December 27, 2012

 

US to approve new law on US beef exports to Russia

 

 

A bill establishing permanent normal trade relations (PNTR) with Russia, passed the US Congress this month and was sent to the US President to be signed into law, which will give cattle producers the opportunity to significantly increase beef exports to Russia.

 

"Ranchers can now sell more than 60,000 tonnes of American beef to Russia every year," Watty Taylor, former president of the Montana Stockgrowers Association said. "But above that, we can export all the high quality beef we want at a reduced 15% tariff. We will have a substantially larger market than the 60,000 tonnes." 

 

Taylor explained there were a lot of beef cuts that do not bring much revenue to beef producers such as short ribs and beef tongue, but those cuts sell for much more in Russia. For example, tongue sells for about US$1 a pound in the US, and sells for US$10-12 in Asia and other overseas markets.

 

Taylor said he testified about the bill that was sponsored by US Senator Max Baucus, D-Montana, to the Senate financial committee, telling the Senators that Montana produces a lot of high quality beef and "we should be able to market it." He explained that establishing PNTR with Russia was the first step in that process.

 

When Russia joined the World Trade Organization (WTO) in August 2012, part of that included lowering tariffs and increasing market access for foreign businesses required by the WTO, Taylor said.

 

American businesses could not fully capitalise on the new market access, because the US had not extended PNTR status to Russia, Taylor said. This bill establishes PNTR status.

 

According to a press release from Baucus, "Senator Baucus' legislation puts US exporters on a level playing field with their competitors in Europe, China and the more than 150 WTO member nations."

 

Last year, Montana exported US$1.8 million in products to Russia, which is the ninth-largest economy in the world, Baucus said. In 2010, Montana exported US$6 million worth of cattle alone to that country. In 2006, total exports from Montana to Russia were only US$170,000.

 

Taylor said there are a lot of cattle producers in the Northern Plains region, and last year the region's producers exported some 40,000-50,000 live heifers to Kazakhstan. While the US cow herd is small currently, Taylor said that is more about the drought than producers culling herds for other reasons. Once the drought alleviates, Taylor expects the cow herd to increase on ranches across the US.

 

With the new law, Taylor said the US could now also take advantage of WTO's trade enforcement tools to resolve issues impeding US exports to Russia. He said the US beef markets went through this resolution process when Canada and Mexico appealed to the WTO about Country-Of-Origin-Labelling (COOL) laws, and also when the EU complained about the use of implants.

 

The US may need this WTO resolution because it recently sent beef and pork to Russia, and Russia is threatening to send it back, Baucus said. He said Russia recently announced it is instituting a non-scientific ban on US pork and beef containing a widely used feed ingredient called ractopamine, despite international standards issued by food safety organisations concluding that it is safe to use.

 

Taylor said the new bill also removes Russia from the 1974 Jackson-Vanik amendment. He explained Congress passed Jackson-Vanik to push the Soviet Union to drop restrictions on the emigration of its Jewish population. With the Soviet Union gone and those restrictions no longer in existence in Russia today, Jackson-Vanik is unnecessary, he added.

 

Baucus said he expects US exports to Russia to double within five years. He said the US currently exports 48,000 tonnes and tariffs fluctuate from 15-60%. According to the way the law is written, US can now export 60,000 tonnes of frozen beef and up to 11,000 tonnes of fresh chilled beef, along with all the high quality beef the US wants to export to Russia under a reduced tariff of 15%.