EU Grants Russia Free Market Status
By Gareth Harding, UPI Europe Correspondent 5/29/2002

BRUSSELS, May 29 (UPI) -- Russia took a major step toward joining the World Trade Organization Wednesday when the European Union became the first major economic power to formally recognize the country as a fully-fledged market economy.

The move makes it easier for Russian companies to export goods to the European market, which accounts for almost 40 percent of its trade. President Vladimir Putin told reporters at the end of a Moscow summit with EU leaders that the change of status would lead to the lifting of 14 anti-dumping cases against Russian firms, freeing up $1.5 billion of trade.

Free market status is normally only granted to WTO members. Last week, U.S. President George W Bush refused to recognize Russia as a market economy, but promised to review Washington's approach.

European Commission President Romano Prodi said the EU decision was a "reward for the considerable efforts undertaken by this country in recent years" and heralded the move as an "important milestone on the road to WTO membership."

In return, Moscow has promised to complete reforms aimed at the gradual removal of trade barriers and to open up its heavily subsidized energy sector to competition.

In the long term, the two sides aim to set up a Common European Economic Space, which is billed as the first step toward a free trade area stretching from Vigo to Vladivostock.

Prodi said "remarkable progress" had been made toward achieving the goal, in particular in harmonizing legislation and agreeing common rules for public procurement. The former Italian premier added that both Russian and European businesses would benefit from having the same laws and rules.

Although the summit made clear progress towards boosting trade between Russia and the EU, the two sides remain poles apart on the thorny issue of Kaliningrad.

When Poland and Lithuania join the EU in several years time, the enclave will become a Russian island in a sea of EU states. Putin pressed Prodi and Spanish Premier Jose-Maria Aznar to scrap visa restrictions for the territory's residents, but the two EU leaders refused to back down.

"Now that we have buried the Cold War, it is very difficult to understand such an approach to Kaliningrad," said Putin, describing the EU's stance as a "violation of elementary human rights."

The two sides agreed to work hand in hand on a range of other security issues, however. EU leaders are expected to agree to Russian participation in EU-led peacekeeping operations at a summit in Seville, Spain, next month. They will also look into possible use of Russian planes for long-haul military operations and how to involve Moscow in the EU policing mission in Bosnia and Herzegovina.

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