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FAO Regional Office for Europe and Central Asia

New playing field for agri-food trade and post-Soviet economies: ‘Proceed with caution’

For countries of the Commonwealth of Independent States, three factors affecting agri-food trade require careful analysis of their compatibility:  participation in the World Trade Organization, regional integration through the Eurasian Economic Union, and proximity to Europe.

A conference on “Integration Processes in Commonwealth of Independent States Countries and their Influence on Agrifood Trade” in Kaliningrad, Russian Federation last week was convened to promote better understanding of these processes.

The conference – organized by FAO in collaboration with Kaliningrad State Technical University – addressed four broad topics:  trade agreements in post-Soviet countries and their economic impact, fulfilment of WTO entry requirements and ways of resolving trade issues, supply chain transformation as a result of changes in trade policy, and the application of sanitary and phytosanitary measures.

There is a need for detailed analysis of the consequences of concluding trade agreements, many participants agreed, including a review of issues that could potentially lead to contradictions between various trade agreements.   Participating in the conference were leading specialists in the region, international experts, FAO officers, government officials, and representatives of the Kaliningrad regional government.

Vladimir Zarudny, Minister of Agriculture of Kaliningrad region, observed that changes in trade policy are happening so fast that business does not have time to adapt, which creates additional complications in the application of trade agreements.

“Taking advantage of the opportunities offered by trade agreements requires bringing the domestic legal framework regulating trade into line with international rules, as well as additional measures to improve the overall competitiveness of the agricultural sector,” said Ekaterina Krivonos, an economist with FAO’s Trade and Markets Division.

John Baffes, a senior economist with the World Bank, pointed to the close relationship between oil prices and food prices, noting that the post-Soviet region is an enormous supplier to world markets of both energy and agricultural products.

Global market fluctuations bring additional risks to the already rather vulnerable economic situation of Russia, provoked by a decline in global oil prices and sanctions due to geopolitical tensions, he said.

David Sedik, FAO senior policy officer and leading specialist in agricultural policy, underlined the importance of harmonizing sanitary and phytosanitary measures in the region with international rules, and pointed to the need to lower informal trade barriers. He also noted that the Eurasian Economic Union has a difficult task ahead in its desire to ensure common approaches to tariff, non-tariff and sanitary and phytosanitary measures across the region. He advocated a careful, consistent and transparent approach, leaving time to ensure that the Eurasian Economic Union does not increase barriers to trade through inconsistent and confusing additional regulations.

“Only 20-30 percent of the trade of CIS countries occurs within the region,” he said, “so it is important to pay attention to reducing friction and barriers to trade with partners outside the region.”

Iryna Kobuta, economist with FAO’s Regional Office for Europe and Central Asia, focused on comparing access to food markets in Russia, Georgia, Moldova and Ukraine. She noted that under the free trade area agreements between the European Union (EU) and Georgia,  Moldova and Ukraine import tariffs on food would be lower than those between Russia and the EU. However, she said that differences in import tariff rates between these countries and Russia were not expected to cause a massive re-export of food from EU countries through Georgia, Moldova and Ukraine to Russia. For example, differences between Russian and Ukraine import tariff rates for food from the EU were much greater immediately following Ukrainian entry into the World Trade Organization in 2008, she noted, and no massive re-export of food was registered then. Therefore there was no reason to believe there would be a massive re-export of food when the free trade area agreement between Ukraine and the EU takes effect.

The annual Forum on WTO Law, which the conference formed part of, has become a platform for discussing issues related to the application of WTO rules and agreements. A special session on food prices, trade and food security organized at the outset of the conference drew interest among the participants and provoked a lively debate on appropriate trade policies to achieve food security globally.

Also noteworthy was a session of the newly formed Agricultural Trade Experts Network in Europe and Central Asia, organized by FAO within the framework of the two-day conference. The Experts Network, which brings together universities and research centres in the region, is a neutral and independent platform for the exchange of ideas and collaboration on international agri-food trade issues in the post-Soviet countries.

27 March 2015, Kaliningrad, Russian Federation

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