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Russia: Trade Disputes May Overshadow Chernomyrdin's EU Visit

Moscow, 18 July 1997 (RFE/RL) -- Against a backdrop of growing friction between Russia and the European Union over trade, Prime Minister Viktor Chernomyrdin is in Brussels today for talks with European leaders that are expected to focus on efforts to boost commercial ties.

The trip reflects Moscow's desire to deepen trade and political links with Brussels as the EU expands eastwards. However, the visit comes as Russian leaders have become increasingly vocal in their criticism of EU trade policies.

President Boris Yeltsin took aim two days ago at EU anti-dumping measures in place against Russian imports and instructed Chernomyrdin to raise the issue during his visit to Brussels.

The EU is Russia's largest trading partner, accounting for more than 40 percent of mutual trade turnover. But the EU currently has 14 anti-dumping measures against Russian goods, making Brussels the leader in such actions against Russia.

Ottokar Khan, the European Commission's top diplomat in Moscow, told a news conference yesterday before leaving for Brussels to attend the talks that the EU is far from happy about these anti-dumping cases. But he said they were in response to unfair competition from Russian enterprises which he said are selling goods in the European markets at unfairly low prices.

Echoing other EU officials, Hahn said the cases affect only 1 percent of Russia's trade with the EU, or about $250 million worth of exports.

In contrast, Russia's Trade Ministry has estimated that the measures block at least $1billion worth of trade.

Signaling that Russia is prepared to take a tough stance on the issue, First Deputy Prime Minister Boris Nemtsov last month refused to meet with the visiting European Commission Vice President, Sir Leon Brittan, in protest over recently imposed anti-dumping duties.

Countering Russian objections, EU officials complain that Moscow is throwing up its own barriers with excessively high tariffs on European goods.

However, Russia's grievances go beyond anti-dumping cases. A new agreement on liberalizing the textile trade between the EU and Russia has been bogged down in negotiations for almost two years because of disputes over quotas. According to one former Trade Ministry official, there has been what he called " a permanent Cold War in the textile trade with the EU" ever since the negotiations began.

Brittan, during his recent visit to Moscow, expressed confidence that an agreement could be reached in time for Chernomyrdin's visit. A Russian negotiating team led by Deputy Foreign Trade Minister Georgy Gabounia was in Brussels this week ahead of the visit to try to agree on a last-minute deal.

The EU hopes to model the agreement on a recently concluded steel accord, which envisages gradually lifting quotas on Russian imports over four years. The Russian side, which wants to do away with quotas altogether, says the European textile industry has the upper hand. According to trade officials, EU textile exports to Russia are five times greater than Russia's exports to western Europe.

In an article in yesterday's Financial Izvestia, European Commission chairman Jacques Santer wrote that the textile agreement, if finalized, would actually give Russia better terms than the EU's other trading partners.

But obstacles remain. Santer, who is due to meet with Chernomyrdin today, said EU countries are concerned that a flood of textile countries will be channeled through Russia once the quotas are lifted.

Russian officials hope to improve trade relations when a long-delayed partnership and cooperation agreement with the EU comes into force later this year. The agreement, first signed in 1994, calls for talks to begin next year on creating a free trade zone between the EU and Russia. In the long term, Russia believes membership in the World Trade Organization, which the EU strongly backs, will help ward off what it views as unfair trade practices.