Publication: Monitor Volume: 2 Issue: 45

Russia plunged deeper into potential conflict with its major western trading partners over the weekend following threats by government leaders February 29 to raise import tariffs by up to 20 percent. The executive commission of the European Union warned March 1 that such an action could both hinder Russia’s entry into the World Trade Organization and complicate plans for the creation by 1998 of an EU-Russia free trade area. A commission press release noted that Moscow’s proposed actions would also violate an existing EU-Russian Interim Agreement that went into effect February 1. (See Monitor, February 1) That agreement stipulates that consultations should precede increases of tariff protection. The commission press release also observed that the average weighted tariff on EU exports to Russia still reaches 19 percent as compared to an average of 1 percent on Russian exports to the EU. (1) The EU accounts for some 40 percent of all Russian trade, making it Moscow’s largest trading partner. (2)

The imbroglio with the EU comes amid mounting tension with the United States over Russian threats to suspend imports of U.S. chicken products. (See Monitor, February 27) U.S. chicken exports to Russia swelled to over $500 million last year, and Russia is now the largest market for U.S. poultry parts. A U.S. deputy treasury secretary characterized the threatened Russian action as "blatant protectionism." Echoing their European counterparts, U.S. officials have warned that banning chicken imports could raise obstacles to Moscow’s entry into the World Trade Organization. (3)

Russian Onslaught in Western Chechnya.