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. Last Updated: 07/27/2016

On Steel and Chicken, WTO Debate and NPR

In response to "George Bush Has Laid An Iron Egg," an editorial on March 7.

Editor,
In an effort to get to the real issues here, the first thing we should not do is resort to name calling and finger pointing. The U.S. steel import tariff and the Russian poultry ban are attempts by the United States and Russia to accommodate domestic producers of the respective commodities, and nothing more.

The U.S. economy is built on the concept of free trade, and the Russian economy discovered free trade in 1991. While both countries now operate their economies on this premise, what would a free market be without government intervention?

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Now to the real story. All countries around the world regard self-sufficiency in certain areas of production as strategic. Certainly food and steel production fall into this category. This philosophy coupled with the politics generally involved always results in protectionism.

When protectionist programs are put in place, who are the winners? Nobody. Why? One might say in this case that U.S. steel producers and the Russian chicken producers are the winners. In the long run, whenever economies (supply and demand) are artificially influenced, sometime in the future -- usually sooner rather than later -- the economy will falter. Russia probably knows this better than the United States. Remember communism?

Now, who are the losers? Everybody. The U.S. steel industry will not gain in the long term, because ultimately supply and demand will prevail. The U.S. steel consumers' cost will go up. U.S. products produced with U.S. steel will have to compete with foreign imports (cars, etc.) and less U.S. produced goods will be sold.

The same thing will basically happen with Russian-produced poultry. The consumer will have to pay higher prices and presumably higher prices will result in lower demand. Not only will the domestic producers not benefit from protectionist measures, the real losers are the consumers in our respective markets with higher prices and lower availability.

Now that we understand what the real issue is here, let's get away from the smoke screen of the health issue of U.S. poultry. There is no health issue.

Obviously, the Russian government must convey to the consumers that they are trying to protect their health in order to justify why they must pay more for poultry, as any other reason would not go over very well.

The chicken legs that are shipped from the United States to Russia are from exactly the same chickens from which we take breast meat for our own consumption.

The entire chicken is inspected and approved by the U.S. Department of Agriculture under the guidelines dictated and approved by the Russian veterinary service several years ago.

Regardless of whether the steel issue and the poultry issue is worked out or not, let's at least get the facts straight.

There is no need to fabricate concepts and take one-sided positions, such as referring to U.S. poultry as a "chemically altered steroid-pumped super bird." This serves no purpose.

Let's stick to the real issues.

Don Ford
President & CEO
American Poultry International, Ltd.
Jackson, Mississippi



Tasty Russian Chicken



Editor,
I applaud the Russian government on its move to ban American poultry from entering the country. I was visiting Yoshkar-Ola in the republic of Mari El over the Christmas and New Year holiday and had the opportunity to cook for the family that I was staying with. There I discovered the difference between Russian chicken and American chicken is considerable.

The chicken I cooked for this family had little to no fat, it was lean and tasted like the chicken I remember eating as a child in the United States in the 1960s.

I have commented for years that poultry in the United States was getting fatter and fatter and that the taste has changed. My visit to Russia proved that I was right and I feel that Americans should re-evaluate our willingness to eat the chemical-laced food that we are forced to purchase. Maybe this move by the Russian government will improve food quality in the United States.

Richard Spencer
Indianapolis, Indiana



Russia and the EU



Editor,
Having visited Russia on a number of occasions over recent years and read your newspaper, one thing occurs to me. While most Eastern European countries are on the track to joining the European Union, Russia appears to have no interest in the prospect. Russians appear to consider that their geographic size makes them a natural unit of equal importance to the EU. It is obviously not the case that Russia is a match for the EU, because while Russia has huge potential it remains underdeveloped economically.

It appears that Russia is being done out of its European birthright. Russia is essentially a European country and membership of the EU would strengthen democracy, open up the country to fellow Europeans and others and increase investment while yielding obvious benefits to the rest of Europe as a vast source of under-exploited natural resources.

In the short term, Russia must surely open up the Europe and the rest of the world and ease its visa travel restrictions. Russia's huge cultural resources could benefit the country so much through increased tourism etc.

John O'Brien
Dublin, Ireland



WTO Debate



In response to "WTO: Myths and Realities," a comment by Mikhail Delyagin on March 8.

Editor,
I support Mikhail Delyagin's opinion about Russia and the WTO.

Contrary to what is usually assumed both in Russia and Western countries, WTO accession negotiations are not necessarily a logical priority for Russia. Russia currently exports mostly raw materials. 52 percent of all exports are oil, gas and weapons -- commodities for which the WTO is not relevant. Moreover, the WTO is currently under strong attack, and some very significant changes could take place in the next two to four years.

To make a bid now to enter the WTO could only mean one thing: Russia wants to enter one of the last international clubs to which it still has not been admitted yet.

One can understand such a motivation, but rapid accession to the WTO without provisional protection for at least 10 years would be completely destructive for Russia. The actual issue, then, is not just the accession but how Russia can obtain temporary relief from certain WTO obligations that its economy cannot currently meet.

First and foremost, Russia should be free to dramatically raise its import tariffs, if only to gain room for maneuver in further negotiations.

Second, Russia should make no concession regarding it being allowed to devise and implement industrial policies during the next five to seven years.

And last but not least, Russia must defend its ability to restrict capital flows and to enforce capital regulations for the next five years.

If the Russian government really believes it can win on these three issues, joining the WTO would be worthy of consideration.

