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Russia: High-Level EU Delegation Travels To Moscow To Discuss WTO Bid

A high-level European Commission delegation headed by President Romano Prodi heads to Moscow tonight for two days of talks with President Vladimir Putin and other Russian officials. EU officials in Brussels say the visit will center on Russia's bid to join the World Trade Organization (WTO). Although recent progress has been made on the issue in talks between Moscow and Brussels, Russia might still have to wait before getting a green light from the EU.

Brussels, 21 April 2004 (RFE/RL) -- EU officials today downplayed speculation that a deal is about to be made on Russia's WTO membership.

Speaking in Brussels today, Matthew Baldwin, a top European Commission trade official, said Russia appears interested in speeding up talks, and may be hoping to strike a deal in time for the EU-Russia summit in May.

He said the EU is willing to support Russia's WTO timetable but cautioned that Brussels will not compromise on important issues simply in order to meet tight deadlines.

Baldwin indicated a breakthrough on the contentious issue of energy pricing may not be too far off. He said Russia has retreated from its earlier insistence that energy policy remain outside the WTO talks.

Arancha Sanchez, a spokeswoman for the EU's trade commissioner, Pascal Lamy, said the EU has made clear it is not trying to force a particular energy policy on Russia.

Instead, she said, the bloc is simply concerned with what it sees as preferential treatment given to Russian operators in the energy field in comparison with their EU counterparts.

"Energy is not the issue," Sanchez said. "It's trade-related energy questions that are the issue. As Matthew [Baldwin] said, we're not trying to regulate, through the WTO entry of Russia, what kind of energy policy they need to have. That's their own sovereign decision. If you talk about export duties on energy, export duties is clearly an issue that is regulated at the WTO. If you talk about freedom of transit, this is clearly an article of the WTO-GATT [General Agreement on Tariffs and Trade] agreement. "

The EU is concerned by Russia's policy of charging EU companies four or five times more for gas than Russian counterparts are expected to pay.

"Some very tough things are out there, some very big political issues surrounding things like aircraft tariffs, car tariffs." -- Matthew Baldwin, a top European Commission trade official
Baldwin today said this practice gives Russia's industrial enterprises an unfair advantage over their EU competitors.

He said, however, that Russia has "in principle" accepted that an increase in domestic energy prices is inevitable. The question that remains is to what level and how fast.

Baldwin also underlined the importance for the EU of an energy partnership with Russia. Some 25 percent of the bloc's total gas consumption comes from Russia, as does 20 percent of its crude-oil imports.

Baldwin said the main issue for the 22-23 April meetings is customs tariffs -- a complex question that is likely to play a decisive role in EU-Russia talks overall.

"We've had complexities arising also from Russia's desire to protect its growing tax base -- and obviously you cut tariffs, you reduce your tax base. Now, our guys in Russia have been working very hard on this during the course of this week. We hope to make progress; some very tough things are out there, some very big political issues surrounding things like aircraft tariffs, car tariffs. That is the tough [issue] this week, and depending on how all that goes we'll have more or less a sense of how long the whole negotiation can go," Baldwin said.

Baldwin said talks are stalled on a number of issues. He mentioned financial sectors such as insurance and banking, where the EU wants its companies to be able to branch directly into Russia without having to set up local subsidiaries. Another key concern is the telecommunications sector. The EU has rejected recent Russian attempts to establish a monopoly on long-distance phone services.

Russia's WTO talks with the EU are complicated by a number of other important outstanding issues, such as the extension of the EU-Russia partnership to the bloc's new member states. Russia's unwillingness to sign the Kyoto Protocol on global warming is another obstacle.

Apart from the EU, Russia will also need to negotiate deals with its other major trade partners -- such as the United States and China -- before it can enter the WTO.