 as a result of the embargo.
Russia used to be a significant export market for this sector: in 2013 the EU supplied Russia with pork worth € 1.4 billion, accounting for 25 % of its total exports of pigs, fresh pork and certain pig products.
Third countries involved
In the wake of Russia’s unilateral trade ban, China, South Korea, Taiwan and Japan have followed its path by banning pork imports. Measures are however limited to meat of Polish origin.
In the meantime, Russia has had to mitigate the lack of pork supplies and subsequently started to consider lifting its ban on Brazilian and US pork meat which was in place for their use of ractopamine, an additive to animal feed.
Russia eventually decided they would indeed start importing pork from the US, but only from two firms of the Chinese-owned producer Smithfield Foods Inc. The spokesman of the Russian agriculture “watchdog” Rosselkhoznadzor (Russian Federal Service for Veterinary and Phytosanitary Surveillance) Alexei Alexeyenko confirmed that they would wait to start the import from these two US companies until the failures of their delivery systems are fixed in order to guarantee safety.
For its part, the EU reacted and condemned the Russian market closure, deeming the measure to be “disproportionate“. The Commission’s annual Trade and Investment Barriers Report 2014 criticises the Russian Federation for having still not fully implemented its WTO commitments more than one year after accessing to the WTO, and mentions examples similar to the pork ban.
Ironically, there have been regular reports of ASF outbreaks inside the Russian and Belarusian borders since 2007, concerning both wild boar and domestic pigs. This is why EU Health Commissioner Tonio Borg concludes that the ASF virus “most probably comes from Russia itself“. The Commission has in the meantime implemented several WTO-compliant control measures in order to contain ASF.
On 8 April 2014, EU Trade Commissioner Karel De Gucht said “the EU has decided that, after several weeks of unproductive talking with our Russian counterparts, there is no choice other than pursue this case at the WTO“. The first step in the WTO dispute settlement procedure is consultations, which last for a maximum of 60 days. If no solution is found, the EU may request the WTO to set up a panel.
As a placatory measure, Polish pig farmers from the regions affected by the recent ASF outbreak will be compensated for their reduced sales, Polish Agriculture Minister Stanislaw Kalemba announced after meeting Commissioners Dacian Ciolos (agriculture) and Tonio Borg. This plan is expected to be co-financed by both Poland and the EU.