VZCZCXYZ0009
PP RUEHWEB

DE RUEHMO #2769/01 2591115
ZNR UUUUU ZZH
P 151115Z SEP 08
FM AMEMBASSY MOSCOW
TO RUEHRC/USDA FAS WASHDC PRIORITY 5367
RUEHC/SECSTATE WASHDC PRIORITY 9980
INFO RUEHVI/AMEMBASSY VIENNA 4652
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 5199

UNCLAS MOSCOW 002769 
 
SENSITIVE 
SIPDIS 
 
USDA FAS FOR OCRA/CURTIS, FLEMINGS, KUYPERS; 
- OSTA/HAMILTON, BEAN; ONA/SALLYARDS, MURPHY 
PASS FSIS/HARRIES, DUTROW 
PASS APHIS MITCHELL 
STATE FOR EUR/RUS 
STATE PASS USTR FOR PORTER, HAFNER, KLEIN 
BRUSSELS PASS APHIS/FERNANDEZ 
VIENNA PASS APHIS/TANAKA 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD ECON WTO RS
SUBJECT: GOR AIMS TO CUT U.S. MEAT IMPORTS IN 
2009 
 
REF: A) MOSCOW 2740, B) MOSCOW 2620, C) MOSCOW 
2579, D) MOSCOW 2204 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (SBU) SUMMARY: On September 11, Russian 
Economic Development Minister Nabiullina sent a 
letter to U.S. Trade Representative Schwab 
requesting expert level consultations on the Meat 
Agreement signed between Russia and the United 
States in 2005 as part of Russia's bid to join 
the WTO (REF A).  Russia's chief WTO negotiator, 
Maxim Medvedkov, informed AgMinCouns on September 
12 that the GOR's position had not yet been 
finalized as to what specific components of the 
Meat Agreement the GOR would like to modify.  He 
did state, however, that GOR plans to make 
amendments for poultry and pork that would take 
effect in 2009.  In recent weeks, several 
government officials have stated they want to 
substantially lower the quota for U.S. poultry in 
2009 (Refs B, C), and raise over-quota duties on 
poultry and pork, even though recent statistics 
show that inflation during the first 8 months of 
2008 has already reached 9.8 percent.  END 
SUMMARY. 
 
------------------------------------------- 
REQUEST FOR CONSULTATIONS ON MEAT AGREEMENT 
------------------------------------------- 
 
¶2. (SBU) In a letter on September 11 to U.S. 
Trade Representative Schwab, Economic Development 
Minister Nabiullina requested consultations to 
discuss issues of concern with the 2005 Meat 
Agreement (Ref A).  Although the letter did not 
specify what issues the GOR would like to 
discuss, several government officials have stated 
to the press recently that they want to 
substantially lower the tariff rate quota (TRQ) 
for U.S. poultry in 2009 and raise over-quota 
duties on poultry and pork. 
 
¶3. (U) Article 3 of the Meat Agreement states 
that the agreement shall be subject to review 
upon request of either Party and that either 
Party may request consultations regarding the 
implementation of the agreement or its 
termination.  The Agreements states that "such 
consultations shall be held within 30 days after 
receipt of a written request, or at such other 
time as the Parties agree." 
 
---------------------------------- 
RUSSIA FOCUSED ON POULTRY AND PORK 
---------------------------------- 
 
¶4. (SBU) Russia's chief WTO negotiator, Maxim 
Medvedkov, advised AgMinCouns on September 12 
that GOR had yet to finalize its position for the 
upcoming consultations.  According to Medvedkov, 
representatives from several Russian government 
bodies will hold internal meetings in the coming 
days to finalize their position.  It is clear, 
however, that GOR does anticipate making 
amendments to the Meat Agreement that focus on 
poultry and pork in 2009.  Medvedkov stated that 
the most sensitive issue was poultry and added 
that he did not foresee a need for any amendments 
on beef. 
 
¶5. (SBU) Medvedkov observed that the U.S. and 
Russian poultry industries signed a "milestone" 
memorandum of understanding (MOU) in July that 
"made conclusions about U.S. poultry exports in 
2009" (REF D).  AgMinCouns stated that the USG 
was aware of the industry agreement, but added 
that it was a private matter that did not involve 
any agreements between our two governments. 
 
 
¶6. (SBU) Observing that "We cannot wait until 
Christmas Eve to announce any 2009 amendments to 
the Meat Agreement," Medvedkov stated that the 
consultations should happen sooner rather than 
later, so that the Russian and U.S. industries 
would have time to make adjustments in production 
and shipping arrangements.  Medvedkov also said 
that the GOR was flexible on the scheduling and 
venue for consultations, as well as on the 
composition of negotiating teams. 
 
¶7. (SBU) In recent weeks, post has heard from 
several government and industry contacts that the 
GOR wants to lower the U.S. quota of poultry to 
750,000 metric tons (mt) in 2009, down from 
931,000 mt.  (NOTE:  That is the level stated in 
the industry MOU that Medvedkov cited.)  In 
addition, it is widely believed that the GOR 
plans to raise over-quota duties on both poultry 
and pork from 40 percent to 90 percent, 
effectively pricing out U.S. supply of over-quota 
pork and poultry to the Russian market. 
 
¶8. (SBU) Representatives from "SoyuzKontrakt" 
advised the Agriculture Section  on September 10 
that government contacts told them that the GOR 
wants to cut the U.S. poultry TRQ allocation down 
to 750,000 mt and that the Ministry of 
Agriculture was also pushing hard for a hefty 
hike in over-quota duties on poultry and possibly 
pork.  (SoyuzKontrakt is the largest importer of 
U.S. poultry in Russia and holds 70 percent of 
the total poultry TRQ.)  The well-connected 
SoyuzKontrakt representatives also stated that 
the GOR has yet to agree on the level of new 
tariff rates, but they were expecting that the 
over-quota duty rate would be high enough to make 
it unprofitable for importers to bring in over- 
quota poultry and pork. 
 
------- 
COMMENT 
------- 
 
¶9. (SBU) Medvedkov's comments on the likely GOR 
issues for consultations on the Meat Agreement 
are consistent with PM Putin's and First Deputy 
PM Shuvalov's August 25 statements about the need 
to reopen some commitments made during the WTO 
accession process, particularly in the area of 
agriculture (Refs B, C).  Likewise, Agriculture 
Minister Gordeyev announced on August 27 that his 
ministry would seek broad cuts in poultry, pork 
and dairy imports, given that "agreements signed 
more than three years ago as part of the 
negotiations on WTO accession are unfortunately 
no longer in Russia's interests."  In their 
public statements about the need to reduce meat 
imports, the GOR has not mentioned any concern 
about the potential inflationary pressures on 
food prices.  Meat prices continue to trend 
upward and jumped 2.2 percent in August on a 
month-to-month basis, according to the Russian 
State Statistics Service.  Inflation during the 
first 8 months of 2008 has already reached 9.8 
percent, and the Ministry of Economic Development 
recently forecast that inflation would reach 12.5 
percent by the end of the year. 
BEYRLE