BLACK
SEA GRAIN DEAL - INTERNATIONAL
News: Russia must implement Black Sea
Grain deal to save millions: USTR
What's
in the news?
●
Calling for Russia to “reverse its
decision to suspend the Black Sea Grain Initiative, end its unjustified war of aggression,
and withdraw all of its forces from Ukraine”, United States Trade
Representative Katherine Tai in her remarks at the G20 Trade and Investment
Ministers’ Meeting in Jaipur said the topic of the meeting could not be
discussed properly without acknowledging the serious and continuing impact of
Russia’s premeditated and unprovoked war of aggression against Ukraine.
Black
Sea Grain Initiative:
●
The deal, brokered by the United Nations (UN) and Turkey, was signed in
Istanbul on July 27, 2022.
Time
Period:
●
Initially stipulated for a period of 120
days, but extended for a year.
Need
of the deal:
●
Ukraine is among the largest exporters of wheat, maize, rapeseed, sunflower seeds and
sunflower oil, globally. Its access to the deep-sea ports in the Black Sea
enables it to directly approach Russia and Europe along with grain importers
from the Middle East and North Africa.
●
Russia’s action in the East European
country has now disturbed this route, earlier used to ship 75% of its
agricultural exports - precisely what the initiative sought to address.
Aim:
●
The deal was to provide for a safe maritime humanitarian corridor for
Ukrainian exports (particularly for food grains) from three of its key ports,
namely, Chornomorsk, Odessa and Yuzhny/Pivdennyi.
Objectives:
●
The central idea was to calm markets by
ensuring an adequate supply of grains,
thereby limiting food price inflation.
●
The Black Sea Grain deal endeavours to
tackle escalating food prices emanating from supply chain disruptions because
of Russian actions in the world’s ‘breadbasket’.
Key
features:
●
The deal put in place a Joint Coordination Centre (JCC),
comprising senior representatives from Russia, Turkey, Ukraine and the UN for
oversight and coordination.
●
All commercial ships are required to
register directly with the JCC to ensure appropriate monitoring, inspection and
safe passage.
●
Inbound and outbound ships (to the
designated corridor) transit as per a schedule accorded by the JCC
post-inspection. This is done so as to ensure there is no unauthorised cargo or
personnel onboard.
●
Following this, they are allowed to sail
onwards to Ukrainian ports for loading through the designated corridor.
●
All ships, once inside the Ukrainian
territorial waters, are subject to the nation’s authority and responsibility.
●
No military ships or unmanned aerial
vehicles can approach the corridor closer than a pre-decided distance agreed
upon by the JCC. This too would require consultation with the parties and
authorisation of the JCC.
●
In the event of non-compliance or
suspicious activities, upon the request of a party, the JCC would provide
assistance to the crew or conduct an inspection against security
guarantees.
Significance
of the deal:
●
As per the UN Office for Coordination of
Humanitarian Affairs, approximately 9.8
million tonnes of grains have been shipped since the initiative was
commenced.
●
The UN Food and Agricultural
Organisation’s (FAO) Food Price Index, which assesses the monthly change in
international prices of a basket of food commodities, fell for the sixth
consecutive month in a row this October.
●
Following the fifth consecutive month of
decline, the supply situation in markets was seen to be easing, with the
potential for further price drops.
What
would suspension of the deal mean?
●
In a nutshell, the deal’s suspension was
expected to re-introduce the price
pressures on grain prices, especially that of wheat, with inventory being
at historical lows.
●
It could particularly impact countries in
the Middle East and Africa such as Egypt, Turkey, Lebanon, Sudan and Yemen
which have benefitted from the resumption (refer to the chart) and are
particularly dependent on Russian and Ukrainian exports.