Russia will propose a solution in a trade row with the European Union over lumber export duties in time for a summit this month, trade negotiator Maxim Medvedkov said on Friday. "This issue demands a solution. The ball is in our court, and we will be able to provide an answer before the summit in Portugal," Medvedkov said.
"The problem exists and we will work to solve it," he told a news briefing before the EU-Russia summit, scheduled on October 26. The announcement met with a cautious response in Brussels. "The Russians are looking at this but for the time being we don't know if there will be a way through. It is too early to judge. This is a very important issue for member states," a European Commission official said, asking not to be named.
President Vladimir Putin ordered the imposition of export duties on raw timber in March after saying he wanted to promote the development of the Russian wood-processing industry. The move angered EU members Finland and Sweden, whose pulp and paper industries process large amounts of Russian timber, and has become an obstacle to Russia's bid to join the World Trade Organisation.
Medvedkov rejected accusations from Sweden that the duties violated earlier agreements between Russia and the EU. "Russia had the full legal right to do this," he said. "All our agreements with the EU on the issue will take effect only when Russia joins the WTO."
Russia, the world's ninth-largest economy, is the largest country outside the WTO. Moscow has been in membership talks since the mid-1990s and officials now hope to complete entry formalities next year. "We are in the middle of the tunnel, where we can see a light at the end of it," Medvedkov said. "As usual, the last mile is the most difficult."
Medvedkov said Russia has recently started bilateral talks with Saudi Arabia and would hold the next round next month. He said Russia had also resumed bilateral negotiations with Georgia over customs posts on Russia's borders with the breakaway Georgian regions of South Ossetia and Abkhazia.
"We tell them: 'Show us what WTO rules oblige Russia to do something about customs posts?'" said Medvedkov. "From my point of view, this issue does not relate to WTO talks. Our Georgian colleagues say it does."
When Russia becomes a WTO member, Medvedkov said, it intends to use WTO mechanisms to help gas export monopoly Gazprom diversify into Europe's gas transportation, distribution and power generation. "We will carefully study what possibilities there are to protect our interests. This issue is of great importance for us," Medvedkov said.
Many European politicians have expressed concerns about Gazprom's expansion plans and the European Union has proposed limits on the involvement of major gas suppliers in the bloc's gas distribution. Russia plans to hike export duties for grain and lower import duties on milk and dairy products in order to curb food prices. Medvedkov said more Russian grain on the domestic market would be welcome news for its international competitors.
"We have our interests in agriculture. We will protect them. We will probably find allies inside the WTO. There are countries with a similar position," Medvedkov said.