Russia, Europe Sign Key Trade Pact : Commerce: The agreement lifts most European barriers to Russian exports and sets talks on a free-trade zone.

Russian President Boris N. Yeltsin and European Union leaders on Friday clinched a trade agreement so overarching that Yeltsin proclaimed it a historic step toward uniting Europe.

The agreement, signed on the Greek island of Corfu and acclaimed in Russia as the end of economic isolation from Europe, lifts most European barriers to Russian exports and sets talks beginning in 1998 on a Europe-Russia free-trade zone.

“It represents a decisive step toward restoring the unity of our continent,” Yeltsin said of the agreement, and the accord “will bring Russia back into economic Europe as an equal partner.”

Coming just two days after Russia joined NATO’s “Partnership for Peace” program and coinciding with Prime Minister Viktor S. Chernomyrdin’s visit to the United States, the pact appeared to signal a new Russian push toward the West--a shift from Moscow’s recent efforts to assert its independence in diplomacy.

But Alexander Konovalov, a senior analyst at Moscow’s prestigious USA-Canada Institute, said the timing was a mere coincidence--and the 10-year agreement with the European Union was simply too good to put off.

“We will have coordinated--and agreed upon--market shares for a number of export goods,” Konovalov added. “That is good and normal because what we have been trying to do until now was to break into Western markets with our dumping prices, for which we have been justifiably pushed out collectively as some kind of troublemaker. Now, Russia can start seriously thinking about some cooperation and division of labor with its European partners.”

Moscow media estimates that trade barriers have cost Russia about $3 billion a year in lost exports to Europe, its biggest trading partner outside the former Soviet Union.

Yeltsin has often argued, particularly with Washington, that Russia needs free access to Western markets more than it needs billions of dollars in aid.

Under Friday’s agreement, some barriers to Russian exports will remain on uranium, steel and textiles. But the basic idea is that Russia and the 12 European Union members exchange most-favored-nation trade status.

The agreement is also meant to encourage European injections of money into Russia’s crisis-ridden economy by making it easier to get profits out of the country and allowing freer investment.

Russia exports mainly raw materials to Europe, including minerals, metals and wood, and imports largely machinery, processed food and vehicles.

Moscow appeared particularly happy that the EU--unlike the United States--recognized that the Russian economy is no longer state-run but rather is “in transition” to a market-driven system, meaning that Europe needed less defense against the possible dumping of cheap, state-owned goods.

After almost two years of wrangling over the accord, Russia also managed to retain the right to keep up some import barriers to protect threatened domestic industries.

Its main concessions included an agreement to allow many more foreign banks to operate in Russia beginning in 1996 and to accept French-backed limitations on its uranium exports.

The accord strengthened political ties with a plan for Russian and European leaders to meet twice a year.

The Russian and European parliaments must still ratify the agreement.

That will be far from automatic given the strong ultranationalist faction in the Russian Duma, where little opposition has been voiced so far.

Along with the Russian accord, the EU on Friday finalized its acceptance of four new members--Austria, Finland, Norway and Sweden--as of January.

Rumblings also continued over who would become the next head of the EU’s executive agency, replacing France’s Jacques Delors.

Belgian Prime Minister Jean-Luc Dehaene has the backing of France and Germany, but there are also candidates from Britain and Holland. The battle for leadership, expected to continue today, threatened to throw a pall on the meeting after the Russian dose of sweetness and light.

Another sticky moment came when Italian Prime Minister Silvio Berlusconi, whose government includes members who call themselves “post-fascists,” was roundly snubbed by one of his Greek hosts at the door to the Church of St. George, where the summit and signing took place.

Yeltsin, however, appeared to be having a grand time, staying on the yacht of Greek magnate Yannis Latsis.

The Itar-Tass news agency reported that the Russian president, who has denied serious health problems but frequently appears fatigued, would stay on for a few days of rest on Corfu.