Brussels courts Moscow with free trade offer

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Brussels courts Moscow with free trade offer

EU Observer
July 4, 2006

The European Commission has offered a free trade agreement to Russia, in a bid to reach an overall deal with Moscow which should also secure the EU's future energy supplies.

Commission chief Jose Manuel Barroso stated on Monday (3 July) upon a visit to the fresh Finnish EU presidency in Helsinki that "we propose to move towards a free trade area to be completed once Russia accedes to the WTO."

Mr Barroso's offer is part of a plan by Brussels to revamp political ties with the Russians, with the current Partnership and Cooperation Agreement between Brussels and Moscow open for re-negotiation from 2007 onwards.

He added that Brussels regards energy as another key element of the overall deal with Moscow.

"We propose a partnership approach for energy, based on mutual interests and agreed principles," said the commission chief.

The free trade offer appears particularly designed to overcome the recent energy deadlock between Brussels and Moscow.

European politicians have repeatedly questioned Russia's reliability as an energy provider since Moscow briefly cut off gas supplies in January, but Moscow is at the same time complaining that the EU fences off its energy market to Russian firms.

The EU is trying to persuade Russian president Putin to ratify the Energy Charter Treaty, which would oblige Russia to open its oil and gas pipelines to foreign companies and competition – but Moscow is irritated by EU governments blocking its energy giant Gazprom from entering European energy markets.

Meanwhile, the new Finnish presidency of the EU has made EU-Russia ties one of its key priorities, with Finland's prime minister Matti Vanhanen saying the talks on the new trade and energy deal with Moscow would start next year.

"Our aim is that in November, when we have this EU-Russia summit, to make a decision to start official negotiations...and that negotiations would be done during 2007," he said on Monday according to media reports.

Helsinki is seeking a strengthening of the so-called Northern Dimension of the EU, referring to the specific co-operation between the EU's northern and Baltic member states - Iceland, Norway and Russia

But the new presidency is facing a tough task not to offend Russia-wary new member states such as Poland and the Baltic countries by getting too cosy with Moscow.

Apart from trade and energy, the current Partnership and Cooperation Agreement with Russia also involves cooperation in justice and home affairs and external security, with the commission saying in a statement that it hopes the new agreement will also cover this "whole range" of areas.

Meanwhile, Russia has put forward proposals that its EU enclave of Kaliningrad could act as a pilot project for integrating the two powers.


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Russian threat to trade unless US backs WTO bid

Financial Times
July 5, 2006

Vladimir Putin threatened yesterday to stop implementing global trade rules his country had signed up to unless the US agreed to Russian entry to the World Trade Organisation.

But two of the Russian president's senior officials said they were still hopeful agreement with the US could be reached in time for next week's Group of Eight summit in St Petersburg.

Agreement between the two countries would remove the last main obstacle to Russian membership of the 149-member trade body and could give Russia a breakthrough to announce at the summit on July 15-17.

A deal has been held up over US demands for Moscow to allow foreign banks to open directly owned branches, rather than having to set up Russian subsidiaries. Russia said it had security concerns about foreign banks. The US has also said Russia must curb video and software piracy.

A WTO deal could clear the way for Gazprom, the Russian gas company, to announce the go-ahead for development of the enormous Shtokman gas field in the Barents Sea, and say which of the five shortlisted foreign oil companies - including two US groups - it has chosen as its partners.

While the US and Russia have denied any specific link, Russia is thought to have delayed announcing the Shtokman partners until it is sure of entry into the global trade body.

In what some analysts saw as a tactic to put pressure on the US, Mr Putin took an aggressive line yesterday. "If for some reason we don't manage to reach agreement, we will withdraw from those obligations that we have not only approved but which, even before entering the organisation, we are already fulfilling," he told leaders of the International Chamber of Commerce.

Mr Putin did not elaborate on what he had in mind. However, recurrent gripes by trading partners include Moscow's implementation of food safety rules that have led to import restrictions on US chicken, Polish meat and Georgian and Moldovan wine, as well as concerns over intellectual property protection and security of energy supplies.

Sergei Prikhodko, a senior foreign policy aide to the president, said Russia "would very much like" a deal by the summit, but cautioned that "any process has two partners". There was a possibility of such a deal, "but it will not be a tragedy if the final deal comes later", he told foreign journalists.

Arkady Dvorkovich, an economic adviser to Mr Putin, also told Russian television it was "possible" Russia and the US could tie up a deal before the summit.


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