Food safety and technical standards and regulations are traditionally viewed as effective tools for public health protection. However, they can also be used as protectionist measures aiming to shield domestic producers from competition. The weak legal framework for implementing these measures may lead to trade disputes between countries. Here are the several examples of such conflicts among post-Soviet countries that are not uncommon at the present time.
A Bit of History
In the Soviet era, the economy of former Soviet republics developed as an integral part of USSR’s single national-economic complex. Russia, a country with huge natural, financial and human resources, dominated and tended to be the center for political and economic decisions. Other republics were mostly considered as raw suppliers for Russia.
The Soviet Union’s breakup resulted in sharp economic contraction as traditional trade ties collapsed. The agricultural and food production sectors of newly independent states come under significant pressure. Each former republic faced the necessity of protecting its own food producers and at the same time providing its population with food.
Nowadays, Russia remains the largest consumer of agricultural and food products from the post-Soviet republics. For instance, Belarus, Russia’s small western neighbor, exports 55 percent of its dairy production. Of this amount, Russia receives 90 percent, which makes Belarusian dairy production highly dependent on Russian trade policy. The vulnerability of Belarusian agricultural and food sectors were dramatically demonstrated during the “milk war” with Russia in 2009. Belarus’s “food wars” with Russia are special because of Belarus’s close political ties with Russia. But these disputes are not unique in the post-Soviet space (ex., Russia also engaged in a “wine war” with Georgia and Moldova in 2006 and other disputes).
“Milk War Smells of Gas”
On June 6, 2009, Russia’s public health and consumer protection agency Rospotrebnadzor prohibited the import of most categories of dairy products from Belarus. Taking into account that dairy exports to Russia brought about $1 billion to Belarus’s total budget of about $15 billion, the prohibition hit the Belarusian economy hard.
The official reason given for this conflict was the inconsistency of Belarusian milk and milk product with new Russian technical requirements. However, the regulations had become effective in December 2008, thus raising the question of why Russian officials had not banned Belarusian food products earlier. Because the official reason was unconvincing to many, various other reasons were offered.
Some of these opinions focused on the economic relationship between Russia and Belarus, which had been steadily worsening since 2007, when Russia raised gas prices and demanded that Belarus give up control of gas transit from Russia to Europe. The 2009 “food wars” were considered to be a continuation of the gas conflicts. In addition, Russia’s intention to “participate” in the privatization of Belarusian large food producers was also among the possible reasons for that conflict.
In the Pursuit of Reintegration
Nevertheless, the “food wars” between Russia and Belarus have revealed internal problems in the Belarusian economy: the country’s food safety system does not meet modern standards; the agriculture sector remains highly subsidized; privatization has barely begun, and others. Unfortunately, these deficiencies prevent Belarusian producers from entering EU markets and ones outside the Commonwealth of Independent States (the successor of the USSR) with the aim to diversify the country’s exports.
Meanwhile, Belarusian authorities have sought more recently to reintegrate with the Russian economy. The creation of the Customs Union on Jan. 1, 2010, and the Unified Economic Space on Jan. 1, 2012 by Russia, Belarus and Kazakhstan was intended to remove customs borders, unify trade and technical standards and regulations, and open the markets of the three countries. Nowadays, the countries of the Customs Union implement a uniformed policy in the area of technical requirements, which is likely to cease “the food wars” between the members of the Union.
On Dec. 16, 2011, Russia signed the documents for joining the WTO, with ratification of the accession due no later than July 23, 2012. Entering the WTO, Russian takes the obligations of Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and Agreement on Technical Barriers to Trade (TBT Agreements), under which the WTO sets constraints on member-states’ policies relating to implementing these kind of measures. Belarus is still outside the WTO.
“Cheese War” or Let’s Go West!
Ukraine, the second largest trade partner of Russia and Belarus in the post-Soviet space, does not participate in the regional integration process considered above and tends to orientate toward the EU markets. Moreover, Ukraine has been a member of the WTO since 2008.
The new episode of “food wars” – the “cheese war” between Russia and Ukraine – is considered to be the result of the Ukrainian failure to meet Russian and new Customs Union technical requirements. Particularly, in the beginning of this year, Russia banned the importation of cheese produced by three Ukrainian companies, and later four more cheese producers came under the ban, claiming that Ukrainian cheese contains palm oil, which is prohibited.
Like in the case of the “milk war” between Russian and Belarus, experts also indicate the deeper reasons of this conflict: current Russia-Ukraine gas negotiations and Russia’s effort to drag Ukraine into the Customs Union, zooming it out of the EU.
The conflict is still ongoing. Ukrainian authorities state that they intend to resolve it without addressing the World Trade Organization for settling the dispute. The Ukrainian National Academy of Agricultural Sciences estimates that Ukrainian cheese producers lose $426 million a month from the termination of exports to Russia.
In its turn, recently Ukraine has banned import of dairy products from Belarus, when Ukrainian inspectors started fixing the excess of allowed antibiotics in their content. As they say, this is all “to be continued” …
Volha Samasiuk, who holds a Diploma in Law and a Doctor of Philosophy in Law from Belarusian State University, is now a LL.M. candidate at the University of Arkansas School of Law.