Halonen and Medvedev met Saturday on the fringes of a summit of Finno-Ugric nations, two days after Finland threatened action against Russia in a long-running dispute over timber tariffs. Hungary and Estonia are also at the summit.
"The president of Finland actively raised the issue of raw timber supplies [from Russia to Finland]," said Sergei Prikhodko, Medvedev's foreign policy adviser.
"President Medvedev provided all necessary explanations in line with Russia's policy aimed at developing timber processing in the territory of Russian Federation," Prikhodko said.
Finland, which is as large a trading partner with Russia as the United States, said last week that it was considering countermeasures in a dispute over higher export tariffs imposed by Russia to kick-start its wood processing industry.
Finland said it might impose a tariff on goods transported across Finland to Russia to raise cash to compensate its paper makers. Russia said such a measure could contradict international trade laws.
Prikhodko said Finland's countermeasures were not discussed at the meeting.
Finland has said it will lose up to 16,000 jobs because of the duties. Finland's economy suffered from both the collapse of the Soviet Union and Russia's 1998 financial crisis.
"Our countries cooperate broadly, and this cooperation is linked with certain challenges," Halonen told Medvedev. "I do not want to describe them as problems."
A Kremlin source said "the atmosphere of the meeting was normal first of all because the Finnish side perfectly understands the importance of good relations with Russia and a need to maintain them."
Halonen greeted Medvedev in Russian to show goodwill.
Medvedev said: "Our trade steadily grows, and the current figure of 15 billion euros [$23.61 billion] is an impressive figure. ... We will talk about tasks for the future and also about problems which sometimes emerge," he said.
The meeting followed a Russia-EU summit in Khanty-Mansiisk on Friday at which Medvedev criticized the desire of "some EU members to use the European Union as an instrument of solving their national problems."
EU Trade Commissioner Peter Mandelson threw the EU's support behind Finland at the summit, telling reporters the "draconian hike" on timber export duties was having a "crippling effect on Finnish industry" and that taxing Russian goods transiting its territory would be a way of compensating the cost.
Halonen invited Medvedev to visit Finland, which Medvedev accepted.
"Finland now hosts a hard rock festival which could be of interest to you," she told Medvedev, who is a fan of British rock band Deep Purple. "Shall we go right now?" Medvedev joked.
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