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Russia Stalls EU Exports With Tough Pesticide Residue Stance

Jim Prevor’s Perishable Pundit, November 18, 2008

Freshfel Europe — which describes itself as “…the European Fresh Produce Association, representing the interests of importers, exporters, wholesalers, distributors and retailers of fresh fruits and vegetables in Europe and beyond…” — came out with a strong statement opposing a new Russian requirement:

FRESHFEL EUROPE CONDEMNS RUSSIAN PLANS TO INTRODUCE SAFETY CERTIFICATES FOR SELECTED FRESH PRODUCE ORIGINATING IN THE EU

Freshfel Europe is alarmed by the information that the Russian Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor) will require, [as of November 15], safety certificates for several products originating in the EU. Freshfel regrets this move, which takes place at the moment when Russia and the EU agreed to hold technical discussions on Maximum Residue Level (MRL) settings to align Russian rules to international practices. This decision is also contradictory to the outcome of bilateral discussions held by Russia with the authorities of several Member States.

According to Rosselkhoznadzor, a safety certificate will be required as of [November 15] for the following products and origins:

GREECE — grapes, peaches, nectarines, oranges and mandarins

SPAIN — peaches, nectarines, mandarins, grapefruits, pears and oranges

LATVIA — all products

THE NETHERLANDS — tomatoes, apples, carrots, beetroots and cabbages

HUNGARY — apples, celery, cabbages and plums

ITALY — grapes

[Editor’s Note: This release has been revised to account for recent changes Russia made in the date for enforcing requirements as well as the products and countries included.]

This measure is putting in jeopardy the exports of EU-quality produce, which today amount to close to 1.3 million tons. EU fruit and vegetables are grown according to strict EU safety and environmental requirements, and the proposed measures threaten to prevent Russian consumers from a wide range of EU quality produce. Freshfel would like to highlight that the current developments are resulting from inadequate MRLs set by the Russian legislation, which are not in line with international practices set by CODEX. Freshfel laments the move from Russia, as at a recent meeting between the EU and Russia, it was agreed to further discuss the inadequacy of the Russian MRL with a view to bringing them into line with international best practices.

Freshfel further criticizes the short term of implementation of the measures, not allowing exporters adequate time to cope with the new requirements. This is likely therefore to lead to the severe disruption of trade flows and will hinder current arrangements between suppliers and Russian importers. Furthermore, the framework of operation of the safety certificate is not clear as long as discrepancies of interpretation between the EU and Russia exist over the terms of the Memorandum. It also remains unclear on which basis laboratory analysis should be undertaken. Freshfel is committed to work with the European Commission to clarify this point and to propose to Russia alternative MRLs compatible with the terms of the Memorandum.

The measures implemented by Russia impose a burden across the whole sector on the basis of limited and questionable problems, and Freshfel considers these measures to be excessive and lacking in proportionality. On the contrary, the new measures mean that Russian consumers will be deprived from EU-quality produce by a situation which does not place the health of Russian consumers at risk.

European exporters are accustomed to complying with strict safety standards and are ready to adjust their practices in order to cope with specific customer requirements demanded by the market as long as these requirements are workable, reasonable and consistent with international trade policy. The move by Russia is a negative development at a moment where Russia is in negotiations to join the WTO.

What could the Russians be looking to achieve by this measure? We asked Pundit Investigator and Special Projects Editor Mira Slott to find out more.

Frederic Rosseneu
Secretariat, Freshfel Europe
Brussels, Belgium

Q: Are Russia’s actions against the European produce trade purely political, and/or what is the context? Are other food products facing similar restrictions?

A: The whole thing seems quite political if you look at all the decisions that they’re based on good science and the lack of science supporting this decision. Having said that, we’re not the only sector that had to deal with these problems. Plant products — flowers and live plants — have been subjected, and certainly on meat there were very big problems one to two years ago, which were finally settled.

Another product last week was fish imports subject to export controls. It means each company that wishes to export fish needs clearance by Russian inspectors on site. We witnessed the same requirement with meat, where each meat consignment needs a certificate signed by Russia from each member state. Luckily we’re not that far yet with fruits and vegetables, but it is generally feared we’re moving to such a system.

Q: Why is Russia so aggressive on this front?

