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Russia-EU Relations: Does the WTO Play a Role?


The EU Trade Commissioner Peter Mandelson gave an interview to the RIA Novosti correspondent Maria Afonina on the EU-Russia relations. 


-There are differences between Russian and EU approaches to the new strategic EU-Russia partnership. Europe wants to thoroughly register all terms and standards of these relations, whereas Russia is satisfied by the general framework. What are the reasons of these different approaches? Who is more interested in this strategic partnership - Russia or the EU?

The important thing to say is that we both agree that we want to have a strategic partnership. And we want to sign an agreement which has sufficient content to give the guidance, the set of parameters, the way we'll conduct our relations in the future. We've agreed on the terms of reference, we've agreed on the goals, we've even agreed now when we are going to start, which will be kicked off at the time of the forthcoming EU-Russia summit. And I'm rather optimistic about our partnership. I think that for Europe and for Russia we have a tremendous amount to contribute to each other. We is a reference point for each other in so many different ways: economically, trade and investment. We have a huge amount to offer to each other. What we have to do is to get the law right, the rules straight, the conditions in which we do this trade and carry out this investment, and that is what we need to focus on now.

If there is a difference of opinion in how light or how detailed the agreement will be, I'm sure we can find a middle way that accommodates both points of view.


-The EU remains Russia's key trading partner. What barriers are hindering trade development? Are you satisfied with the existing composition of trade?


We see how trade is growing between the EU and Russia and I welcome that. If you look how our relations are accelerating, you can then put into prospective the frictions and the irritants that are arising in our trade. They are relatively very small indeed. Where [are] trade disputes to arise? We should have done everything we [could] to avoid them in the first place. Secondly, any reaction should be entirely proportional and our priority should be an advocate in resolving these issues. And those are the principles that we should operate [with] all the time in our relationships.


-Earlier you said that Russia was not ready to enter the WTO. Do you still hold the same opinion now? What is the EU's stance towards the multiparty talks in Geneva?


In terms of Russia's economic needs, the rights and entitlements that it demands internationally, the protection it wants for its trade in a global economy, it is very much ready to join the WTO. As Russia diversifies, expands, as its exports grow, it needs more and more protection internationally that the WTO rules will bring. That's a much more important consideration, in my view, for Russia's joining the WTO than creating some sort of image of Russia or helping bring some stability to Russia economically. I think it might be a bridgeable satisfaction for WTO membership. But a much more important and valid reason is the entitlement and the rights that Russia demands quite rightly internationally for its trade, its investments and those will come with membership of the rules-based international trading system supervised by the WTO. That's why Russia needs to be in, not out.


  • - How will investment cooperation develop after Russia enters the WTO?


I think the important need for Russia is to strengthen, modernize, diversify the economy and to work with the international partners to achieve that. What will bring it about? It's international investors knowing that when they come to Russia they can have confidence, predictability about the terms and conditions in which they will be investing in Russia, that what Russia expects from others in terms of treatment and its investment it will offer to others who come to invest in this country. What WTO - membership does? It offers the rules, the dispute-settlement machinery, it provides the basis on which that certainty, the predictability can be achieved by exporters and investors. It's going to become increasingly important for Russia. Russia doesn't want to and can't rely on high energy prices indefinitely. It's got a tremendous asset and it has a very important national interest to assert in relation to that energy asset. Their simply relying on that asset and these high prices indefinitely is in my view very unsafe, very risky for Russia as I believe Russia's government and political leaders acknowledge.


  • - How do you anticipate energy cooperation development between Russia and the EU? Will Russian companies be granted access to Europe's energy transportation and distribution networks?


  • - I don't want to see any discrimination against Russia in the operation of our rules and our energy center in the European Union. On the same basis I don't want to see any discrimination against European businesses and European operators in the Russian context. I think that provides us the basis for grand energy bargain between the EU and Russia, security of supply and security of demand, reciprocated investment, upstream and downstream both ways, and thirdly, freedom of transit and transportation, freedom of supply and transportation on the basis of national rules. And I think Russia and the EU have as much to benefit from such a grant a bargain as each other


-What actions will the EU take in response to the increase in raw timber export duty, which may cease raw timber exports from Russia in 2009?


  • - I would like to make a strong appeal to the Russian government. At this stage to indicate that we'll not proceed to the next stage of even higher export duties on wood which were originally planned for the end of the year. I think it would be a great confidence builder, I think it would help us resolve this matter to everyone's satisfaction. If Russia's government steps back and makes clear that those duties which are foreseen for January will not take place, they will be a prohibition on trade; they would have tremendous economic and employment consequences for the European industry. Businesses in Europe will have to eliminate jobs, make people redundant in anticipation of those prohibitive duties planned for next January. So I hope that the Russian government will consider that as an important contribution to resolving this matter. Both sides step back and we can then find the basis for a suitable compromise.


-How do you regard the extension of Russia's meat import quotas after 2009? Will it still be required? Are talks with Russia being held on raising above-quota duties on pork and beef?


I don't object in principle to such quotas. What's important in trade is predictability. Know where you stand, know what the rules are, and then knowing that these rules will be operated in a consistent way and not in an arbitrary fashion So if Russia were to meet this commitment on these quotas and stick to them, then we would know where we stood and that would be a tremendous step forward. In principle I have no objection to continuing the commitment to that policy.





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