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Russia: Trade Defense Becomes A New Kremlin Priority

Moscow, 27 August 1997 (RFE/RL) - The first priority in Russia's foreign policy is now to defend export trade flows, President Boris Yeltsin's foreign policy advisor, Sergei Prikhodko, announced this week. "Nobody will deny the special importance of our state's integration into European and world economic structures," said the former diplomat who recently took over his Kremlin post, replacing Yeltsin's long-time advisor, Dmitri Ryurikov. "We are flatly against the infringement on the interests of Russian exporters and commodity producers," Prikhodko said.

At the Denver, Colorado, meeting of the G-7 in June, President Yeltsin claimed support from the G-7 leaders for accelerating Russia's accession to the World Trade Organization (WTO). This is not likely to occur before the end of 1998, First Deputy Trade Minister, Georgy Gabounia, tells RFE/RL.

In New York after the Yeltsin visit, Prime Minister Viktor Chernomyrdin called on the Clinton Administration not to impose penalty duties in an anti-dumping case involving Russia's largest steelmaker, Severstal. A recommendation on this by the U.S. International Trade Commission is expected shortly. Gabounia's ministry has already rejected a proposal from the U.S. Department of Commerce to set a combination of quota and price limits on Russian steel imports.

A month ago in Bangkok, Foreign Minister Yevgeny Primakov took the Thai government to task for imposing penalty duties on Russian steel imports. Primakov told Prime Minister Chavalit Yongchaiyut the Thai action was discriminatory, and urged the replacement of the anti-dumping duties with an across-the-board tariff. Russian and Thai officials acknowledge that, because of the new duties, the flow of Russian steel has now come to a virtual halt. Russian steelmakers, which depend on exports to sustain their operating cashflow, are facing losses due to trade penalties around the world of at least 1,000-million dollars this year.

Rather than risk Russian retaliation against imports of televisions and cars, the South Korean government, with whom Primakov also had talks on his Asian tour, has agreed to exempt Russian steel from anti-dumping penalties, so long as the Russian exporter keeps to a minimum price agreement.

In Moscow, officials say options for trade retaliation are limited in most cases; especially so, Gabounia says, because the Russian parliament has yet to enact appropriate trade legislation, and because members of the WTO have pressed for a standstill in Russian tariffs, while negotiations on joining the organization continue.

Deputy Prime Minister Anatoly Chubais, who has claimed he is in charge of the WTO talks, has yet to join the government's chorus of complaint against Russia's trade partners. His colleague, First Deputy Prime Minister Boris Nemtsov, has been scathing in attacks on European Union trade limits on Russian steel and textiles. Gabounia says that, if the European Union does not relax limits on Russian textiles, the government will retaliate; most likely, it will raise tariffs on Belgian carpet imports.

Prikhodko's remark from the Kremlin - his first public statement since his appointment - comes as government ministries in Moscow attempt to improve their strategy in the steel trade battles. A meeting last week appointed a committee headed by Leonid Shevelev of the Ministry of Economy, and Alexei Ruzhin, the dispute's negotiator for the Ministry of Foreign Economic Relations.

According to Ruzhin, "the U.S. and Europe are applying a discriminatory regime. This leads to very high anti-dumping duties. We are being shut out of steel markets all over the world."

Top officials like Ruzhin also believe the International Monetary Fund (IMF) is discriminating against Russian trade, applying one standard to Moscow, and another elsewhere. Ruzhin said he has heard nothing to indicate that, when the Thai government recently negotiated an emergency bailout with the IMF, any commitment to lower trade tariffs was either sought or given.

"We prefer the IMF treat equally, without discrimination, all countries under its programs," Ruzhin said. "In the case of Russia and Thailand, this appears to be different."