A: We’re not the only ones affected; in part this is all due to an economic power play because of the economic revival in Russia, and to make it clear to Europeans and other countries that Russia is no longer a garbage market, no longer a trash bin of the world, which is a legitimate request.

Q: What are the requirements exactly and how did they escalate?

A: A signed memorandum in March of this year between the EU and Russian Federation agreed as of the first of July that all consignments of plant products to Russia must be accompanied by pesticide documents. The memorandum is only on pesticides and nitrates. If exporting tomatoes to Russia, for example, documentation would need to show which plant protection products were used and the time of last application. It has some problems for re-exports but this is manageable. But supposedly based on continued infractions with Russian laws, Russia threatened in August to implement a requirement of safety certificates for different products originating in the EU. Now Russia has declared it is following through with its threat.

Q: Doesn’t EU law already require strict pesticide regulatory measures, more stringent than in the U.S.?

A: In Europe, Maximum Residue Limits (MRLs) are by far among the lowest in the world. And the range of pesticides is also quite small compared to other countries in the world. This is the first time the EU is dealing with exports to a third-world country, where pesticide requirements are stricter than the EU. This is not a problem because any country has the right to impose its own restrictions. But in Russia, through the Federal Service for Veterinary and Phytosanitary Surveillance (Rosselkhoznadzor), is going much further than other countries. Residue limits are far below what we know in the EU. A lot of cases are not detectable by laboratories.

Q: What do you mean? If testing can’t determine whether companies are actually meeting the Russian Federation’s requirements, how can authorities measure compliance?

A: If in testing you only looked for that one particular product you might detect it, but most laboratories test 300 pesticides at a time, with accuracy of 0.01 milligrams per kilogram.

For sure, this program is problematic to almost all countries exporting to Russia. We respect a country’s own legislation but it also must be in accordance with rules set with WTO. From a general perspective, we were working on solutions with the European Commission; solutions acceptable to both us and the Russians. But all of a sudden Russia decided to make its threat a reality and require safety certificates for EU products.

Q: It sounds like you were caught by surprise.

A: We have no concrete measure why Russia went from threatening to implementing the threat. We first knew of the threat to implement safety certificates in August. Russia argued it was due to continued infringement of their law, but in the majority of cases, this was not so because Russia didn’t have clearly defined limitations for those pesticides.

Q: From a scientific perspective, is it possible to produce some of the products in question with lower residue levels?

A: We don’t have any other alternatives for those products. Some products leave residues. Either you accept this or you don’t have apples. For certain residue levels, the requirements are not achievable for certain uses; it’s as simple as that. It’s not that we weren’t willing to find solutions

We first knew of the threat in August, even if it was not based on true infringement of law. The recent change occurred in October. Russian authorities said we warned you in August, and now we’re going to do it. There was no indication or reason for this. We were under the impression we were having good visits with the Russian authorities. Russia and the EU had agreed to hold technical discussions on MRLs to align Russian rules to international practices. Now in November the new requirements are set to be enforced.

Q: What happens now?

A: For certain countries which Russia says are main offenders, they will be subjected to the new regulations for listed vegetables. [Editor’s note: see list in the announcement above.] Any consignment containing the products will require not only a pesticide certificate but a safety certificate, residue tests from a lab showing results and also a declaration it complies with Russian legislation.

Q: What impact will this have on industry? Will certain countries feel the heat more than others?

A: For now, a lot of exporters have put product at minimum or on hold because they don’t know what will happen if consignments will actually pass the Russian border.

A lab test for a product on average costs in dollars nearly $350 or $400 for each consignment, so the bill becomes quite considerable. But also, there is great uncertainty because we don’t know which residue limits we need to comply with. We are not able to know if it will comply with Russian legislation or not. The degree of uncertainty is palpable.

And Russia seems to be targeting all products exported from a country, whether produced there or not. All the exports will have to be accompanied by safety certificates. This makes no scientific or public health sense since the exact same product if sent via country A will not require a safety certificate, but if sent via Country B, it will require a certificate.

Q: How important is Russia as an export market to Europe?

A: Russia is the biggest export market outside of the EU. And also one of the few growing export markets.

Q: Has the produce industry ever faced a situation like this with Russia in the past?

