OREANDA-NEWS. April 19, 2012. The Federal Antimonopoly Service (FAS Russia) will undertake measures to observe the law on protection of competition in course of actions towards supporting particular sectors of the economy in the context of membership in the World Trade Association (WTO), reported the press-centre of FAS Russia.

The FAS Expert Council for Agro-Industrial Complex discussed possible risks and threats for developing competition in agro-industrial complex due to Russia’s joining WTO.

Representatives of industry unions and associations made reports at the session of the Expert Council, in particular: the Meat Union of Russia, the National Meat Association, the Russian Union of Hog Producers, the National Milk Union, Russian Sugar Union, the National Association of Exporters of Agricultural Products, the Association of Producers of Agricultural Equipment, etc. All speakers expressed concerns about possible adverse consequences, which domestic agricultural producers can experience due to opening our markets with Russia joining WTO.

According to market participants, the main risks and threats are related with changing the measures of customs-and-tariff regulation and limiting state support of agriculture. Participants arrived to a unanimous opinion, that the consequences of joining WTO will have a very adverse impact upon certain markets of agricultural complex. For instance, changing customs duties will increase import of dairy products, and domestic production will shrink while investment prospects of the industry will be decreased. Import duties for sugar, approved for Russia joining WTO, will make domestic market less protected and more dependent on exchange prices. As a result of reducing export duties for sunflower, prices for oil-bearing crops and products produced from them can grow up considerably due to intensified competition for quantity of sunflower inside Russia. At the same time, decreasing customs duties for import of live pigs from 40% to 5% and decreasing the tariffs for import of non-quota pork meat will lead to market oversaturation, abrupt reduction of prices and, as a consequence, lowering investment prospects of companies.

Members of the Expert Council pointed out that government support of agricultural sectors, particularly: subsidizing credit interest rate; co-financing regional programmes for developing agriculture from the federal budget; compensating some costs of purchasing fodder, fuel-and-lubrication materials, mineral fertilizers; customs-and-tariff regulation of the market of agricultural products – helped stabilizing the situation in the industry over the last years.

Russia joining WTO can significantly reduce the rate of return in many sectors of the industry.

Since many agro-holdings comprise enterprises across the whole chain, from growing agricultural raw materials or food supply to producing finished agricultural products, failure at any link of the chain will affect the end results. It will result in reducing production of domestic products and decreasing their competitive ability.

Under the agreement on agriculture signed by the Russian Federation under the framework of joining WTO, by 2012 the level of support should be reduced from USD 9 billion to USD 4.4 billion.

In the experts’ opinion, it is important to adopt a package of measures as quickly as possible in order to increase financing of agriculture according to the obligations undertaken by the Russian Federation due to joining WTO, as well as protecting domestic market of agricultural products.

Measures of state support should also concern modernization of infrastructure services, including power supply, roads, market and port equipment, water supply, dams and drainage systems, works for developing infrastructure combined with environment protection programs. According to members of the Expert Council, technical regulations of specific markets of agricultural complex must be unified and pay special attention to developing science and applying modern agricultural technologies.

“FAS informed developed an Action Plan for 2012 in view of the Russian Federation joining WTO. The Antimonopoly Service analyzed and estimated possible problems for developing competition associated with Russia joining WTO. Concerns raised by the market participants will be summarized and forwarded to the Ministry of Agriculture and the Ministry of Economic Development to be used for devising measures and programmes of work with the agricultural industry in the context of WTO. FAS is in favour of all support measures that are allowed or are not prohibited by WTO. The key point is to ensure non-discriminatory access of all market participants to measures of state support in order to develop fair competition”, said the Chairman of the Expert Council, Deputy Head of FAS Andrey Tsyganov.