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#22 - JRL 2006-257 - JRL Home
RIA Novosti
November 14, 2006
Two steps to Russia-US agreement on Russia's WTO accession

MOSCOW. (Oleg Mityayev, Izvestia daily correspondent, for RIA Novosti) - Russia's Ministry of Economic Development and Trade claims that the completion of negotiations with the United States on Russia's accession to the World Trade Organization (WTO) is just a few days away.

The two countries' presidents, Vladimir Putin and George W. Bush will be able to finalize the details of the bilateral agreement during their brief meeting in Moscow on November 15. The signing of the U.S.-Russian Protocol is to take place several days later in Hanoi, at the forthcoming summit of the Asia-Pacific Economic Cooperation (APEC). If this really happens, we can expect that Russia's 13-year-long journey toward WTO accession will soon be over.

On November 15, George W. Bush's aircraft will make a refueling stop in Moscow on the way to Vietnam, and the U.S. President will meet with Vladimir Putin. This will be the last but one step in the course of Russia's eight-year-long talks with the United States on its entry to the WTO. On November 19, Vladimir Putin and George W. Bush will meet again. After the presidents' second meeting, German Gref, Russia's Minister of Economic Development and Trade, and the U.S. Trade Representative Susan C. Schwab will sign the U.S.-Russian Protocol on WTO accession. This will remove the last serious obstacles to Russia's WTO membership.

Russia started the procedure for its accession to the WTO 13 years ago, in the tumultuous 1993, long before its negotiations with the United States on the subject. At that time, Russia applied for membership in the GATT (the General Agreement on Tariffs and Trade), WTO's precursor. The WTO, which has 149 members now, was just a project at that time. However, the political and economic crisis in Russia diverted Russian politicians' attention from the process. Throughout the entire 1990s, negotiations on Russia's entry to the WTO were conducted without much zeal. International financial and economic organizations focused on the problems of the Russian financial system and the stabilization of the ruble exchange rate.

A breakthrough was achieved at the turn of the century. The newly elected President Vladimir Putin and the Economics Minister German Gref, who quickly gained political weight, made Russia's accession to the WTO a priority task. This was followed by an active phase in the talks conducted with 56 countries over the course of six years. Simultaneously, foreign businessmen began to show an increasing interest in Russia's WTO accession, which was given a further boost by a rapid growth of the Russian domestic market in the new century.

At the same time, many Western experts, while supporting Russia's earliest possible entry in the WTO, set very tough terms and conditions for Russia's membership. They claimed that the abolition of all tariffs would be the best strategy for Russia. The Russian authorities, however, realized that the only way to join the WTO was on their own terms. Russia's talks with the United States were the most difficult and protracted. The signing of the joint protocol was postponed several times. The main disagreements that remained between Russia and the United States by the beginning of this year included the U.S. demands to give branches of western banks and companies access to the Russian banking and insurance markets, to be more active in fighting counterfeit products (especially audio and video) on the domestic market, and to cut import tax on aircraft and aircraft engines.

The Russian negotiators were almost certain that they would reach agreement with the United States by the G8 summit, which was held in St. Petersburg in July 2006. Russia made great concessions at that time and even agreed to allow foreign companies enter its insurance market. However, the talks ended in failure because of the U.S. rejection of Russia's new veterinary requirements on poultry, beef and pork imports from the U.S.A. After this, the presidents set the time limit for their negotiators: they had to come to terms within the next three months, by November 1.

This was probably the main reason why German Gref nearly unleashed a "chicken war" on the United States. In August, he sent an ultimatum to his counterpart Susan Schwab, threatening to abolish quotas on meat imports from the United States if it fails to approve Russia's membership in the WTO within three months. The U.S. reaction was equally strong. Nearly one-third of all chicken exports from the United States goes to Russia. Nevertheless, the Russian economics ministry claims that all the terms and conditions of the agreement with the United States have been finalized, though it has declined to go into details.

However, even if the U.S.-Russian Protocol on Russia's WTO membership is signed, it will have to be approved by the U.S. Congress, which was recently "seized" by the Democrats. Apart from this, the Congress will have to abolish the notorious Jackson-Venik amendment passed in 1974, in order to establish lasting "normal trade relations" with Russia that have to be confirmed now every year. The Bush Republican Administration is trying to convince the Democrats now that agreements with Russia will have only positive consequences for the United States.