A: This is the first time with produce. There was a little history with Polish produce, and that was purely for political reasons, nothing to do with the safety of produce.

Q: Is Russia going beyond Europe in enforcing these new produce trade regulations? Will other countries be affected?

A: We’ve seen now the Russians are also putting out a memorandum to Turkey, to Argentina and to Chile. More countries are now receiving these new requirements. It’s budding. Our impression is that the Russians are going to all exporting countries to address the issue.

Q: Since the EU has already operated with such stringent pesticide and safety requirements, will other countries find the demands more challenging?

A: For Europe, we export a lot to Russia, but it is still marginal to what we sell within the European community. But other countries might be better able to adapt because they have larger scales of operations to Russia. Some of those countries have different distribution channels destined for targeted export markets.

It may be easier to adapt to Russian rules, if dedicated farms are producing for Russia. This is a more difficult issue in Europe where only part of production is going to Russia. Even if we are used to adapting to stricter requirements than the law, as we’ve seen tougher retail requirements coming from Germany or UK, what Russia is requiring is unmanageable.

Q: Russia claims European produce infractions justify the safety certification requirement. Could you further discuss the veracity of the claims?

A: We have serious questions with the Russian results for infractions, where there are no clearly defined limits. There were no infractions based on EU law. Some infractions of residue levels in excess of Russian requirements prove unmanageable for EU producers, where we see no alternatives.

Q: What products face the biggest challenges in terms of meeting Russia’s regulations?

A: Apples, pears and citrus really are the large volumes, and in each of these cases there is at least one substance where there is a real problem, and which we can’t do without.

We are currently establishing lists of solutions. These are the three most important crops.

We hope that the Russians will continue bilateral negotiations. At least by finishing these negotiations, we can have transparency on which residue limits we need to comply with. That is not clear. We are working with the plant protection industry to point out ways to alleviate potential issues and to seek reasonable procedures for delisting the countries if they show no problems.

Q: What are the procedures outlined by Russia at this time?

A: Right now in the memorandum it is vague on when and how the requirement for a safety certificate will be abandoned if there is no problem. There remains a lot of freedom for Russia on delisting a country. We’re kind of afraid it might take too long. For inclusion, if Russia finds one problem, you could be on the list of countries needing a safety certificate.

Q: Are negotiations continuing on these issues?

A: I try to remain optimistic. Last week we were all optimistic and the news came as a great surprise. Our due diligence is well known. If you think of GlobalGAP and other standards that the majority of our products comply with, that in itself should be enough for the Russians. At least they should know these standards exist.

Q: It seems ironic that Russia is questioning the EU’s commitment to producing products with low pesticide residue levels. Isn’t there strong consumer demand in Europe for insuring these programs exist?

A: Greenpeace and other anti-pesticide groups are very strong in Europe and the UK disseminating powerful messages to consumers and making it a major concern being picked up by politicians and the media.

There have been some very minor issues with pesticides but not to the proportion of what has happened with safety in the U.S. the past three years.

Q: What is Freshfel doing to help its members deal with this trade dispute?

A: Our role is coordinating information for our members so they know what to do, and we are in close liaison with the European Commission to advise them on where the particular problems are and to seek solutions. We are working along with the European Crop Protection Association, which can supply the data behind the chemicals. The Commission has always called on us to find out what we think and to help look for answers.

It is an interesting question to what extent countries can impose limits on pesticides. WTO rules require scientific justification for such restrictions. Russia would have a hard time producing scientific evidence to support this action.

After the Berlin Wall fell, the opening of trade with the East was initially focused on the cheapest product. The big protection for Russia was that most European produce was not grown to sell to Russia, so it typically met normal European standards just as American exports met US standards.

Now the Russian market has matured some and, certainly, if Russia wants to harmonize pesticide standards with Europe that would probably be a good idea.

We just hope that in these difficult times, this effort is not just a form of protectionism. The Great Depression was aggravated by beggar-thy-neighbor policies like America’s Smoot-Hawley Tariff Act. The path to greater prosperity lies through more trade, not less, so any move toward the other direction has to be quickly nipped in the bud.

Many thanks to Frederic Rosseneu, Secretariat, Freshfel Europe, for helping to clarify the situation for the industry.

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