However, last week Russia announced it intends to lower the 2012 tariff rate quotas (TRQs) allotted to the countries that supply its imported pork. This is significant because pork imported within the TRQs is only subject to a 15 percent duty while the duty rate on pork imported outside the TRQs is 75 percent.
Thad Lively, USMEF senior vice president, explains the TRQs don’t place an absolute cap on imported pork, but they make imports beyond the TRQ volumes much less cost effective in an effort to bolster demand for Russia’s domestically produced pork. If the US does receive a lower TRQ volume in 2012, this will likely have a dampening effect on next year’s exports to Russia.
Russia’s quest to join the World Trade Organization (WTO) has the potential to provide some relief on this issue, as WTO membership would require Russia to administer its TRQs in a more uniform and transparent manner, Lively added.
Russia, however, announced no plans to reduce its TRQs on imported beef in 2012. Through May, US beef exports to Russia totaled 57.4 million lbs. valued at $76 million. This is steady with 2010 in terms of volume, but 8 percent higher in terms of value.
“The tariff rate quota as it currently set up ensures that we’re able to export pork to Russia at a reduced tariff up to a certain amount,” he said. “If we exceed that amount, then the tariff goes up. By design the quota is set to more or less set a ceiling on how much pork Russia will import. The way the Russians have administered this quota over the years has been a little bit opaque; they change the rules from one ear to the next. Just recently they announced new rules for next year; we don’t have all of the details but according to the announcement that was made in the last week or so, Russia actually intends to reduce those quantities so we’d be able to export less pork to Russia at a reduced tariff. Clearly, this is a part of their overall policy to trying to achieve something like self sufficiency in pork production.”
Lively said Russia’s ongoing effort to join the WTO could provide some relief on this issue.
“They have been negotiating for more than 18 years to join the WTO, but I think Russia has gotten quite serious about doing this,” he said. “In fact, we’re even they hope to get it done by the end of this year. Once the join the WTO, they won’t be able to operate the quotas in such an opaque fashion as they do today. Once they create a quota and set the rules, those rules will remain in place; they won’t be able to change the rules without coming back to us and the other countries that supply pork there.”