EU May Impose Sanctions On Russia Over New Bilateral Deal

by Ulrika Lomas, Tax-News.com, Brussels

19 February 2004

Reports have indicated that the European Union is about to impose trade sanctions on Russia if the latter refuses to extend a bilateral agreement with the EU to encompass the ten accession states.

Russia has been unwilling to sign the expanded Partnership and Cooperation Agreement with the EU unless it is given compensation for the potential loss of trade from the accession of the ten states, many of which have traditionally been within the Russian sphere of influence.

To emphasise its argument, the Russian government last month published a list containing fourteen areas in which it is likely to suffer as a result of the extended PCA. Russia claims its economic loss will be in the region of EUR150 million per year.

Whilst EU diplomats are reportedly sympathetic to Russia’s concerns, officials have indicated that Europe is unwilling to compromise on the issue, and will insist on unconditional acceptance of the extended PCA, a stance that Russia is likely to regard as highly confrontational.

Recommended