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08-08-2019

Russia lifts ban on transit of sanctioned EU products: opportunities for Dutch companies exporting food to China

Introduction

The Russian prohibition on the transportation of European food and agricultural products through Russia, which came into effect in August 2014, has had great impact on the export of products from the EU to China. This prohibition has been lifted as of 1 July 2019, following an announcement of a new decree by the Russian government on 24 June 2019.

The implementation of this decree is an important breakthrough for Eurasian railway transportation. Russia is regarded as an important transit country for transportation of products via the New Silk Route. Until 1 July 2019, agricultural products, raw materials and food products could only be trans-ported to China via routes around Russia, which resulted in much longer transport times. European companies exporting agricultural or food products to China, can now again benefit from a more direct railway transportation route through Russia.

Requirements and restrictions

The decree does, however, stipulate certain requirements and keeps some of the earlier restrictions. Russia requires the use of electronic seals on the goods during the whole transit across the country. The installation of such devices on containers ensures Russia can track the movement of cargo across the country. Up to now, legislation concerning electronic seals has not been rolled out. We expect the Russian government to offer more clarity in the form of practical conditions and guidelines in a later stage.

Although the ban has been lifted, not all kinds of goods are permitted to be transited. The decree makes reference to a document providing the products which are now available for transiting. The document lists the following types of goods: fresh and frozen beef meat, milk and diary products, vegetables, root crops and tubers, fruits and nuts, etc. Companies are advised to consult the full list of products to check whether transit of their products is permitted or not, according to the Russian regulations. 

Observations 

The moderation of Russian decree opens up a huge potential market for European companies. 

European agricultural and food companies are able to take a more flexible and efficient approach to exporting goods to China. Besides, logistics companies can expand their traffic routes along the New Silk Road, the well financed initiative of the Chinese government. Because a great part of the exported agricultural and food products to China from Europe are either fresh or frozen, their fleet of reefer containers may be expanded due to the need for supply cold chain with temperature-controlled devices. 
 

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