RETALIATION AGAINST THE RUSSIAN FEDERATION'S
IMPORT RESTRICTIONS ON ALCOHOLIC BEVERAGES FROM THE COMMUNITY
(21527)
10627/00
COM(00) 452
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Draft Council Decision to supply the Co-operation Council with all
relevant information required for a thorough examination of the
situation in respect of the failure by the Russian Federation to fulfil its
obligations under the Partnership and Co-operation Agreement (PCA)
in regard to trade in alcoholic beverages.
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| Legal base:
| Article 133 EC; qualified majority voting
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| Document originated:
| 18 July 2000 |
| Forwarded to the Council:
| 19 July 2000 |
| Deposited in Parliament:
| 5 September 2000 |
| Department: |
Trade and Industry |
| Basis of consideration:
| EM of 13 October 2000 |
| Previous consideration:
| None |
| To be discussed in Council:
| No date set |
| Committee's assessment:
| Politically important |
| Committee's decision:
| Cleared, but further information requested
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Background
23.1 The terms of the Co-operation Agreement
with the Russian Federation permit goods originating in the Community
to be imported into Russia free of quantitative restrictions.
However, according to the Commission, the Russian Federation has
breached the Agreement in a number of respects as regards the
trade in alcoholic drinks. More specifically, it has imposed discriminatory
fees for alcohol import licences; a requirement for a minimum
level of imports in order to obtain an import licence; restrictions
on points of entry and other transportation arrangements; and
a law which contains an effective quota on imports of strong alcohol.
The Commission says that, largely as a result of these restrictions,
Community exports of alcoholic beverages to the Russian Federation
have decreased from 478 million euro in 1994 to around 66 million
euro in 1999, and that draft legislation threatens to restrict
access further. It adds that, despite the Community having formally
and repeatedly drawn these developments to the attention of the
Russian Federation, only "minimal" progress has been
achieved.
The current document
23.2 Against this background, the Commission
is proposing that, as provided for under the terms of the Agreement,
a letter should now be sent to the Co-operation Council, setting
out the information needed for a thorough examination of the situation
in the hope of reaching an acceptable outcome. It suggests that
the Community would also say that, if such a solution has not
been reached within three months, it intends to take "appropriate
and proportionate" measures in response. The letter does
not specify what those measures would entail, but, in its Explanatory
Memorandum to the Council, the Commission envisages "punitive"
tariffs on imports into the Community of vodka and undenatured
ethyl alcohol from Russia, where the volume of trade is currently
put at a just over 12 million euro a year. Were such action to
prove necessary, it would require the Commission to put a fresh
proposal to the Council.
The Government's view
23.3 In his Explanatory Memorandum of 13 October
2000, the Minister for Trade and Industry (Mr Caborn) says that
the Government sees the proper implementation of the Agreement
by Russia as a key part of that country's overall economic reform
programme, and that allowing the Co-operation Council to examine
the issue is the first step for taking matters forward. He adds
that, if the Russian response is not satisfactory, the Government
will want to consider very carefully what Community action would
be appropriate, but that it is keen that in such cases this should
be measured and proportionate. The Minister also makes the point
that a number of UK companies produce, distribute and export spirits
in and from Russia, and could be adversely affected by Community
action, aside from any Russian retaliation. The Government will
remain in touch with the industry as any specific proposals develop,
to ensure that it is aware of their perspective on the impact.
Conclusion
23.4 Given the background to this document,
we see no problems over the Community writing to the Co-operation
Council in the terms proposed, and, although we will be interested
to see what retaliatory action, if any, needs to be taken if the
Russian response is unsatisfactory, we are content to return to
this should the Commission have to put forward specific legislative
proposals. We are, therefore, clearing the present document.
23.5 There is, however, one point on which
we would welcome the Minister's comments. Were this simply an
isolated incident, it might not in itself be a matter of great
concern, but, as we have already noted in a couple of our recent
Reports[58],
the Community also considers the Russian Federation to be in breach
of its obligations as regards the restrictions it has imposed
on the import of eggs from Member States. It would obviously be
disturbing if these two disputes proved to be part of a wider
pattern of non-observance, and we would be interested to know
whether the Minister is aware of any other potential breaches
of this Agreement by the Russian Federation.
58 (21253) 8214/00; see HC 23-xx (1999-2000), paragraph
17 (7 June 2000) and (21464)10277/00; see HC 23-xxvii (1999-2000),
paragraph 19 (25 October 2000). Back
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