Russia, EU meet as trade talks stall on Polish row

Russia and the European Union were scheduled to start talks, during a summit meeting, on a Partnership and Cooperation Agreement, the fundamental text defining trade and other relations between the two sides. It will replace an existing agreement that expires next year. Over 50% of Russia's exports go to the EU, which gets a quarter of its natural gas from Russia. The European Commission can only start negotiating the text when all 25 EU member states have given it a mandate to do so. Poland refused after Russia banned meat imports, and hasn't signed a separate agreement regulating energy trade. Finland, which holds the EU's rotating presidency, said the talks couldn't start. “We're going to keep on working and the situation will be overcome,” EU foreign policy chief Javier Solana said as he arrived at the summit in Helsinki today. EU External Relations Commissioner Benita Ferrero-Waldner said the dispute didn't indicate damage to relations between the EU and Russia. “I don't think they are messed up,” she said. “We have I don't know how many things to discuss,” she added, saying the two sides would hold talks on a range of issues such as the Middle East peace process, the Iranian nuclear dossier and North Korea's nuclear program.

Finland's Prime Minister Matti Vanhanen, presiding over the summit, said he'll carry on seeking an agreement, which is partly designed to lead to greater security both for foreign investors in Russia's energy sector and for Russian energy exporters to the EU. Russian officials played down the significance of Poland's veto. “The alarmist forecasts” that the summit would fail as a result didn't materialize Putin spokesman Dmitry Peskov said today. In an indication the two sides want to develop relations, the European Commission announced it had reached agreement with Russia to end fees on EU airlines flying over Siberia on routes to the Far East. “This issue has been a trade irritant for the EU and Russia for a long time,” EU Trade Commissioner Peter Mandelson said in a statement released in Brussels. It gave no details of the agreement. Russian-EU trade has increased since the bloc enlarged to 25 members in 2004, taking in several former communist eastern European states once in the Soviet Union's sphere of influence. That's one reason why a new PCA is needed, Marc Franco, the head of the European Commission's delegation in Moscow, said in an interview. A provisional draft of the text of the PCA to be negotiated, seen by Bloomberg, states that “it will be of long, preferably unlimited duration,” unlike the current one which was signed in 1997.

The summit came a day after Alexander Litvinenko, a former Russia spy who sought political asylum in London, died of poisoning in unexplained circumstances. Peskov called his death a tragedy, and said suggestions that Russia had been involved were “nothing but nonsense” and “too silly” for officials to comment on. The EU wants Russia to agree to use the language of the so-called Energy Charter in the PCA. This sets out terms for trading and transporting energy across the Eurasian landmass. Russia signed it, then later said it won't ratify it. The EU sees the PCA as a way of getting the charter's language into a treaty without requiring Russian ratification of the original document. Asked if such a move would be acceptable, Peskov said the new PCA “will contain a general understanding of cooperation in the field of energy. It won't be a commercial contract.” He said “both sides want reliable supply, and reliable demand” of energy. The Russian meat ban was prompted by accusations by the Russian authorities that Polish producers are violating hygiene laws and smuggling. Putin said in Helsinki there is no problem with the quality of Polish produce itself. “We don't have claims against the quality of Polish food. The problem is somewhere else,” Putin said, adding that Polish authorities had failed to oversee certification of food from third countries. EU veterinary inspectors said in a preliminary report that Polish food products were safe for export and the Russian ban was “out of proportion,” daily Puls Biznesu reported today. According to European Commission spokesman Philip Tod, Poland has made considerable progress in increasing safeguards since joining the EU two years ago. (Bloomberg)