Russia Halts Lithuania Dairy Imports as Trade Tensions Flare

October 7, 2013 12:14 PM

The "restrictive measures" are necessary because of Lithuania's "weakening" food quality and safety controls, Russia says. But Lithuania says the curbs are Russia’s way of protesting plans to strengthen EU trade ties with Ukraine and other ex-Soviet countries.

Bryan Bradley

Russia banned dairy imports from Lithuania due to what it said were safety concerns, adding to a month of trade disruptions that the Baltic nation says are politically motivated.

The European Union last month urged Russia to stop targeting Lithuania, which currently holds the bloc’s rotating presidency, with "punitive" trade restrictions. Lithuania’s leaders, including Prime Minister Algirdas Butkevicius, say the curbs are probably Russia’s way of protesting plans to strengthen EU trade ties with Ukraine and other ex-Soviet countries at a November summit in the Lithuanian capital.

The "restrictive measures" are necessary because of "weakening" food quality and safety controls by Lithuanian dairy producers and regulators, Russia’s consumer protection watchdog said today on its website. Russia’s customs service will impose the suspension, it said.

As per Russia’s World Trade Organization commitments, "any restriction introduced by Russia based on sanitary grounds needs to be justified by a demonstration of the risk at stake, and the measure taken must be proportionate to the level of risk identified," European Commission spokesman Frederic Vincent said today in an e-mailed reply to questions.

Shares of AB Rokiskio Suris and AB Pieno Zvaigzdes, Lithuania’s two biggest dairy companies, fell 0.6 percent and 1 percent, respectively, in Vilnius today. AB Zemaitijos Pienas fell 2.8 percent and AB Vilkyskiu Pienine closed down 3.2 percent on the Nasdaq OMX Vilnius exchange.

Sanitary Concerns

The commission "has confidence in the safety of Lithuanian dairy products" and hasn’t been officially informed of the nature of Russia’s sanitary concerns, Vincent said.

Lithuania’s Foreign Ministry also lacks official information from Russia about the ban and won’t comment until it gets that, spokeswoman Rasa Jakilaitiene said. Russia has delayed Lithuanian cars at the Kaliningrad border since Aug. 30 and has subjected Lithuania-origin cargo to lengthy inspections at borders since Sept. 11, according to the ministry’s website.

"Nobody knows exactly what indications Russian customs have or what the reasons are for the sanctions," Arturas Paulauskas, the head of the Lithuanian parliament’s National Security and Defense Committee, said in an e-mailed statement. "This is causing chaos in our economy," he said, calling for the government to react without further delay.

Russia also decided today to impose tighter controls on imports of Lithuanian meat and fish, Russia’s state-run RIA news service reported, citing an unidentified person with knowledge of the situation.

Historical Echo

After becoming the first Soviet republic to declare independence in 1990, Lithuania suffered more than a year of trade blockades as Moscow tried to convince it not to leave the Soviet Union.

Russia took 19 percent of Lithuanian exports last year, making it the largest trade destination, with almost 85 percent in transit goods, the Baltic nation’s statistics office said.

Lithuanian companies exported 557 million litai ($219 million) of cheese and other dairy products to Russia in 2012, according to data on the office’s website. That was about a fifth of the value of all Lithuania-origin goods exported to Russia.

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