On Wednesday, July 4, the European Parliament (EP) adopted three new agreements that will offer EU companies more benefits in doing business with Russia.
These agreements do not provide for new obligations for the EU, but they do improve trade relations with Russia for car parts manufacturers, for manufacturers that are reliant on raw material export from Russia, especially in the field of marine transport, EP reports.
The EU and Russia agreed upon the new agreements, which can only become in force with the Parliament’s consent, during discussions about Russia’s inclusion into the World Trade Organization. Bilateral agreements ensure more beneficial trading terms for EU member states than the ones of WTO do.
During the talks on joining WTO, Russia agreed to set constant export tariffs on 80% on its exports of raw materials. The remaining 20% of raw materials are strategically important to European manufacturers, for whom Russia does not take up any obligations. In accordance with Wednesday’s approved agreement, Russia will warn the EU and will discuss with the union two months before it plans on increasing export tariffs on wheat, sunflower seeds, tobacco, animal skins, power products, wool and cotton, as well as various minerals and rocks.
“This agreement is the best temporary solution in relation to many raw materials important to EU manufacturers,”- says MEP responsible for the agreement Inese Vaidere. She regretted that the agreement includes only a commitment, rather than binding rules for Russia, and expressed the hope that soon it will be replaced with a binding agreement on raw material trade.
The second adopted agreement – is about the EU compensation mechanism for car parts manufacturers. It protects EU automobile companies from trade distortion measures, which Russia will continue to use until 2018; even after its inclusion in the WTO. These trade distortion measures force foreign automobile manufacturers to relocate their work to Russia and could potentially reduce the ability of EU companies to export goods to Russia. The agreement provides for the following: if the EU car parts export volume drops below 3% per year, Russia is to reduce import duties by an appropriate amount.
The third agreement – on service trade – provides new opportunities for EU marine transport agencies that want to do business in Russia. It offers advantages to EU service provider companies employees of which temporarily relocate to Russia. In accordance with this agreement, Russia takes up the obligation to allocate at least 16 000 job permits per year to EU citizens.