Page 194 - The Principle of Economics

196 PART THREE SUPPLY AND DEMAND II: MARKETS AND WELFARE
IN THE NEWS
A Chicken Invasion
WHEN DOMESTIC PRODUCERS COMPLAIN about competition from abroad, they often assert that consumers are not well served by imperfect foreign products. The following article documents how Russian producers of chicken reacted to competition from the United States.
U.S. Chicken in Every Pot? Nyet! Russians Cry Foul
BY MICHAEL R. GORDON Moscow—A nasty little skirmish be- tween Russia and the United States is brewing here over a threatened trade barrier.
But this fight is not about manufac- tured consumer goods or high technol- ogy, but about American chicken, which has flooded the Russian market.
To the frustration, and considerable anxiety, of American companies, the Russian government has threatened to ban further American poultry sales effec- tive March 19. . . .
The ostensible reason for the Rus- sian government’s warning is health—a
seemingly strange concern in a country with a generally lax record in observing safety standards, where virtually every able-bodied man and woman smokes.
Today, no less an authority than the Veterinary Department of the Russian Agriculture and Food Ministry said the ban was needed to protect consumers here against infected poultry until the United States improved its standards.
But the real agenda, American producers contend, is old-fashioned protectionism.
Agitated Russian producers, whose birds, Russian consumers say, are no match for their American competition in terms of quality and price, have repeat- edly complained that the United States is trying to destroy the Russian poultry industry and capture its market. And now American companies fear the Russian producers are striking back. . . .
The first big invasion of frozen poul- try [into Russia] came during the Bush administration. . . . The export proved to be very popular with Russian con- sumers, who dubbed them Bush legs.
After the demise of the Soviet Union, American poultry exports con- tinued to soar. Russian poultry produc- tion, meanwhile, fell 40 percent, the result of rising grain prices and declining subsidies.
Astoundingly, a third of all American exports to Russia is poultry, American officials say. . . .
If the confrontation continues, the United States has a number of possible
A THREAT TO RUSSIA?
recourses, including arguing that the Russian action is inconsistent with Moscow’s bid to join the World Trade Organization.
Some experts, however, believe there is an important countervailing force here that may lead to a softening of the Russian position: namely Russian consumers.
Russian consumers favor the Amer- ican birds, which despite the dire warn- ings of the Russian government, have come to symbolize quality. And they vote, too.
SOURCE: The New York Times, February 24, 1996, pp. 33, 34.
same. In other words, it can bargain with its trading partners in an attempt to reduce trade restrictions around the world.
One important example of the multilateral approach is the North American Free Trade Agreement (NAFTA), which in 1993 lowered trade barriers among the United States, Mexico, and Canada. Another is the General Agreement on