EUROPEAN FOREIGN POLICY SCORECARD 2016

Sanctions, trade and overall relationship

16 - Trade with Russia

Grade: B+
Unity 4/5
Resources 4/5
Strategy 3/5
Impact 4/5
Total 15/20
Scorecard 2015: A- (17/20)
Scorecard 2014: B+ (14/20)
Scorecard 2013: B+ (14/20)
Scorecard 2012: A- (16/20)
Scorecard 2010/11: B- (12/20)

Sanctions dominated EU trade policy on Russia, with some wobbles emerging towards the end of the year

In 2015, EU–Russia trade relations were dominated by European sanctions and Russian countersanctions, with trade liberalisation talks placed on hold. The EU had seven trade disputes with Russia in the World Trade Organization (WTO) – a lot given that Russia is a relatively new member.

Europe largely demonstrated unity on sanctions, though Italy caused confusion in December. Some false steps, however, were made on the potential relationship between the EU and the Russia-dominated EEU. Certain member states – notably Germany – favour talks, in the hope that this could encourage Russia to accept an OSCE-based European order. However, major initiatives are unrealistic as long as Belarus, an EEU member, remains outside the WTO. Trade liberalisation would also run counter to sanctions. In addition, the EEU’s failure to function as a proper customs union, and its not entirely voluntary nature, raise questions about whether it is timely for Europe to engage. That confines the agenda to limited discussions on standards and procedures – low-level talks, unlikely to result in a political breakthrough.

Disputes about the EEU also resulted in missteps by EU institutions: a notable example being Juncker’s November letter that – because it was addressed to Putin and not to official EEU representatives, and was written without consulting EU countries – angered member states and ignored the nominally multilateral nature of the EEU.

Throughout 2015 the EU engaged in trilateral talks with Russia and Ukraine on the EU–Ukraine trade deal, due to enter into force in 2016. The talks aimed to address Moscow’s fears around the deal, but revealed that Russia’s concerns are political or related to perpetuating market dominance in Ukraine, and hence are not legitimate for the EU. Still, the talks demonstrated the limited usefulness of such engagement to EU members, and gave Ukraine time to make its economy less vulnerable to a trade war.

Russia’s “counter-sanctions” – bans on imports of agricultural products from Western countries – caused losses to European producers, and drove prices up for Russia’s consumers. EU–Russia trade declined 38.5 percent year-on-year between January and September.