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Eastern Europe: EU, Eastern Candidates Discuss Sensitive Trade Issues

Prague, 20 May 1999 (RFE/RL) -- The European Union and five leading eastern candidates for membership have opened a key phase of their negotiations, one which will have wide impact on other East European countries.

In Brussels yesterday, EU officials held a negotiating session with Estonia, Slovenia, Poland, the Czech Republic and Hungary on a range of accession issues, including external relations.

That heading is important because of the EU's principle that the candidate countries must end on accession any special trade relations they have with other non-EU countries. Brussels says such bilateral deals are incompatible with equal and free access to the EU's own internal common market.

But some candidates are resisting cutting their lucrative links with eastern neighbors, and are demanding long transition periods to phase them out.

For instance, Estonia has flourishing trade accords with neighbors Latvia and Lithuania, as well as with Ukraine. Slovenia has successful free trade agreements with Macedonia and Croatia, and a special economic agreement with Bosnia-Herzegovina. The Czech Republic enjoys a customs union with Slovakia, which stimulates trade between the two. Poland has important cross-border trade with Ukraine. All these trade patterns will be affected by the negotiations now opened in Brussels.

Looking at the case of Estonia and Ukraine, the ambassadors in Brussels of those two countries, Clive Kull and Boris Hudyma, recently emphasized to RFE/RL the importance of the accord. Hudyma also stressed the importance to Ukraine of direct cross-border trade with Poland.

In a possibly hopeful sign, the EU side at yesterday's negotiations did not specifically state to Estonia its rejection of the accords. It has asked the Estonians for more information on what they are proposing vis-a-vis external trade. This could indicate a measure of readiness on the part of the EU to compromise. Estonia's spokeswoman in Brussels, Anne Harmaeste, spoke by telephone with RFE/RL:

"Our impression is that from the European Union side probably the two free trade agreements with Latvia and Lithuania would be a rather easier issue than the free trade agreement with Ukraine."

That's because Estonia's Baltic neighbors are themselves EU candidate members, and all three already have similar association agreements with Brussels. Ukraine, by contrast, is still an outsider despite its existing links with the EU.

Harmaeste said the Estonian side is now debating internally the shape of compromise proposals to the EU aimed at protecting those Estonian companies with trade interests in Ukraine.

"That is what we have to do, to make a real calculation concerning which categories of goods and for which kind of companies we would like to have some kind of exception, and to calculate whether we would need some compensation for companies which would suffer losses, if Estonia loses the Ukraine market." As to Slovenia's trade links with its neighbors, the case is even more paradoxical. The EU is now busy at several levels working out ways to help the entire Balkan region integrate into the European mainstream. At the same time, it is objecting to Slovenia's successful trade links with Macedonia, Croatia and Bosnia.

The First Secretary of Slovenia's Mission in Brussels, Bostjan Sporar, told RFE/RL that his country has made the point that Slovenia's trade pacts are a means of helping stabilize the region. He also notes the tradition of strong economic links with neighbors dating from former common nationhood.

"One of our arguments is that our free trade agreements might be helping to stabilize these countries, and to develop free trade, which is always an important means of economic cooperation leading to political cooperation as well, and so we don't see any contradiction in that."

The Czechs too feel bound by ties of former nationhood to the Slovaks, and are reluctant to give up their customs union, which helps the economies of both countries. And Poland for its part is requesting a transition period to 2017 before abolishing its special economic zones. Ukraine, fearing exclusion, is requesting multilateral consultations.

For the EU, this whole issue of east-east is largely uncharted territory. It may find that the best way forward lies not so much in strict application of principle, but in a measure of compromise with the eastern candidates.