Brussels, 14/02/2008 (Agence Europe) - During his 14-15 February visit to Russia, EU Trade Commissioner Peter Mandelson's talks with Russian Finance Minister (and former Deputy Prime minister) Alexei Kudrin, trade and economic development minister Elvira Nabiullina, chair of the Duma committee on economic policy, Efgeny Fedorov, and representatives of Russian and European industry will focus on bilateral trade and Russian World Trade Organisation (WTO) membership. Speaking before the trip, Commissioner Mandelson said: 'This will be a year of transition in Russia and we need to maintain the constructive work we have been doing on Russia's closer economic integration with the European Union. Our priority must be to see Russia accede to the WTO, which will be good for Russia, good for regional economic integration and good for the global trading system, which needs Russia inside rather than out. We have made good progress in recent weeks in resolving outstanding problems. With political will on both sides, I believe that negotiations can be completed quickly.'
On 5 February, another economic power that emerged from the former USSR, Ukraine, was given the go-ahead for joining the WTO, but Russia has still to join. In order for Russia to join, an agreement will have to be signed between Russia and the EU27 on access to the market for goods and services. The talks between the Commission and Russia are hampered by friction over veterinary and phytosanitary issues, intellectual property, customs cooperation and, more importantly, two meatier problems, namely differentiated tariffs for the import of wood into Russia (the increase in these tariffs since 1 July 2007 is hurting Finland, Latvia and Sweden) and rail duty (imposed by Russia on rail freight transport from the EU) that discriminates against the Baltic States.
According to Russian press agency Prime-Tass, Mandelson has sent Alexei Kudrin a letter outlining the EU's opposition to any further increase in the differentiated tariffs on Russian wood. On 1 July 2007, the tariffs rose from €4 to €10 a cubic metre and are due to rise again on 1 April 2008 to €25 and around €50 at the start of next year. Russia argues that it is perfectly entitled to increase its differentiated tariffs on the import of unprocessed wood ahead of joining the WTO, Finland, Latvia and Sweden argue that the hike contravenes the agreement signed in 2004 between the EU and Russia to pave the way for Russia joining the WTO. At the end of last year, Russia made an offer that was hailed by the Commission as a step forward (see EUROPE 9531). In his letter, Peter Mandelson points out that the July 2007 increase had a huge impact on the forestry industry of some EU member states, warning that if a further increase were introduced on 1 April 2008, it would spell the end to the wood trade and make it impossible to find a negotiated solution.
In 2006, EU exports to Russia (mainly machinery and chemicals) totalled €72.4 bn or 6.2% of total EU exports. EU imports from Russia (mainly fuel and minerals) totalled €140.8 bn or 10.4% of total EU imports. Provisional figures for 2007 show a 26% rise in EU exports to Russia and a slight fall in EU imports from the country. The EU is Russia's biggest trading partner by far and Russia's leading source of fdi. (E.H.)