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. Last Updated: 07/27/2016

Russia Seeks Agreement On Vodka Trade Limits

A Russian trade official said Wednesday the government would try to seek understanding from European Union officials who have expressed alarm at Moscow's plans to sharply limit imports of vodka and other spirits next year.

"We are hoping the European Union will understand our position on this question," said Vladislav Baranov, deputy head of the multilateral economic cooperation division of the Foreign Trade Ministry.

"We are hoping they will be willing to reach a compromise," he said.

The European Commission, the EU's executive body, said EU exports of vodka and ethyl alcohol to Russia, a major market, could plunge by 75 percent if the quotas are imposed.

"This is really quite disturbing," said EU spokesman Nico Wegter in remarks reported by The Associated Press.

The commission urged Russia to reconsider its stand. No potential retaliation was specified, but Wegter said he "cannot exclude any action."

Andreas Papadopoulos, head of the economic section of the European Union Embassy in Moscow, said the measure was "against the spirit of the trade agreement between Russia and the European Union."

The Russian government has been under pressure from domestic vodka producers for protection from a flood of cheap foreign imports, mainly from neighboring countries such as Ukraine.

Hippolyte Dyumulin, a trade specialist at the All-Russian Foreign Trade Academy, maintained that the measures are necessary and legitimate.

"Protecting an industry that has been seriously affected by international competition is perfectly legitimate and in accordance with the international laws of the World Trade Organization," he said.

"The overall share of foreign goods sold on the Russian market exceeds 60 percent, and for some products it can reach 90 percent. We have to protect our market from this inflow of imports."

Russia's highest import duty, 35 percent, is low compared to tariff barriers established by some WTO-member countries, he said.

Alexei Leppanen, head of the Finnish firm Primalco, which exports "Finlandia" vodka to Russia, said Moscow's increasingly protectionist attitude was a "serious question."

"We are worried by Russia's measures because it is one of our biggest markets, but we will have to wait and see what these quotas really mean," he said.

It appears Russia is torn between having to protect its own market to help its industries become more competitive and liberalizing its trade policy to gain membership to the WTO, something it has been requesting since 1993.

?The European Commission said Thursday it will negotiate new five-year steel accords with Russia, Ukraine and Kazakhstan, The Associated Press reported from Brussels.

It said in a statement the accords will provide for a progressive opening of the 15-nation EU for steel products from the three countries. Import quotas and trade limits will continue but will be eased in line with the "gradual application of competition, state aid and environmental protection disciplines."