Russia halts Lithuanian dairy imports before EU summit

MOSCOW/VILNIUS Mon Oct 7, 2013 6:22pm BST

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MOSCOW/VILNIUS (Reuters) - Russia suspended imports of dairy products from Lithuania on Monday, turning up trade pressure on the small Baltic state weeks before it hosts an EU summit that could pull former Soviet republics further from Moscow's orbit.

Lithuania, already struggling with long and costly holdups of its trucks at the Russian border, threatened to refer Moscow to the World Trade Organisation over what its president called "trade obstacles" thrown up by its giant neighbour.

In announcing the suspension, which could hit some Lithuanian producers hard, Russia's consumer protection agency cited quality concerns, but past Russian bans on products from abroad have been widely seen as tools of geopolitical influence.

The suspension adds to tension between Russia and Lithuania, which hosts a European Union summit with ex-Soviet republics in late November at which Ukraine is scheduled to sign a free trade and political association agreement with the 28-nation bloc.

Vilnius has made the free trade accord with Kiev a focus of its six-month stint as EU president, but Russia is opposed to the deal and wants Ukraine and other former Soviet states to join a customs union that Moscow is building.

Lithuania, which borders the Russian exclave of Kaliningrad and joined the EU in 2004, has had trucks held up for days at a time in recent weeks after Russia stepped up customs checks, causing heavy losses for Vilnius's freight industry.

Taking aim at another sector, the Russian consumer protection agency Rospotrebnadzor said inspections of Lithuanian dairy imports had revealed "numerous violations" of quality and sanitary standards in products including cheeses and yoghurt.

"We are seeing a sharp weakening of (Lithuania's) position on protecting the rights and safety of consumers," Rospotrebnadzor chief Gennady Onishchenko said, according to the Interfax news agency.

Russia is also stepping up monitoring of Lithuanian meat and fish imports, state-run news agency Prime reported, citing an unidentified source. Rospotrebnadzor declined to comment.

Lithuanian Agriculture Minister Virgilijus Jukna told reporters the government had received no "official news about halting milk or meat or fish exports", but President Dalia Grybauskaite said her country's patience was wearing thin.

WTO COMPLAINT?

"The situation which is developing at our border and in trade relations with Russia has been worrying for the past several weeks," Grybauskaite told reporters.

"It is necessary to prepare to refer the trade obstacles which Russian institutions are raising to Lithuania at the World Trade Organisation," she said.

Russia's Onishchenko denied politics lay behind the suspension, but Kremlin critics have seen ulterior motives behind such trade restrictions in the past, including bans on wine and mineral water from Georgia and vegetables from the EU.

"It is obvious that this is used as a means of political pressure", said Nerijus Maciulis, chief economist at Swedbank in Lithuania, adding that around one fifth of the country's dairy exports went to Russia, or 0.4 percent of national output.

In Brussels, the European Commission said it had "complete confidence" in the quality of Lithuanian dairy products and called for discussions with the Russian side.

"The EU has the most stringent system in the world when it comes to food safety," Frederic Vincent, Commission spokesman for health and consumer policy, told a regular press briefing.

Of the 15 former republics that became independent states when the Soviet Union disintegrated in 1991, only the Baltic states of Lithuania, Latvia and Estonia have joined the EU.

But the EU's Eastern Partnership policy, designed to draw six other ex-Soviet states closer to the European fold, has run up against President Vladimir Putin's efforts to revive Moscow's sway by promoting closer ties among its former vassals.

In addition to the scheduled signing of agreements with Ukraine, the EU may take further steps toward free-trade deals with Moldova and Georgia at the Vilnius summit. Belarus and Armenia remain more closely aligned with Moscow.

Putin has said Moscow will respond with protectionist measures if Kiev signs a trade deal with the EU.

(Additional reporting by Andrius Sytas in Vilnius and Adrian Croft in Brussels, Editing by Gareth Jones)

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