PLAYING CHICKEN WITH TRADE.

Despite a declaration of victory by U.S. government officials, an agreement signed on March 31 by a top Russian veterinary official and U.S. Ambassador Alexander Vershbow may not, in fact, mark the end of a high-profile trade battle over U.S. poultry exports to Russia. In remarks to the press yesterday, Russian Agriculture Minister Aleksandr Gordeev warned that a Russian ban on U.S. poultry products would be lifted only if U.S. producers meet an extensive series of requirements set out by the Russian side in the March 31 protocol. In addition, Gordeev indicated that the Russian government is now discussing a second policy proposal–one involving quotas on U.S. chicken products–that would also serve to limit U.S. poultry exports to Russia.

The extent to which Gordeev’s remarks reflect the views of the Russian government (and the Kremlin) is unclear, but his warnings yesterday suggest that the dispute over poultry exports may merely have entered a new stage. The issue is one of considerable importance. In remarks of his own on March 31, Vershbow identified the poultry row as the number one problem in Russian-U.S. relations, and said that five U.S. cabinet officials had involved themselves in resolving it. The poultry dispute was also raised during a telephone conversation between Presidents Vladimir Putin and George W. Bush yesterday. Both sides would like to ensure that the issue is resolved as preparations accelerate for the Russian-U.S. summit scheduled for May 23-26 in Moscow and St. Petersburg.

Moscow imposed the poultry ban on March 10. Many observers in Russia and elsewhere argued that the move was at least in part retaliation for the Bush administration’s own controversial decision on March 5 to slap tariffs of up to 30 percent on a range of steel imports. Reports at the time estimated that the U.S. action could cost Russian steel producers US$400-500 million in lost revenues, though one Russian TV report put the potential losses at over US$1 billion (AP, March 5). Remarkably, U.S. poultry exports to Russia are comparable in value, having earned U.S. poultry producers about US$700 million last year. The U.S. poultry industry, moreover, employs people in thirty-eight different states, and half of its exports–or about 1 million tons–go to Russia. Russia itself is reported to have produced only between 550,000 and 800,000 tons of poultry products last year (see the Monitor, March 7). Indeed, the Russian decision to ban U.S. poultry products appears also to have been part of a strategy aimed at protecting domestic producers. Gordeev had himself complained last month that Russia is overly dependent on food imports, particularly meat. He described this as an issue affecting national security.

Vershbow trumpeted the signing of the March 31 protocol as the end of the poultry dispute, but there were some signs that the issue might not be entirely resolved. Most notably, there appeared to be no immediate, official confirmation from the Russian side, an unusual silence given the importance that the issue has assumed. It appeared also to be clear that the protocol in question was a fairly complex one, containing a total of thirteen inspection and certification demands which U.S. producers had to satisfy before Russia would meet the protocol’s requirement to lift the ban by April 10. Included among those requirements was one that required the U.S. government to inform fourteen American poultry producers–whose products had been found by the Russians to contain salmonella–that they would be temporarily excluded from the list of approved exporters. Other of the conditions require the United States to create a new verification certificate for poultry products with a stamp that is signed by a veterinary inspector. In addition, feed by U.S. producers must be registered with Russia. According to Vershbow, the Russian demands centered on two issues: the discovery of salmonella in some of the imported U.S. poultry lots, and the appearance of discrepancies, including forgeries, in veterinary documents. The demands set out by Russia in the protocol are apparently designed to address these problems.

The negotiation of the protocol agreement appears to have been a contentious process, lasting from March 11-22. At that point Russia’s chief veterinary inspector, Mikhail Kravchuk, signed the document, but it took more than a week for the U.S. side to do the same. According to a Russian news source, moreover, the United States refused to honor a Russian request that the document be signed on the American side by Kravchuk’s U.S. counterpart. It was instead signed by Vershbow on March 31. Meanwhile, Vershbow himself charged that the Russians had complicated the negotiations by shifting their positions on more than one occasion. He also accused them of exaggerating the problems allegedly found with the poultry shipments, and said that the U.S. producers had fully lived up to the terms of a 1996 agreement that governs the Russian-U.S. poultry trade.

Most seriously, Vershbow disputed the notion that Moscow had imposed the poultry ban for reasons related to consumer safety, as Russian trade and veterinary officials had claimed. He said that a protectionist agenda appeared to underlay the Russian actions, and intimated that Moscow had not only harmed Russian-U.S. relations by imposing the ban, but that it had weakened Moscow’s case for membership in the World Trade Organization as well. Ironically enough, the Bush Administration has itself been accused of pursuing a protectionist agenda in its decision to impose the tariffs on steel, and some have suggested that Moscow responded as it did to the U.S. tariffs in part because it is not a WTO member, and could not, therefore, follow the example of European and other countries which are contesting the U.S. steel tariffs in the WTO.

Against this background, the next week may prove to be an interesting interlude. A delegation of Russian veterinary inspectors flew to the United States on April 1 to begin their inspections of U.S. poultry export facilities and to ensure that the conditions set out in the March 31 protocol are being met. Their assessment, and what the Russian government does with it, could have an important effect on how relations between Russia and the United States progress over the next six weeks, and whether the May 23-26 Russian-U.S. summit is as successful as both sides now hope it will be (AP, Strana.ru, March 31, April 2; Reuters, AFP, March 31; New York Times, Dow Jones, April 1; Moscow Times, April 2).

“CAUCASUS FOUR” LIMPING ON ONE LEG.