Russia and EU enlargement

The article looks at the economic implications on Russia of the EU’s scheduled enlargement.

Russia is raising, more and more vigorously, the question of the economic cost it might have to bear as a result of the accession to the European Union on May 1st 2004 of the eight countries of Central and Eastern Europe and the Baltic States (Russia’s trade with Cyprus and Malta being negligible, it is not included in this paper):

Russia remains an important economic partner of the eight acceding countries. In 2002, Russia exported 13.8 billion euros’ worth of goods to this area, 82% of which were energy-related products, i.e. 14.2% of Russia’s total exports. Russia imported 3.8 billion euros’ worth of goods from the Eight, i.e. 5.9% of Russia’s imports. 2.4% of the 8 countries’ exports go to Russia and 7.6% of their purchases come from it.

Russia believes that enlargement will entail a significant drop in its exports to this area, a loss which the Russian experts calculate at between 150 and 400 million euros. Russia has therefore submitted to the European Commission a list of 14 points on which it asks for urgent negotiations, otherwise Russia might not accept the extension to the 10 new members from May 1st 2004 of the Partnership and Cooperation Agreement signed between the Russian Federation and the European Union and its Member States.

The 14 points are not all commercial grievances directly related to Enlargement (for example, they include the future of the Russian enclave of Kaliningrad and the situation of the Russian minorities in the Baltic States), and they require political treatment. The majority of the difficulties raised are, however, of a commercial nature: they primarily concern iron and steel, because of quantitative restrictions imposed by the European Union’s anti-dumping regulations and certain agricultural products, affected by more stringent phyto-sanitary measures and European quotas. The European energy policy is also, indirectly, criticised.

Russia accompanied this request for negotiation by a threat that it would refuse to ratify the extension to the 10 new members of the Partnership and Cooperation Agreement (PCA) which governs the relationship between the European Union and its Member States with Russia.. This agreement determines the trading system between Russia and the European Union (“the Most Favoured Nation” clause, elimination of quantitative restrictions, etc.), defines the fields of cooperation, establishes a political dialogue between the two partners and puts in place an institutional framework for cooperation: two annual Summits, a Cooperation Council and a ministerial Cooperation Committee with 9 sub-committees, two ministerial meetings per annum (in the “Troika” format) etc. It was within this framework that a Summit took place at St Petersburg (May 2003), whose Final Declaration defined 4 common areas (economy; liberty, security and justice; research, education and culture; and finally external security) within which cooperation between Russia and the European Union should be deployed.

The Commission’s current position is that linking the extension of the PCA and the 14 contentious matters is unacceptable, the extension of the PCA to the 10 members being non-negotiable.

For more analyses of the EU’s enlargement process, see the

enlargement website of DREE.