logo logo

Merkel talks down chances of Russia-EU free trade zone

Agence France Presse | 25 November 2010

Merkel talks down chances of Russia-EU free trade zone

BERLIN — German Chancellor Angela Merkel Thursday talked down the chances of a Russia-EU free trade zone ahead of a visit by Prime Minister Vladimir Putin who has floated the idea.

"Of course we support the idea of a free trade zone between the EU and Russia but I have to pour a bit of cold water on it," Merkel said in a speech in Berlin.

"The steps that Russia has taken recently do not point in that direction."

She cited Russian tariff policy and Moscow’s trading bloc with Kazakhstan and Belarus as particular obstacles.

"But Russia has created a customs union with Belarus and Kazakhstan, and this doesn’t make the negotiations between the EU and Russia any easier ... And I hear again and again news from Russia that import tariffs are, let’s say, surprisingly increased," she said.

"But I would like to say that if the will is there on the Russian side, it is in the interests of Europe ... to form a free trade zone."

Putin, who will hold talks with Merkel Friday in Berlin, outlined a vision of a new era of closer economic cooperation between Russia and the European Union, including the creation of free trade zones.

In an unusually impassioned championing of closer ties with the EU as he starts a visit to Germany, Putin envisaged the creation of a "harmonised community of economies from Lisbon to Vladivostok."

"In the future it is possible that we will have zones of free trade and even more advanced forms of economic integration," Putin wrote in an article for the Sueddeutsche Zeitung daily Thursday whose text was published on the government website.

"In essence, we will get a continental market with a volume of trillions of euros," he said.

Putin wrote of the need for an "organic synthesis of two economies — the classic, established model in the European Union and the new, developing one in Russia."

The prime minister said a necessary condition was Russia’s entry into the World Trade Organization (WTO), which officials have said is finally on the cards after years of wrangling.

Also vital was the abolition of visas on both sides but the chances of this remained unclear, Putin said.

Putin, who served as a KGB agent in the former communist East Germany, said the two sides had the chance for a breakthrough in Europe two decades after the fall of the Berlin Wall.

"Today, in the new economic conditions, we have a chance to build a united and flourishing Europe," he said.

President Dmitry Medvedev often talks of the need for greater economic modernisation in Russia and closer ties with foreign partners but it is rare to hear such sentiments echoed so strongly by Putin, still seen as the de-facto number one.

The EU is Russia’s largest trading partner, accounting for around one half of its foreign trade. According to the federal customs agency, total trade in the first half of the year was 141.9 billion dollars, up 43 percent.

The 27-country bloc has long complained about Russian tariffs on timber exports and fees for trans-Siberian overflights.

Meanwhile, Russia, Kazakhstan and Belarus created a customs union among their three ex-Soviet states in July in an initiative that initally raised eyebrows as Putin said the countries would apply to join the WTO as a bloc.

Moscow later adopted a more nuanced approach, suggesting that each country would pursue membership with the WTO separately, despite an effort to coordinate the timeline of their accession talks.

Russia is the sole remaining major economy not to be integrated in the WTO system. Tortuous talks on joining started in 1993, but the United States called Russia’s accession into question after its war with Georgia in August 2008.

 source: AFP