EU poised to ratify Russia trade deal

Date: 01/05/1997

THE EU and Russia may be political competitors, but they are on the brink of a partnership and cooperation agreement which would give European companies a considerable advantage over their American and Japanese counterparts.

European firms in Russia will in future be given either national or most-favoured nation treatment (crucial for banks and insurance companies) and be guaranteed the right to take capital back home should conditions change.

In return, Russian firms will gain access to Union markets on the same basis as World Trade Organisation members.

A new framework will also be created to set up more deals later, including joint EU-Russian initiatives to combat crime.

Germany and Belgium, the only two original EU members yet to translate the PCA into national law, claim they will ratify it within a matter of days.

An 'enlargement protocol' to bring on board the three newest Union members should also be signed next month and ratified by the autumn.

Provided Denmark and Portugal overcome technical difficulties under their constitutions, Brussels diplomats expect the deal to be up and running well before the end of the year.

“The agreement will give us a strong offensive advantage over our competitors,” declared one European Commission analyst.

The only danger for Europe would be a US challenge under world trading rules, which is why diplomats are urging caution in the short term. “We are resisting pressure for a free trade agreement,” said an official.

The deal comes at an opportune moment. Although Russia's economy is still severely below pre-transition levels, there are signs of new growth this year and investors are cautiously optimistic.

In the medium or long term, the country's 150 million people offer Europe lucrative markets in consumer goods, foodstuffs and chemicals.