KIEV, July 30 – The trade dispute between Ukraine and Russia rapidly escalated on Tuesday with Moscow broadening its ban on imports of confectionary products and Kiev appealing to the World Trade Organization.
The Russian authorities on Monday banned imports of chocolate made by the largest Ukrainian confectionary Roshen, but on Tuesday they had expanded the ban to pastry products.
"Unfortunately, additional testing of Roshen products intensified our earlier fears,” Gennadii Onishchenko, the head of Rospotrebnadzor, the Russian consumer protection agency, told Interfax. "We will now strengthen control over pastry products from this company.”
The escalation comes days after Kiev has rejected calls from Moscow to scrap its plans for greater cooperation with the European Union and to join a Russia-led trade bloc instead.
Ukraine seeks to sign a free trade and political association agreements with the EU at a summit in Lithuania in November. Moscow warned Kiev repeatedly the agreements would make life more difficult for Ukrainian companies exporting their products to Russia.
Roshen exports between $150 million and $200 million worth of confectionary products to Russia, which makes up a half of the company’s overall exports.
Roshen’s overall sales, including foreign and domestic markets, were reported at $1.28 billion in 2012, according to Candy Industry.
Roshen also owns a confectionary in Russia – Lipetsk Confectionary – and will try to increase production at its Russian facilities to compensate for the loss, a company official said.
Meanwhile, as the trade dispute intensified, Ukraine already appealed to the WTO accusing Moscow of resorting to non-market regulations to restrict imports of vehicles from Ukraine.
Russia slapped an ‘utilization fee’ on cars, exports of Ukrainian-assembled vehicles to plummet 75% year-on-year in January through June, according to the Economy Ministry.
At special consultations in Brussels on July 29-July 30, a Ukrainian government team said the move by Russia was a “violation of WTO principles” and insisted that Russia must abolish the fees, according to the ministry.
Russia warned Ukraine in early July that it may ban imports of Ukrainian chocolate, coal and glass in reaction to Ukraine’s plans to introduce duties on imports of Russian cars.
Ukraine planned the duties as a response to Moscow’s move to slap the ‘utilization fee’ on cars. (tl/ez)