RIGA - A sudden trade dispute between Russia and the EU over food certification halted exports from some 11 member states last week, including the Baltics, though a phone call between European Commission President Romano Prodi and Russian PM Mikhail Fradkov on June 7 brought the matter to an apparent end.
The dispute began on June 1 when Russia unilaterally demanded a common EU veterinary certificate for all meat, fish and dairy products originating in the 25 member zone. Since few member states have the certificate, deliveries to the Russian market were put on hold.
At least 11 EU countries - including Spain, Poland, the Netherlands, Germany, France, Ireland, Denmark, the Czech Republic, Belgium, Austria and Latvia reported problems arising when Russia began to block imports of beef, pork and poultry products.
In Latvia the trade dispute affected all animal products, including milk and fish in addition to pork and chicken.
The demand caught EU diplomats and bureaucrats off guard, especially with the recent warming of relations after several key issues between the union and Russia had been resolved.
In April Russia agreed to apply the Partnership and Cooperation Agreement (the document that regulates relations between the two enormous trading partners) to the new accession states and sign border agreements with Latvia and Estonia, while the EU said it would support Russia's WTO entry. Russia even hinted that it might sign the Kyoto protocol to reduce greenhouse emissions.
The European Commission initially called the ban "unjustified" and threatened to review their support for Russia's WTO entry. But later it backed off, saying that the blockade and WTO membership were not related.
"This kind of behavior is not expected from a WTO member," Reijo Kemppinen, a spokesman for Romano Prodi, was quoted as saying. He added that all existing WTO members accepted the current certificate regime.
The European Commission does not have the power to issue a common quality certificate, although it can check the quality of goods moving into the union. The commission said it was legally impossible to issue a common certificate for all member states, and that no other country in the WTO has a problem trading with the current regime.
Yet Russia's Agricultural Ministry said they understood that the Commission would need a "transition period," and it therefore insisted that the period must be a short one.
In Latvia, the blockade was as shocking to exporters as it had been to EU government officials.
"We received a letter from David Byrne of the European Commission on May 19, saying that the situation was solved, and that there would not be a problem with trade," Dagnija Muceniece, spokeswoman for the Agricultural Ministry, said.
No figures on the size of the lost income due to the blockade were immediately available, but the Agriculture Ministry was already pondering compensation.
"We will be asking the European Commission for compensation of lost revenue due to the trade dispute," Muceniece added.
Curiously, the Prodi-Fradkov verbal agreement does not provide for a solution to the problem but merely gives each side until the end of September to ink a new agreement that will satisfy both parties, the EU however promised swift retaliatory measures should one not be reached.
Considering it reportedly took Germany and Russia three years to reach agreement on a bilateral level, a quick resolution satisfying Russian demands for a common EU certificate seems unlikely anytime soon, especially given that the Commission has said it is legally "impossible."
Riga's Milk Complex dairy spokeswoman Rita Voronkova told the Baltic News Service that a "very positive solution had been achieved," adding that a long disruption in trade would be difficult to recover from.
Exports to Russia make up 30 percent of total exports for the company.