Last year was the best ever for beef trade with Russia, as U.S. exports topped $300 million. Russian demand for U.S. beef was outstanding, and the U.S. industry capitalized on a larger tariff rate quota that was negotiated as part of Russia’s accession to the World Trade Organization (WTO).

Russian customers showed a growing appetite for high-quality, grain-fed U.S. beef. What had once been primarily a market for U.S. beef livers was now purchasing large volumes of round cuts for processing, and a wide range of muscle cuts for its rapidly expanding foodservice and retail sectors.

However, trade slowed dramatically toward the end of 2012 as Russia stepped up enforcement of its zero-tolerance policy for residues of the livestock feed additive ractopamine. Despite diplomatic efforts to address this issue, the Russian market formally closed to U.S. beef on Feb. 11. Not surprisingly, the impact on 2013 beef exports to Russia has been dramatic. When compared to 2012, first-quarter exports sank 87% in volume to 1,858 metric tons and 96% in value to $2.3 million.

“Although Russia’s position on ractopamine has been on the books for some time, they really only started enforcing it last fall,” explains Thad Lively, U.S. Meat Export Federation (USMEF) senior vice president for trade access. “Russia contends that it closed the market because the U.S. government did not come forward with a program for shipping beef from cattle that hadn’t been fed ractopamine. Russia has imposed new requirements and restrictions on beef from other suppliers as well, but the extreme step of closing the market only applies to the U.S.”

Lively says USDA officials have been working closely with the U.S. beef industry in recent weeks to develop a plan for resuming exports to Russia. Great care must be taken, however, to ensure that the proposed program is feasible and economically viable before it’s presented to Russian veterinary officials. Though some final details are still being worked out, Lively expects this process to move forward soon.

“After much consultation with USDA and representatives of the U.S. cattle and beef industries, USMEF is comfortable that the program being developed will satisfy Russia’s requirements,” he says. “We also feel it’s workable for packers that are able to develop a source of ractopamine-free cattle – and this is critical, because there is no point in declaring that Russia has reopened to U.S. beef if exporters who produce ractopamine-free beef are still not able to access the market. The U.S. industry had built Russia into a destination that delivered a strong return for U.S. beef, and that’s the environment we need to restore.”

The next step is for USDA to present the elements of this program to their counterparts at the Russian Veterinary and Phytosanitary Surveillance Service. It's too soon, however, to speculate on when shipments will actually resume.
 

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“It’s important to move carefully on this because Russia has always been a market in which the terms of access have been a bit hard to define,” Lively explains. “We are frustrated by the interruption in export activity and we want back in the market as soon as possible. But this has to be done right if U.S. beef is going to have long-term success in Russia.”

The fact that Russia is now a WTO member could be beneficial to U.S. efforts to restore access to the market. However, Lively cautions that addressing this trade impasse through WTO channels can be a complex proposition.

 “Certainly by joining the WTO, Russia has taken on certain treaty obligations,” he explains. “When WTO members choose to deviate from international food safety standards, they are required to come forward with a scientific risk assessment that justifies their position. There is an international standard for ractopamine residues that is recognized by WTO, but it’s not the zero-tolerance policy that Russia is imposing. When officials from the U.S. and Russia meet to discuss a solution to this matter, Russia’s obligations under the WTO are likely to be a key part of that conversation.”    

 

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