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. Last Updated: 07/27/2016

EU Official Downplays Potential Trade Crisis

A looming trade crisis between the European Union and Russia appeared to be defused Monday, when the visiting European Commissioner, Hans van den Broek, soft-pedalled criticism of Russian import tariff hikes on vodka and textiles and offered financial aid to ailing industries.

There will be "no trade war," Deputy Economics Minister Sergei Vasilyev told the Interfax agency after van den Broek's talks with top Russian government officials.

Moscow had last month threatened protectionist measures ranging from tariff hikes to restrictions on EU imports, prompting warnings from the European Commission that Russia could be jeopardizing its chances of taking a berth in the World Trade Organization.

But in a press conference Monday during his two-day visit to Moscow, van den Broek was vaguely diplomatic on the potential trade dispute, suggesting that a compromise would be found.

"I think that the outcome of our discussions on those subjects this morning have provided for both sides a basis to find appropriate solutions," van den Broek said following meetings with Deputy Prime Minister for Foreign Trade Oleg Davydov. "No restrictive measures will be imposed or established pending the negotiations that we are continuing now on textiles."

Van den Broek also appeared to backtrack on earlier criticism of Russia's announcement of a hike in minimum import prices for vodka.

"We need more clarification there to know whether really imports from Europe are being discriminated against compared to other imports or not," he said, although he warned against protectionism in general.

The commissioner said he had offered to provide assistance to Russia on modernizing ailing sectors in the textile industry, apparently responding to a request from Davydov.

In remarks to Interfax after the talks, Davydov said Russia was concerned not by the fact of European textile and vodka imports, but wanted to reduce the amount of low quality vodka and textiles pouring into Russia. He said Moscow would gladly refrain from imposing tariffs provided the EU helped with capital to revive Russia's textile industry.

Van den Broek said the European Union wanted to "adjust" its technical assistance program, to allocate the 1.2 billion ecu ($1.6 billion) allotted to Russia for the period from 1996 to 1999 not just to transport, the environment, energy and agriculture as before, but also small- and medium-sized enterprises.

The EU accounts for 45 percent of the Russian federation's foreign trade.

Van den Broek, arriving in the midst of an election campaign, seemed keen to soften criticisms of President Boris Yeltsin's administration in all fields.

He praised macroeconomic reforms, pointing to falling inflation and expressing optimism about privatization.

"We should support the policy of reform and that is the only basis upon which cooperation between the European Union and the Russian Federation can be a fruitful one," he said.

Van den Broek said he was sure Russia would not abandon political and economic reforms, saying that "All our interlocutors want to convince us that the course of economic and political reform in this country is irreversible."

While calling for restraint, van den Broek showed sympathy for Russia's stand on negotiations with Chechen leaders. Reporting on his meeting with Russian Foreign Minister Yevgeny Primakov, van den Broek said they discussed perspectives for a solution.

"I must say that is not that encouraging as long as Mr. Dudayev insists upon independence and everything else in fact is non-negotiable from their side," he said. "I have a clear impression that, from the Russian side, one is really prepared to negotiate, let me say it in my own words, about almost everything short of independence."