New Protocol with Russia Increases U.S. Pork Quota for 2009

The U.S. Trade Representative’s (USTR) Office recently announced the signing of a new protocol to the 2005 trade agreement that covers most U.S. pork, beef and poultry exports to Russia. The overall result is very positive for the United States, according to Thad Lively, USMEF senior vice president of policy, planning and research. He highlighted a near-doubling of the import quota for U.S. pork — from 50,300 metric tons (110.9 million pounds) to 100,000 metric tons (220.5 million pounds) — as a noteworthy win for the U.S. pork industry.

“Considering the Russian government’s objective of increasing the efficiency of its pork industry and eventually becoming self-sufficient in pork production, we are very pleased with the outcome of these protocol negotiations,” Lively said. “The doubling of the quota for U.S. pork suggests that Russia views the United States as an important supplier of pork in 2009 and beyond.”

Lively added that another important aspect of the trade protocol is that the United States and Russia have agreed to a series of technical consultations on sanitary and phytosanitary issues that have often disrupted exports of U.S. meat to Russia.

“This is also an encouraging development in our trade relationship with Russia,” he said. “These are issues that need to be addressed constructively if we are to realize the full potential of this market.”

Russia has emerged as an important growth market for U.S. pork exports. Through the end of October, 2008 pork exports to Russia increased by 173 percent in volume and 184 percent in value over the same period in 2007. The increase in the U.S. pork quota will allow a much larger volume of U.S. pork muscle cuts to enter Russia at the in-quota tariff rate of 15 percent, which is the rate that also applies to pork variety meat. In the latest agreement, Russia has the ability to raise the above-quota tariff rate on U.S. pork muscle cut imports from the current 60 percent to as much as 75 percent. But Lively said the 100,000 metric ton quota will soften the impact of this rate increase considerably. Since 2005, the annual quota has averaged less than 52,000 metric tons (114.6 million pounds) and has never been higher than the 2006 figure of 54,800 metric tons (120.8 million pounds). He noted that gaining a larger quota is especially important this year, considering the difficult economic climate.

“While Russia made a tremendous volume of above-quota meat purchases in 2008, keep in mind that its currency and economy were very strong in the first half of the year, and credit was readily available,” Lively said. “It’s much harder to envision that level of above-quota purchases in today’s environment, which makes this increase in the pork quota even more beneficial.”

The agreement made no significant changes in the terms under which Russia imports U.S. beef. A slight increase in the import quota for U.S. beef – from 18,300 metric tons (40.3 million pounds) to 18,500 metric tons (40.8 million pounds) was agreed for 2009. But the quota excludes beef variety meat, which constitutes a large percentage of Russia’s beef purchases. Beef muscle cuts purchased within the quota, as well as beef variety meat, are subject to a 15 percent tariff. The above-quota tariff rate for beef remains unchanged from the 2008 rate of 30 percent. Through the end of October, Russia was the sixth-largest market for U.S. beef exports by volume (43,617 metric tons or 96.3 million pounds) and seventh-largest market by value ($92.1 million) in 2008.

The U.S. Trade Representative’s (USTR) Office recently announced the signing of a new protocol to the 2005 trade agreement that covers most U.S. pork, beef and poultry exports to Russia. The overall result is very positive for the United States, according to Thad Lively, USMEF senior vice president of policy, planning and research. He highlighted a near-doubling of the import quota for U.S. pork — from 50,300 metric tons (110.9 million pounds) to 100,000 metric tons (220.5 million pounds) — as a noteworthy win for the U.S. pork industry.

“Considering the Russian government’s objective of increasing the efficiency of its pork industry and eventually becoming self-sufficient in pork production, we are very pleased with the outcome of these protocol negotiations,” Lively said. “The doubling of the quota for U.S. pork suggests that Russia views the United States as an important supplier of pork in 2009 and beyond.”

Lively added that another important aspect of the trade protocol is that the United States and Russia have agreed to a series of technical consultations on sanitary and phytosanitary issues that have often disrupted exports of U.S. meat to Russia.

“This is also an encouraging development in our trade relationship with Russia,” he said. “These are issues that need to be addressed constructively if we are to realize the full potential of this market.”

Russia has emerged as an important growth market for U.S. pork exports. Through the end of October, 2008 pork exports to Russia increased by 173 percent in volume and 184 percent in value over the same period in 2007. The increase in the U.S. pork quota will allow a much larger volume of U.S. pork muscle cuts to enter Russia at the in-quota tariff rate of 15 percent, which is the rate that also applies to pork variety meat. In the latest agreement, Russia has the ability to raise the above-quota tariff rate on U.S. pork muscle cut imports from the current 60 percent to as much as 75 percent. But Lively said the 100,000 metric ton quota will soften the impact of this rate increase considerably. Since 2005, the annual quota has averaged less than 52,000 metric tons (114.6 million pounds) and has never been higher than the 2006 figure of 54,800 metric tons (120.8 million pounds). He noted that gaining a larger quota is especially important this year, considering the difficult economic climate.

“While Russia made a tremendous volume of above-quota meat purchases in 2008, keep in mind that its currency and economy were very strong in the first half of the year, and credit was readily available,” Lively said. “It’s much harder to envision that level of above-quota purchases in today’s environment, which makes this increase in the pork quota even more beneficial.”

The agreement made no significant changes in the terms under which Russia imports U.S. beef. A slight increase in the import quota for U.S. beef – from 18,300 metric tons (40.3 million pounds) to 18,500 metric tons (40.8 million pounds) was agreed for 2009. But the quota excludes beef variety meat, which constitutes a large percentage of Russia’s beef purchases. Beef muscle cuts purchased within the quota, as well as beef variety meat, are subject to a 15 percent tariff. The above-quota tariff rate for beef remains unchanged from the 2008 rate of 30 percent. Through the end of October, Russia was the sixth-largest market for U.S. beef exports by volume (43,617 metric tons or 96.3 million pounds) and seventh-largest market by value ($92.1 million) in 2008.