EU vows to protect newcomers from Russia trade snag

The European Union's trade chief pledged yesterday to protect incoming EU members from a possible trade spat with Russia.

Moscow is demanding concessions from Brussels such as bigger export quotas and easier travel rules for Russians before it agrees to extend to the 10 incoming EU countries a trade and cooperation deal it had agreed with the EU's 15 current members.

Businessmen from many of the incoming EU member states, most of which are former Soviet satellites, fear their exports to Russia could be frozen if a compromise is not reached before the European Union's enlargement on May 1.

"You need not worry. We are taking care of this," EU Trade Commissioner Pascal Lamy told a news conference in Warsaw after meeting local business executives.

There are 10 incoming countries to the European Union. Estonia, Lithuania, Latvia, Poland, Czech Republic, Slovakia and Hungary were all members of the Soviet bloc. The other three; Slovenia, Malta and Cyprus, were not.

"You are joining the EU and this provides you with a level of protection and a level of leverage which we have. It works with the Americans, it works with the Africans, it works with China, and it will also work with Russia," Mr Lamy told them.

His statement contrasted with that of French President Jacques Chirac, who said late last month that the EU must show more respect for Russian interests during EU expansion.

Mr Lamy said Moscow had demanded bigger quotas for exports of steel and food products to the EU as well as fewer barriers in nuclear fuel trade. Russia also wants the EU countries to scrap travel visas for its citizens.

Exports to Russia is a fraction of the overall foreign sales for EU newcomers, but any snag in trade ties with Moscow would harm industries such as food processing, paper, cosmetics and pharmaceuticals, especially in Poland and the Baltic states.

"A lack of the agreement would have severe implications: tariffs on our exports could double," said deputy Polish economy minister Miroslaw Zielinski.

Poland saw its Russian exports grow 11 per cent in the first 11 months of 2003 to $1.4 billion, but the figure could be bigger as many Polish goods are re-exported to Russia from countries such as Lithuania.

Hungary's exports to Russia, mainly of foods, manufactured goods and machinery, were worth $651-million last year. The Czech Republic's 16.5 billion crown ($636.6 million) worth of exports to Russia amounted to 1.2 per cent of its foreign sales.