Russia eyes wheat trade with Saudi Arabia

Saudi Arabian Energy Minister Khalid Al-Falih. (AFP)
Updated 05 September 2019

Russia eyes wheat trade with Saudi Arabia

  • Russian sovereign fund chief praises role of Saudi energy minister in stabilizing global oil market

VLADIVOSTOK: Russian Agriculture Minister Dmitry Patrushev and Saudi Arabian Energy Minister Khalid Al-Falih will discuss the development of bilateral relations, including agricultural trade, during their meeting on Thursday.

In August, Saudi Arabia decided to relax its bug-damage specifications for wheat imports, opening the door to Black Sea imports and strengthening ties with Russia beyond energy cooperation.

Al-Falih and Patrushev will meet as part of Patrushev’s visit to the Kingdom on Wednesday, the ministry added. Patrushev will also meet his Saudi Arabian counterpart, Abdulrahman Al-Fadhli.

Russia, the world’s largest wheat exporter, has long sought access to the Kingdom’s wheat market as Moscow tries to take further market share in Middle Eastern and North African wheat markets from the EU and the US.

After Riyadh said in August it would relax its limits for bug-damage in hard wheat to 0.5 percent from zero from its next tender, a Russian industry source told Reuters that Moscow would continue to press it to reduce the bug damage level to 1 percent.

A delegation from Russia, which includes major grain, meat and dairy companies, has also arrived with Patrushev.

Russia’s Saudi negotiators have praised Al-Falih, saying changes in the country’s oil industry would not affect Moscow -Riyadh cooperation. 

Ties between Russia and Saudi Arabia have developed in the last couple of years after the two countries, along with members of the Organization of the Petroleum Exporting Countries (OPEC) and some non members joined forces to curb output to support prices.

Russian Direct Investment Fund (RDIF) boss Kirill Dmitriev, a key player in the deepening cooperation between Moscow and Riyadh, praised work with Al-Falih and said that all existing plans remain unchanged.

“Saudi Arabia is an absolutely key partner for us. Khalid Al-Falih ... has played an absolutely key role in stabilizing global oil markets,” he said.

“We plan to make joint investments with Aramco in Russia ... Plans which we had remain.”

RDIF has partnerships with Saudi Arabia’s two sovereign wealth funds, the PIF and the Saudi Arabian General Investment Authority (SAGIA).

Russia’s Energy Minister Alexander Novak said on Wednesday that OPEC and non-OPEC countries would continue to coordinate on output.

“This is very important for the market to maintain its stability,” Novak said.

Aramco, the world’s top oil producing company, is preparing for an initial public offerring of up to 5 percent by 2020-2021 which could be the world’s largest.

South Korea downgrades Japan trade status as dispute deepens

Updated 18 September 2019

South Korea downgrades Japan trade status as dispute deepens

  • The change comes a week after South Korea initiated a complaint to the World Trade Organization
  • The new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan

SEOUL, South Korea: South Korea on Wednesday dropped Japan from a list of countries receiving fast-track approvals in trade, a reaction to Tokyo’s decision to downgrade Seoul’s trade status amid a tense diplomatic dispute.
South Korea’ trade ministry said Japan’s removal from a 29-member “white list” of nations enjoying minimum trade restrictions went into effect as Seoul rearranged its export control system covering hundreds of sensitive materials that can be used for both civilian and military purposes.
The change comes a week after South Korea initiated a complaint to the World Trade Organization over a separate Japanese move to tighten export controls on key chemicals South Korean companies use to manufacture semiconductors and displays.
Seoul has accused Tokyo of weaponizing trade to retaliate against South Korean court rulings ordering Japanese companies to offer reparations to South Koreans forced into labor during World War II. Tokyo’s measures struck a nerve in South Korea, where many still resent Japan’s brutal colonial rule from 1910 to 1945.
According to South Korean trade ministry, the new measures in effect mean it might take up to 15 days for South Korean companies to gain approvals to export sensitive materials to Japan, compared to the five days or less it took under a simpler inspection process provided for favored trade partners.
Lee Ho-hyeon, a South Korean trade ministry official, said the change would affect about 100 local firms that export items such as telecommunications security equipment, semiconductor materials and chemical products to Japan. He said Seoul will work to minimize disruption to South Korean companies.
Japan for decades has enjoyed a huge trade surplus with South Korea, an economy that’s much more dependent on exports. Many major manufacturers heavily rely on parts and materials imported from Japan.
But the dispute is taking a toll. Exports to South Korea from Japan fell 9.4% last month, Japan’s Finance Ministry reported Wednesday.
The trade dispute between the neighbors erupted in July, when Japan imposed tighter export controls on three chemicals South Korean companies use to produce semiconductors and displays for smartphones and TVs, major export items for South Korea. It cited unspecified security concerns over Seoul’s export controls.
A few weeks later, Japan dropped South Korea from its own trade “white list,” triggered a full-blown diplomatic dispute that took relations between the US allies to their worst in decades.
The dispute has spilled over to security issues, with Seoul declaring it plans to terminate a bilateral military intelligence-sharing pact with Japan that symbolized the countries’ three-way security cooperation with the United States in the face of North Korea’s nuclear threat and China’s growing influence.
Following an angry reaction from Washington, Seoul later said it could reconsider its decision to end the military agreement, which remains in effect until November, if Japan relists South Korea as a favored trade partner.
Seoul announced its plans to downgrade Tokyo’s trade status in August before holding a 20-day period to gather opinions on the decision, during which the Japanese government voiced opposition to the move it described as “arbitrary and retaliatory,” Lee said.
He said Seoul needs to strengthen controls on shipments to a country that’s “hard to cooperate with” and fails to uphold “basic international principles” while managing export controls on sensitive materials.
South Korea previously divided its trade partners into two groups in managing export controls on sensitive materials. Following Wednesday’s change, South Korea now has an in-between bracket where it placed only Japan, which would mostly receive the same treatment in trade as the non-favored nations in what had been the second group.