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. Last Updated: 07/27/2016

Officials Defend Import Tariffs

Top agricultural officials Tuesday defended Russia's new import tariffs, saying they would boost domestic production but not, as critics have charged, result in higher prices.


Viktor Khlystun, Russia's agriculture minister, and Alexander Zaveryukha, deputy prime minister in charge of agriculture, said the new 15 percent tax on imported foods was justified and should be preserved.


"We would be very, very disappointed if the decision were reversed," Zaveryukha told a news conference, adding that the government was under pressure to revoke the decree.


Valery Kruglikov, first deputy director of Russia's customs committee, said some importers and official who opposed the decision were overreacting. He said new tariffs were in effect only until September and may than be changed. "Changes will fully depend upon the economic situation," he said.


He also said that imported foods were not subject to the Value Added Tax, even though a 10 percent levy is charged on Russian food products.


Khlystun added that there were no duties on foods not produced in Russia under new decree.


A number of Russian officials, including Mayor Yury Luzhkov and St. Petersburg Mayor Anatoly Sobchak have severely criticized the new tariffs, which took effect March 15, saying new tariffs will boost inflation, thereby leading to social unrest in the country.


The Council for Foreign Economic Policy of Russia's Foreign Trade Ministry, a group of bankers, industrialists and trade-industry officials, recently joined the chorus of opponents, Interfax reported Tuesday.


Council Chairman and Foreign Trade Minister Oleg Davydov said the tariff increases on such items as electronic parts and wool would hurt domestic producers who rely on the imports to make their products.


"We will have to fight for the revision of import customs ties in the interests of Russian consumers and several branches of the domestic industry," the minister said.


But Khlystun said Tuesday that the measure was necessary to support the Russian producer at a time when imports are flooding into the country.


"Russian producers have been facing serious problems with sales beginning last summer, even though domestic production declined," Khlystun said.


The agricultural officials said the new tariffs on imported foods would not push up prices if trade officials turn to Russian agriculture producers rather than Western exporters, for food supplies, agriculture officials said Tuesday.


Moscow officials have been reluctant to purchase food in Russian agricultural regions even though the city had been offered cheap state credits for such purchases, said Zaveryukha.


High food prices were the result of traders who bring in imported foods and products from the regions and charge up to 100 percent more than the wholesale price, Khlystun said.


He said the disproportion between wholesale and retail prices was most evident in Moscow and St. Petersburg, which together accounted for more than half of Russia's food imports. Both St. Petersburg and Moscow city officials were among the loudest opponents of the import tariff decision.


He called on city officials to get rid of middlemen and trade directly with regions and set up wholesale markets.


"When traders import chicken legs for 1,600 rubles a kilo and sell for 3,200, there must be something wrong with it," Khlystun said. "It would be a sin if the government did not withdraw some of this enormous mark-ups as taxes."


While admitting that quality of Russian foods was not up to world standards, Khlystun said imports could also be of low quality. He referred to recent cases when Russian authorities did not allow imported meat products into the country because of its poor condition.


Khlystun and Zaveryukha insisted Tuesday that Russia will not import grain this year besides insignificant purchases for Russian Far East. Khlystun said the harvest was expected to be about 90 million tons in 1993, 7 to 8 million tons less than last year.