Russia promises "quite substantial" U.S., EU food import bans

by Reuters
Thursday, 7 August 2014 01:17 GMT

(Updates with USTR spokesman, paragraphs 10-11)

MOSCOW, Aug 6 (Reuters) - Russia will impose "quite substantial" bans on the U.S. and EU food imports and has already decided to suspend U.S. poultry imports as part of President Vladimir Putin's order to prepare a list of food import bans, its veterinary service said.

Putin signed a decree on Wednesday banning or limiting imports of agricultural products from countries which have imposed sanctions on Russia because of its support of rebels in Ukraine.

Putin ordered his government to come up with a list of goods to be banned for imports into Russia and to last one year, the Kremlin said.

Russia's Veterinary and Phytosanitary Surveillance Service (VPSS) will ban the U.S. poultry imports, VPSS spokesman Alexei Alekseenko told Reuters on Wednesday evening.

He declined to say what other products would be included in the list, but said the ban on the U.S. and EU food imports will be large. Russia imported $43 billion worth of food last year.

"In relation to the U.S., the country which was imposing sanctions, the decision (on food import bans) will be quite substantial," Alekseenko said. The same "of course refers" to the European Union, he added.

Apart from boosting local production and expanding cooperation from sanction-resilient countries, Putin's decision may well become a self-made sanction on the population, Dmitry Polevoy, ING chief economist in Russia & CIS, said in a note.

"Even though from political point of view the move may look appropriate, and it will indeed hit countries supplying food to Russia, the move will likely only amplify the effects of financial/sectoral sanctions imposed on Russia," Polevoy said.

"This will likely add to overall sanction costs via higher food inflation and, so, will have a widespread effect on households," he added.

"Going after western business will backfire on Russia causing more isolation and crippling growth, a spokesman for the U.S. Trade Representative said in a statement.

"The sanctions that the United States has imposed comply with our international obligations. By contrast, Russia's move to ban agriculture goods from the United States and the EU appears to have no grounding in the WTO rules governing international trade. We will monitor the situation and take actions as appropriate," Deputy Assistant U.S. Trade Representative Trevor Kincaid said.

To see the list of Russia's top food imports: (Reporting by Polina Devitt; Additional reporting by Eric Walsh in Washington; Editing by David Evans)

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