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. Last Updated: 07/27/2016

Russia Set for EU Grain Fight

Russia hopes to persuade the European Union to soften planned curbs on grain imports, but it is also preparing legal mechanisms that would enable it to retaliate, a senior government official said Wednesday.

"We are absolutely not satisfied with the EU measures," Maxim Medvedkov, deputy economic development and trade minister, told the State Duma.

"We have already had two rounds of negotiations with the EU, and a third will start tomorrow in Moscow. We hope to reach a compromise that will satisfy our exporters," he said without providing details.

The European Commission plans to impose an import quota of 2.982 million metric tons of low- and medium-quality wheat at a favorable rate of 12 euros per ton from Jan. 1 to stem the influx of Black Sea wheat into the 15-nation bloc.

Within this, the United States would be allocated 572,000 tons and Canada 38,000 tons of the soft-wheat quota, both at a duty of 12 euros per ton. Non-quota imports would have a 95-euro tariff.

Earlier this month, a senior Agriculture Ministry official said Russia was seeking an exclusive annual quota for grain exports to the EU of 5 million tons, including 3 million to 4 million for wheat.

Diplomats in Brussels said that the desired volumes were unrealistic but that a wider quota could be considered.

Russian officials have said Moscow could retaliate by restricting imports of EU meat and dairy products. Medvedkov said the government was preparing legislative mechanisms for such a retaliation.

"Our hands are somehow tied up by imperfect legislation, which does not permit the government to impose tariff quotas ... and other effective measures," he told the Duma.

Medvedkov said the government would in the next few weeks present to the Duma bills on special protective anti-dumping measures and on the state regulation of external trade.

"For the first time we propose to legitimize the introduction of measures in retaliation for discriminatory actions by our trade partners," he said.

Russia represents the European Union's largest single export market for beef and poultry, accounting for around a half and one-third, respectively, of the bloc's overall exports.

It is also a highly significant outlet for EU pork, taking around a quarter of European exports.