Polish Trade Ties Hit by EU Expansion

WARSAW, Poland -- Russia and Poland will try this week to resolve a trade dispute resulting from Poland's entry to the European Union next year, diplomats said on Tuesday.

The dispute, stemming from Poland's decision last month to revoke a bilateral trade agreement with Russia, will be a key topic during Russian Foreign Minister Igor Ivanov's talks on Wednesday with his Polish counterpart Wlodzimierz Cimoszewicz in Warsaw.

Poland has been forced to annul the deal, which guarantees mutual privileges in trade in many products, because it has to bring its import and export rules in line with those of the EU when it joins the bloc in May, along with nine other countries.

"We hope there will be an agreement. Nobody wants a trade war," a Russian diplomat said. "The lack of a solution will be more painful for Poland than Russia. Most Polish goods may face double custom duties."

Russia would like to extend the life of bilateral agreements with Poland and other EU newcomers beyond May and until Moscow and the European Commission, the EU's executive body, clinch a new comprehensive deal on mutual trade after the bloc's enlargement.

"From May 2004, legal framework of our economic cooperation with Russia will change ... Our Russian partners so far have certain reservations," Cimoszewicz said on Monday.

Russian President Vladimir Putin expressed concern this month at a summit with the European Union over possible trade losses his country might suffer due to EU enlargement.

Moscow is afraid the EU will keep many import quotas for Russian goods unchanged despite the bloc's expansion by 10 countries, seven of which were part of the Soviet bloc before the 1989 fall of communism.

A prolonged trade conflict could sour the often uneasy diplomatic relations between Poland and Russia, which some political analysts say are already stalling economic cooperation, notably in the energy sector.

A trade dispute with Russia would harm Poland's machine, paper, chemical and food processing industries, which dominate its $1.3 billion annual imports to Russia. Russia exported $4.4 billion worth of goods to Poland last year, mainly gas and oil.

One Polish official said the countries would also have to examine the future of "about 10 financial and loan agreements" which might not be fully compatible with EU regulations. He declined to give details.