Altercation over Health Safety Measures Triggers EU-Russia Trade Dispute

8 June 2011

An EU-Russia spat over trade in fresh vegetables is casting shadows on Moscow's ongoing bid to accede to the World Trade Organisation.

In the wake of a fatal E. coli outbreak in Europe, Russia on 2 June imposed an import ban on all fresh vegetable products from the EU, even though Russia's health agencies have not yet signalled any cases of infection in their country. The European Commission- which has been among the stronger supporters of Russia's accession to the global trade body - has criticised the import ban as disproportionate, unscientific, and contrary to WTO rules.

Russian Prime Minister Vladimir Putin has defended the ban, and dismissed criticism that it contravenes global trade rules. "We can't poison our people for the sake of some spirit [of WTO]," he told Russian business executives in the southern Russian city of Sochi.

This feud follows a mysterious and rare bacterial outbreak that has primarily affected Germany; as Bridges Weekly went to press, over 20 people had died and over 2,300 sickened in the past month. Spanish producers estimate that Germany's panic regarding Spanish produce- German officials initially blamed Spanish cucumbers and tomatoes for the outbreak - is costing them €200 million weekly. One Spanish exporter, Costa de Almeria, has already incurred €1 million worth of losses from having to destroy stocks, according to a 3 June BBC report.

European Commissioner on Health and Consumer Policy John Dalli "protested to the Russian Federation" and "requested the immediate withdrawal of the measure" in a 2 June letter to Russian authorities.

Blanket ban has repercussions for industry and WTO entry

The Russian ban applies to all fresh vegetables that originate from the 27-country bloc. Russia accounts for a quarter of EU fresh vegetable exports, with the Moscow Times putting that value at €600 million annually. The export market, however, pales in comparison to the EU's own internal trade.

The ban will benefit Russian vegetable producers. The head of the Russian Consumer Protection Agency, Gennady Onishchenko, has publicly urged Russians "to forego imported vegetables in favour of domestic products," arguing that the E. coli outbreak "shows that Europe's lauded health legislation - one which Russia is being urged to adopt - does not work."

According to Russia's agricultural minister, Yelena Shrinnik, their position is heavily influenced by the nation's capacity to suffice on domestic agricultural production alone.

The all-encompassing ban is illegal under WTO regulations, Fernando Valenzuela, head of the EU delegation to Russia, argued.

"One of the aspects of joining the WTO are a number of regulations... and certainly the ban that has been decided by the sanitary authorities of Russia is not compliant with those rules," Valenzuela said at a news conference in Moscow. He then asserted that Russia must demonstrate that it can, of its own accord, abide by the rules of the WTO in order to demonstrate that it is willing to become a responsible member of the organisation.

Maxim Medvedkov, Russia's top negotiator for its WTO membership talks, rejected Valenzuela's comments, telling Interfax that "any WTO member is entitled to this, and Russia has and will have this right after joining the organisation."

WTO rules give members the right to restrict trade in order to protect the health and safety of their citizens, but specify that such restrictions must be "applied only to the extent necessary to protect human, animal or plant life or health" and are "not maintained without sufficient scientific evidence." (Article 2.2 of the SPS Agreement)

The Russian consumers' rights agency has said that Moscow would consider lifting the ban once the EU identifies the source of the outbreak and the mechanism for the bacteria's transmission.

EU officials have warned that the trade spat could sour the mood for discussions scheduled for tomorrow's EU-Russia summit in Nizhny Novgorod, Russia.

ICTSD reporting: "E. coli: Russia bans import of EU vegetables," BBC, 2 June 2011; "Spain seeks compensation for E. coli blame," BBC, 3 June 2011; "Spanish farmers blame Germany for crisis," BBC, 3 June 2011; "Russia won't lift ban on EU vegetables to enhance its WTO bid, Putin says," BLOOMBERG, 3 June 2011; "Russia and EU clash on trade ahead of summit," EU OBSERVER, 6 June 2011; "Russia refuses to lift Europe vegetable ban," FINANCIAL TIMES, 3 June 2011; "Ban on Vegetable Imports Threatens to Derail EU Summit," THE MOSCOW TIMES, 6 June 2011.

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