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. Last Updated: 07/27/2016

Gore Warns on Poultry Ban, Tariff Hike in Limbo

U.S. Vice President Al Gore has sent a strongly worded letter to Russian Prime Minister Viktor Chernomyrdin threatening unspecified political and economic consequences if Moscow goes ahead with a proposed ban on American poultry exports from March 16.


Separately, a deputy economics minister said the government was unlikely to adopt a proposal by Finance Minister Vladimir Panskov last week to raise duties on all imported goods by an average of 20 percent across the board, while other trade officials called into question both the scope and the wisdom of the controversial plan.


Russian officials on Monday expressed annoyance at Gore's letter and reiterated that a ban on U.S. poultry exports -- worth an estimated $500 million in 1995 -- would be imposed unless the U.S. agreed to meet certain health and certification standards.


Vyacheslav Avilov, Russia's chief veterinary inspector, told Interfax that Gore's letter would have no bearing on ongoing talks on the issue and that he was surprised by "this attempt to make Russian-American relations dependent on the solution of the matter."


Other officials described the letter as "rather tough" and said Chernomyrdin would not issue a prompt reply because of irritation at Gore's "excessively sharp tone," according to Interfax. The agency said that the prime minister had assigned acting Agriculture Minister Alexander Zaveryukha to handle the matter.


Avilov and other sources indicated, however, that there was progress in discussions with U.S. chicken exporters over standards and that negotiations were continuing.


Spokesmen for Gore could not be reached for comment Monday.


Tough talk over chicken has raised fears in the West of a protectionist shift in Moscow ahead of June's presidential poll. Those fears were reinforced last week when Panskov suggested raising import levies, but Sergei Ignatiev, deputy economics minister, said the plan was not likely to be fully implemented.


"It's unlikely that all import duties will be raised by 20 percent," Ignatiev said in an interview, citing "obligations" to the International Monetary Fund and World Trade Organization to raise tariffs "only slightly," if at all.


Russia pledged not to increase the overall "weighted average" of import tariffs as one of the conditions for a $10.2 billion International Monetary Fund loan granted preliminary approval last month, while Western officials have said Russia's accession to the World Trade Organization could be threatened by protectionist policies.


An IMF official quoted by The Washington Post said it was too soon to tell whether the loan prospects could be jeopardized by Russia's trade moves.


"It may not be alarming at all once they decide what they're going to do," he said. He added that "our assessment could be affected" by a "massive shift" toward protectionism.


Ignatiev said that import duties would not be raised across the board but that hikes would be applied to a selective number of items and possibly cut on others. He did not specify which goods might be affected, adding that measures were still under government review.


Import duties are an important source of money for the state budget, he added. Panskov said the measures were necessary to make up for severe revenue shortfalls.


A Foreign Trade Ministry official, who asked not to be identified, noted that Panskov's proposal did not necessarily mean tariff rates -- at a weighted average of 13 percent to 14 percent when last raised July 1, 1995 -- would skyrocket. Using 13 percent to 14 percent as the base for a 20 percent rise would hike tariffs by just a few percentage points overall, he explained, not send them up to the 30 percent range.


A Finance Ministry official did not clarify how much import tariffs might be raised, but said: "We don't have any documents regarding the 20 percent rise of the weighted average rate for import duties."


The official, who asked not to be named, said electronics was the category of goods most likely to see an increase in duties, while food tariffs would likely be left unchanged. The government also planned to cut back on the number of goods now permitted into the country duty-free, the official added.


An official at the State Customs Committee, who spoke on condition of anonymity, was critical of Panskov's initiative.


"This measure does not aim at regulating the market, it serves only to patch up the budget," said the official, who asked not to be named. "I hope common sense will prevail."


On the chicken war, Gore wrote Chernomyrdin that 39 U.S. senators have signed a letter to U.S. President Bill Clinton demanding urgent measures on the issue, Interfax said. Meanwhile, U.S. Trade Representative Mickey Kantor issued veiled threats to impose sanctions on Russian imports if chicken shipments, suspended Feb. 16, are not resumed, the Post reported.


Reuters said that U.S. poultry giant Tyson announced it would trim output by 7 percent in response to uncertainty over exports to Russia and higher grain and feed prices.