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. Last Updated: 07/27/2016

U.S., Russia Play High Stakes 'Chicken'

The prospect of a U.S.-Russia chicken war loomed Friday as Russian officials threatened to make a temporary suspension of frozen poultry imports permanent from March 16 unless U.S. exporters improved health and safety standards to Moscow's satisfaction.

"This is not a bureaucratic game," said one Russian agricultural official. "It's very serious. But this question could be decided in 10 days, if people want. It's demagoguery to say it's a protectionist issue," the official, who declined to be named, told Reuters.

The move nevertheless had all the hallmarks of a sop to domestic opinion at a time when the Russian government and producers have adopted a more strident defense of their trade interests. A ban, if implemented, would affect a large part of the $500 million in U.S. poultry shipped annually to Russia -- constituting well over half of the domestic market -- although it would exempt processed food.

"We are concerned with this but we hope the problems will be resolved" before a full ban is imposed, said Ed Nicholson, a public relations manager at Tyson Foods in Arkansas, which exported $200 million worth of chicken, mostly frozen legs, to Russia last year.

"We admit that there are procedural problems with the Russians, we do things differently, but we still think that our product is of very high quality," Nicholson said in a telephone interview, discounting Russian safety concerns.

Stanislav Zakharov of the Agriculture Ministry's veterinary department said in an interview that further talks with the U.S. Department of Agriculture would be held soon, and the imports would be opened again if the U.S. side agrees on Russian terms.

U.S. Agriculture Department officials could not be reached for comment Friday.

Russia, the largest export market for U.S. birds, suspended shipments Wednesday, citing failure to comply with new health regulations, the latest and strongest in a string of recent moves countering foreign imports.

Tariffs on imported poultry were raised from 0.25 ecu per kilogram to 0.30 ecu on Feb. 1, and acting Agriculture Minister Alexander Zaveryukha earlier this month denounced "Bush legs" -- named after food aid to the Soviet Union under former U.S. president George Bush -- for "destroying Russia's poultry market" with prices one-third of domestic chicken.

But Zakharov of the Agriculture Ministry denied that the issue was economic or political.

"During our numerous checkups both here and in the U.S. we found out that the poultry imported from the U.S. does not reflect the needed health safety standards," he said. "The guarantees they show us are not satisfactory. They are not prepared in the right fashion.It's not a ban, it's a temporary halt, and it has nothing to do with protectionism."

Analysts and importers, however, saw the situation differently.

"It's clear that this measure is a part of a protectionist slant that began with [First Deputy Prime Minister] Vladimir Kadannikov's arrival to the Russian government," said Yaroslav Lissovolik, an expert with Russian-European Center for Economic Policy. "The ban, together with the rise in import tariffs, will push domestic poultry prices up, hitting the average consumer."

Konstantin Vorobyov, a public relations director with Soyuzkontrakt, a Russian private company that controls 55 percent of Russia's poultry imports, said the ministry's move could prove effective in cracking down on gray-market importers of poultry of dubious quality. But he did not think a full ban would take effect.

"I don't think the poultry imports will be completely banned," Vorobyov said. "Russian producers cannot satisfy the demand anyway, and the U.S. chicken is still the cheapest imported chicken available in Russia."

Irina Tolmacheva, 45, an accountant shopping at a northern Moscow supermarket Friday, didn't want any trade war breaking out over poultry.

"I hope the government will not allow a ban on chicken imports," she said.

"You know, Russian chickens do not look attractive and are not as tasty as American chicken."