There is another point, however, that certainly reduces the urgency of WTO accession negotiations: the geographical structure of Russia's foreign trade. Europe in the broadest sense and the CIS make for at least two-thirds of Russia's foreign trade. Increasing coordination and cooperation with the European Union and developing a system for easing and promoting intra-CIS trade, such as the establishment of a payments union modeled on the European Payments Union in its 1949-1958 vintage, would make much more sense.

Developing trade with CIS countries could generate from 10 percent to 15 percent growth over a three-year period (up to 5 percent per year). As the EU is already committed to the process of Eastern European enlargement, and as most countries involved still have non-negligible trade with Russia, the EU is set to become Russia's most important trade partner. This is why reaching an agreement with the EU on trade is -- after a CIS payments union -- the next highest priority for Russia.

Four projects could be commonly devised with the EU, each of them having a much greater impact on the Russian economy than joining the WTO:

• supporting major investments to economize on energy and local services (local public utilities) and thereby facilitate a rapid improvement of living standards. This would also cut down on energy and fuel waste, and thus reduce not only energy consumption but also pollution. Under the Kyoto protocol, this would increase the pollution credits Russia could sell; European countries could buy these credits and help to fund the investment effort. This could be part of an EU-Russia integrated energy policy.

• supporting trade integration between CIS countries through technical assistance and political support for the setting-up of the local equivalent of a payments union.

• supporting a kind of post-privatization cleanup that is badly needed to harden property rights. This is particularly important in the raw materials sectors. It could involve technical assistance in setting rules and regulations as well as in making clear that some "deprivatization" is politically tolerable if it is the only credible way to move away from a situation in which vested interests and collusion prevent any improvement in governance. Such a cleanup could also pave the way for a debt-equity swap enabling Russia to lower its debt burden.

• fostering industrial integration at branch level by targeting some specific industries (automobile, aerospace, food-processing etc.) in order to help the flow of foreign direct investment.

All this does not mean that accession to the WTO should not be a medium- to long-term goal. However, the WTO will be really significant for Russia when and only when Russia's industry has been restructured and modernized.

Jacques Sapir
School of Advanced Studies in Social Sciences
Paris, France



Editor,
As a former banker and an interested observer of Russia's emergence as a free economy, Mikhail Delyagin's article on the World Trade Organization particularly interested me.

The single most important thing Delyagin noted is that the "fine print" of all WTO members' agreements allows any member nation to address excessive price competition through the implementation of a price-restraining tariff. Delyagin also mentions bilateral agreements whereby unilateral tariffs can be imposed, even under most-favored-nation agreements.

In the former case, Russian steel could be, and has been, sold more cheaply than U.S. steel to U.S. customers, who always want a good buy to improve bottom-line profit figures. As long as the quality of Russian steel is as good as U.S. steel, who is to say that Russian steel would not continue to be imported by U.S. buyers, even with the prices equalized by a tariff?

Two variables would need to be explored. One is the age of Russian steel plants versus those of the U.S., as this defines the overall quality and tensile strength of steel products and also defines the overall production and operating costs. Newer plants generally are cheaper to operate and require less maintenance.

The second is steel-shipping and handling costs from Russia to the United States.

A new door has just opened for Russian steel in the short term, but perhaps in the longer term as well. The countries of Central Asia need additional international bridges, more railroad lines and pipelines to carry oil and gas from the Caspian Sea area both to the West and East.

Billions of dollars are being spent now by the United States and its allies on Central Asia as we fight the war on terrorism. The infrastructure of these republics will, for years to come, benefit from these Western infrastructural expenditures. This is a golden opportunity for the Russian metals industries to provide materials for construction and development.

George Singleton
Birmingham, Alabama



Unpleasant Surprise



Editor,
The Pentagon's plans to target Russia along with other "rogue states" were an unpleasant surprise for me. Are we to understand that all the post-perestroika detente between our two countries has been flushed down the drain by die-hard hawks in Washington? Are they trying to dismantle the very edifice of a new strategic relationship just for kicks?

Eugene Leonenko
Plekhanov Economic Academy
Moscow



Editor,
As an American I am incredibly upset about the Los Angeles Times report on the Pentagon's plans to target Russia along with the other countries mentioned in the Nuclear Posture Review. To me, this is just utter stupidity at a time like this.

It may be realpolitik to do this kind of contingency planning, but the relationship between our two nations has often been difficult and this does not make it easier for us to get along.

I had hoped we had turned a corner toward a more reasonable rapprochement with each other. This kind of report will only make it easier for hard-liners in each country to re-escalate tensions and pad defense budgets.

I honestly don't know what, if anything, can be done about this, but I can assure you I will voice my displeasure about this development to the White House and the U.S. Congress.

John Moor
San Antonio, Texas



American or Martian



In response to "Chris Floyd's Global Eye" on March 1.

Editor,
I must say that I truly enjoyed the comment by Chris Floyd. With a name like that he must be American, and he writes like an American. However, American or Martian he has nailed the situation with the Pentagon lying machine and the related Bush family dirty tricks -- notwithstanding the usual mess that is being and has been made of our foreign policy.

Don't get me wrong, I love America and I'm no pacifist.

But somehow I don't think the Pentagon's plans to lie to the world (last time I looked, the United States was still part of the world) are in my best interests, or in the United States' best interests. I don't even think lying is in the Pentagon's best interests, but those jackasses have very, very seldom ever had a clue what was in their own best interests, much less in the interests of the American people, including their own soldiers and sailors.

Once again the Pentagon reveals it's strategy: They will save the village by destroying the village.

Mark Swaney
Fayetteville, Arkansas