Railway tariffs put Russia on track for dispute

Date: 08/07/04

THE EU could soon start another dispute with Russia over Moscow's discriminatory railway tariffs that take away business from Baltic and Finnish seaports and railways. Russia is applying lower railway tariffs for cargo transportation for petrol, fertilizer and metal exporters if they use Russian seaports.

This gives the ports of Kaliningrad and St Petersburg an advantage in comparison to other ports on the Baltic coastline. Following complaints from Estonia, Latvia, Lithuania and Finland, a European Commission working group will meet on 16 July to evaluate the situation. It will decide whether a solution can be found through EU-Russia negotiations or whether the matter must be referred to the World Trade Organization. In parallel, talks between Russian and Commission officials, which started in Geneva last week, will continue.

Andris Maldups, chief of the transit department in Latvia's transport ministry, said that Moscow's policy amounted to subsidies for domestic ports.

"If they [Russian authorities] know that cargo goes to Russian ports, railway tariffs are two to three times cheaper than if the cargo is transported to the Estonian, Latvian, Lithuanian or Finnish ports, which results in subsidies for Russian ports," he said.

Latvia has lost around €317 million in the five years since Russia's tariff policy is in place, he added.

A spokesperson for Lithuania's permanent representation to the EU said that due to Russia's tariff policy, transit through the Klaipeda port has decreased significantly in recent years to the benefit of the Kaliningrad port in the Russian enclave. Last year, the Lithuanian port shipped around 30% less cargo than in 2000.

Estonia's ports have also suffered. Tallinn will provide the Commission with examples of negative effects of Russia's policies, Jana Vanamolder, the spokesperson for Estonia's EU embassy, said. "As the transit sector adds up to 10% of our gross domestic product, of course it is affected [by Russia's policy]," she added.

Jussi Myllarniemi, transport counsellor at the Finnish embassy to the EU, said that the issue had been "on the table" of Finnish-Russian negotiations for several years. Helsinki hopes that Russia will now "correct the tariffs", following EU pressure.

An official from the Russian delegation involved in the talks with the Commission says that Moscow "understands that there is a problem with certain legal grounds". But experts should find a reasonable solution, he said.

The Baltic Republics and Finland complain to the European Commission that Russia discriminates in its railway tariffs against cargo intended for their ports as opposed to Russian ports.

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