Russia imposed an embargo on food supply from Ukraine

Russia imposed an embargo on food supply from Ukraine

Duty mode and predamage against Ukraine will not affect the Russian economy, stated in the Ministry of economic development. The vast majority of Ukrainian goods is not critically important, said the first Deputy Minister Alexey Likhachev.

MOSCOW, 1 Jan. Russia from 1 January to protect its market introduced for Ukraine customs duties and food embargo, similar to that which acts against the countries that supported anti-Russian sanctions.

In addition, Russia has suspended to Ukraine, the agreement on the CIS free trade zone.

The embargo and the FTA

This year, the West was extended for one year sanctions against Russia, and received a similar response in the form of extension of the food embargo. In addition, to the sanctions against Russia joined in August, Albania, Montenegro, Iceland, Liechtenstein, Norway, Ukraine and Georgia. In response, Russia decided to expand its response to these States, except Georgia, taking into account the degree of their involvement in the sanctions regime against Russia.

At the same time against the Ukrainian regime predamage was introduced with a delay of 1 January 2016, and was expected to act only in case of implementation of the economic part of the agreement on the establishment of a free trade area (FTA) between Kiev and Brussels, which was signed in June 2014. With these arrangements was due to the introduction of import duties on Ukrainian goods — the so-called most-favored.

The fact is that in November 2014 Ukraine and the European Parliament ratified the Association agreement between Ukraine and the EU, part of which is the provision on the free trade zone. The Russian authorities were afraid that duty-free EU goods via Ukraine will rush to the Russian market and create unequal conditions for domestic producers. So since then, there have been about 20 expert, as well as six Ministerial trilateral meetings to attempt to agree on the issue.

The last Ministerial meeting was held on 21 December, and it finally became clear that Russia, Ukraine and the European Commission on the negotiations failed to agree on the implementation of the economic part of agreement about free trade zone (FTZ), thus, from 1 January in the country to earn predamage, as well as the mode of customs duties on all other goods at the rate of 6%.

In the Ministry of economic development believe that the duty mode and predamage against Ukraine will not affect the Russian economy. The vast majority of their products is critical, said the first Deputy Minister of economic development Alexey Likhachev, noting that the Russian Federation will be able to compensate all through import substitution.

Ukraine was once one of the largest trading partners of Russia — the trade turnover between the two countries in 2011 exceeded 50 billion dollars, but then began to consistently decline. Already by the end of 2015 it will fall to $ 12 billion, by the end of 2016 — up to 10 billion, said Likhachev.

According to the FCS, the import to Russia from Ukraine in 2014 decreased by 31.9%, amounting to 10.7 billion dollars in total turnover of 27.8 billion. Meanwhile, for the first half of 2015, imports from Ukraine decreased in 2,3 times up to 2,7 billion dollars.

Answer Of Ukraine

On the eve of new year, Ukraine decided to “answer” Russia. Tuesday December 29, President of Ukraine Petro Poroshenko has signed a law that will allow Cabinet the country to impose economic sanctions against Russia in response to Moscow’s decisions on free trade and food embargo.

Following this the Ministry of economic development of Ukraine has proposed to the Cabinet to suspend the Treaty on free trade zone with the Russian Federation on 2 January and 10 January to impose an embargo on some Russian goods. Among them — vodka, confectionery, meat, chocolate and chocolates, baby food, fish, processed cheeses, Beers, filter cigarettes, food for dogs and cats and a number of other food products. Also under the ban can get equipment for Railways or tramways, diesel-electric locomotives.

The documents were approved by the Cabinet of Ministers of Ukraine on December 30. As noted the Deputy Minister of economic development and trade-trade representative of Ukraine Nataliya Mykolska, Kiev restrictions will apply only in case will act Russian.

Likhachev from the MAYOR of the Russian Federation however believes that if Ukraine will completely close the Russian export of agricultural products, some fundamental consequences for the Russian selhozproizvoditelej will not do. According to him, this year the export of agricultural products of the Russian Federation to Ukraine “at the most optimistic estimates” amount to 450-480 million dollars with much of it being South-East of the country. Russia will be able to compensate for the loss due to the shift to other markets, in this aspect the country has made significant progress over the past 1.5-2 years, almost approaching the amount of us $ 20 billion in exports of agricultural products.

Among the major export goods of the Russian Federation to Ukraine Likhachev called the tobacco, tobacco products, alcoholic beverages, confectionery and meat products. This is confirmed by the data of Federal customs service of Russia.

According to the materials of the Russian customs service, Russian exports to Ukraine in 2014 decreased by 28.4%, totaling 17.1 billion dollars. Of them the share of agricultural products accounted for only 584,8 million (with a decrease by 27.9%). Meanwhile, already in the first half of 2015 the total exports of the Russian Federation to Ukraine decreased by 2.6 times, amounting to 4.8 billion dollars of agricultural products — by 43.3%, to $ 192,3 million.

The Ukrainian Ministry of agrarian policy and food, meanwhile, said that the volume of exports of agricultural products, which Russia introduced an embargo for 10 months of the 2015 year in monetary terms equal to the deliveries to Ukraine from Russia (of 118.8 116.4 million and million, respectively).