Russian agriculture minister to discuss sugar imports from Belarus :: Charter'97 :: News

The Russian agriculture minister and the vice-premier of Belarus will discuss Wednesday sugar deliveries from Russia`s western neighbor, the ministry said Tuesday. Alexei Gordeyev and Deputy Prime Minister Ivan Bambiza "will discuss certain issues of cooperation between Russia and the Republic of Belarus, including the volume of white sugar imports to Russia from Belarus," the ministry said in a news release.

Sugar made from Belarusian sugar beet is currently not subject to Russian customs duties.

The agriculture ministries of the ex-Soviet neighbors are drafting an intergovernmental agreement on terms for sugar supplies, the ministry said.

A source close to the negotiations said Russia aims to restrict Belarusian sugar exports to 50,000 metric tons a year, while Minsk is proposing a mechanism of self-imposed restrictions.

Russia believes this mechanism can be used only under normal bilateral relations, and has doubts as to whether Belarus will honor its obligations, the source said.

Although the two countries declared their intention in 1997 to build a Union State envisaging a common economic, customs and political space, the negotiations have been complicated by a host of issues, in particular a recent oil and gas row.

The standoff, which began when Russia hiked the natural gas price to Belarus and slapped an export duty on oil supplies to the country, causing Minsk to impose a retaliatory transit fee on Russia`s Europe-bound crude exports at the start of the year, led to a three-day stoppage of supplies to Poland, Germany and other consumers. During the spat, Moscow accused Minsk of tapping oil as payment for transit services.

The dispute was resolved when Belarus lifted the transit duty, and Russia later cut its export duty from $180.7 to $53 per metric ton, effective from January 1, 2007, avoiding potentially crippling economic consequences for its neighbor, which has relied heavily on receipts from refining and re-exporting Russian oil.

Russia has complained of huge losses inflicted on its budget from crude supplies to its western neighbor. Belarus refines Russian oil and re-exports it to third countries, and has until now paid no taxes to the Russian budget in the process.

As of 2007, Russia canceled a preferential price for natural gas supplies to Belarus, doubling it to $100 per 1,000 cubic meters, in line with its drive to gradually bring gas prices for former Soviet satellites closer to European levels.

Bilateral talks are also under way to agree on trade terms. Belarus currently charges higher tax rates for Russian goods than those levied by Moscow on products from Minsk.