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Russian food-import ban „intolerable,” Mandelson says

The European Union „cannot tolerate” a Russian ban on food imports from the bloc and wants to avoid escalating the row by linking it to Russia's WTO bid, EU trade chief Peter Mandelson said.

Russia, citing health concerns, has threatened to prohibit meat from the EU when Romania and Bulgaria become members on January 1. While Russia has offered exemptions to four EU nations, bilateral agreements aren't possible because the bloc coordinates policy in trade matters, the EU says. Russia bought €723 million ($952 million) of meat from the EU last year. „Where they have a legitimate grievance we will help them address that,” Mandelson said in an interview in Brussels today. „If they are trying to extend this and try to turn it into a less legitimate blanket response, then this is something we really cannot tolerate.” Russia's planned EU-wide ban strains tensions that have already been stoked by a Russian blockade of meat and some vegetables from Poland. The Polish government vetoed talks between the bloc and Russia to protest the year-old ban, which the Russian government imposed amid claims that Polish producers were violating hygiene laws and involved in smuggling.

Today, Polish Premier Jaroslaw Kaczynski said his government would be open to suspending the veto provided Russia acknowledges Poland's „basic interests.” Kaczynski, speaking on public radio Jedynka, didn't elaborate. While the EU doesn't want to link the food dispute with Russia's effort to join the WTO, Mandelson didn't rule out that possibility. Russia is the biggest economy outside the WTO. „We want to see Russia in the WTO,” he said. „I hope we won't have to make a connection between the two” issues. Last month, Russia agreed to lift a ban on wine and meat imports from Moldova, the former Soviet republic that is already a member of the WTO. Russia applied to join the Geneva-based trade arbiter in 1995 and cleared the last major hurdle to membership a month ago when it reached a deal with the US. „An illegitimate or over-hasty response simply isn't justified,” Mandelson said. „I'm sure we can resolve these difficulties without it blowing up into a trade war.” EU Health Commissioner Markos Kyprianou is in Moscow today to discuss the situation with Russian Agriculture Minister Alexei Gordeyev.

Separately, Mandelson also said China has both the „ability and capacity” to revalue the yuan and urged the Chinese government to follow up past moves to help the currency appreciate. „People would be much reassured if they saw China adopting currency policies that didn't seem designed to give them such an unfair advantage in trade,” he said. Pressing the Chinese government on this point is „not my chief priority,” he said, adding that „sometimes people exaggerate the trade gains of what might be achieved in balancing out trade as a result of revaluing the Chinese currency.” Europe's trade deficit with China surged 19% in the first nine months of the year to €63.4 billion ($83 billion), the EU's statistics office said yesterday. German Chancellor Angela Merkel plans to raise the issue of „imbalances” in exchange rates during Germany's Group of Eight presidency in 2007. Last week, US Treasury Secretary Henry Paulson said two days of talks in China had led to agreement on „many principles” to relax control over the Chinese currency. A stronger yuan would help reduce China's trade surplus by curbing demand for exports. (Bloomberg)