* Commission concerned by Moscow's rising trade barriers
* Russia due to join trade body later this year
* EU says protectionism growing, especially in Argentina
By Sebastian Moffett
BRUSSELS, June 6 Russia will probably be in
breach of global trade rules when it joins the World Trade
Organisation this year, the EU executive said on Wednesday,
signalling Brussels would feel justified in filing a case
against the club's newest member.
Russia is set to join the WTO once its parliament
rubber-stamps its application. But the European Commission said
in a report that Moscow will be in breach of its obligations in
several areas if it does not take steps to dismantle the trade
barriers it has put up.
"Russia, as an imminent WTO member, still deserves close
scrutiny as one of the most frequent users of trade-restrictive
measures," the Commission said. "Russia is not currently fully
living up to its future obligations as it has undertaken, and
extended numerous, potentially trade-restrictive measures."
These include safety regulations on alcoholic drinks, a ban
imposed on the import of live animals from the European Union,
and legislation under preparation that contains preferences for
domestic car producers in public procurement, the report said.
Russia and the EU are deeply intertwined, with Europe
relying heavily on Russian energy exports and Russians hungry
for EU products and access to its 500 million consumers. But the
two sides argue over issues ranging from energy supplies, trade
and market access to human rights.
Bilateral corporate ties have also frayed in places, with BP
embroiled in a row over its plans to sell a stake in its
Russian venture TNK-BP.
The UK oil major's billionaire partners are threatening to
block a deal that would help the Kremlin tighten its grip on the
country's vast energy sector.
Negotiations between Russia and the EU towards a
comprehensive economic and political agreement have also
stalled, and Brussels is concerned by President Vladimir Putin's
plan to develop a "Eurasian union" of ex-Soviet states,
including Kazakhstan and Belarus.
At a summit with EU leaders in St Petersburg on Monday,
Putin told them they would have to deal with this new economic
Wednesday's report - one of a series launched by the
Commission to monitor trade protectionism in the recent, harsh
global economic environment - said other governments were also
resorting to protectionism.
Worldwide, only 89 protectionist measures have been removed
since October 2008, whereas 534 new ones are in place, said the
Commission, which negotiates trade agreements on behalf of the
EU's 27 countries.
SCARING OFF INVESTMENT
Healthy trade flows are crucial for Europe at a time when
its economy has stagnated and the debt crisis is eating away at
business confidence at home. Fast-growing emerging economies in
Asia provide European businesses with an opportunity to boost
exports, such as those of German machinery to China.
But trade also makes Europe vulnerable to any rises in
protectionism in overseas markets.
Argentina, under President Cristina Fernandez' centre-left
government, has resorted the most to trade-restrictive measures
since October 2008, with 119, according to the report.
In April, Buenos Aires seized control of energy company YPF
from Spain's Repsol.
Last month, the EU filed a suit against Argentina with the
WTO, citing an import licensing regime and an obligation on
companies to balance imports with exports.
"Ad-hoc measures such as those taken by Argentina or Bolivia
substantially impact the investment climate for EU investors,
increasing its unpredictability," the Commission said.
On May 1, Bolivia nationalised a local unit of Spain's Red
The Commission called on the Group of 20 world leaders'
summit in Los Cabos, Mexico, on 19 and 19 June to keep a pledge
"not to resort to trade restrictive measures during the economic
and financial crisis".
Brussels is currently revamping its trade defence mechanisms
against what it sees as unfair practices in countries - such as
China, Russia and Vietnam - that it says practise state
(Additional reporting by Robin Emmott; Editing by John