Russia's WTO bid comes closer to fruition

WORLD / Wall Street Journal Exclusive

Russia's WTO bid comes closer to fruition

(WSJ)
Updated: 2006-11-13 09:25

http://online.wsj.com/public/article/SB116317125808419823-mSwxFQD_H_tMaLaam
pplJT_snuQ_20061118.html?mod=regionallinks

MOSCOW -- Russia and the US say they will sign a landmark deal in the
coming days paving the way for Russia to join the World Trade
Organization -- a goal that Moscow has doggedly pursued for the past 12
years and that has been one of the key objectives of Vladimir Putin's
presidency.

The breakthrough removes a major irritant in relations between Moscow and
Washington that have been strained by disagreements over Iran and US
accusations that Russia is backsliding on democracy and human rights and
using energy to bully its neighbors.

"We have an agreement in principle and are finalizing the details," US
Trade Representative Susan Schwab said. She said the deal "will mark an
important step in Russia attaining membership of the WTO."

Russian officials said delegations of both countries were trying to make
sure the deal would be ready for signing when Mr. Putin and President
Bush meet during the Asia-Pacific Economic Cooperation Forum summit in
Hanoi, Vietnam during the week.

The US is the only one of Russia's major trading partners that hasn't
signed a bilateral trade deal with Moscow, provoking much frustration in
the Kremlin. Russia had hoped to reach such an agreement in time for
July's G-8 summit, which it hosted, and the failure to do so cast a pall
over the meeting. Both countries set an informal deadline of the end of
October, but a week of negotiations in Washington last month ended
without progress.

Central to the deal was the resolution of a longstanding dispute over the
safety of US beef and pork exports. Russia insisted on inspecting all US
exporters' meat-production facilities before it agreed to lift
restrictions on such imports. The results of the inspections, which took
several months, were positive, according to a person close to the talks.

Meanwhile, the US appears to have made concessions on access to Russia's
financial-services market. It had initially demanded that Moscow allow
foreign banks and insurance companies to open branches in Russia.
According to US trade officials, the final deal allows only insurance
companies to open branches. But Russia agreed to allow the total share of
foreign investment in the banking sector to rise to 50% from 25%,
according to a person familiar with the talks.

Russia also agreed to improve protection and enforcement of
intellectual-property rights -- a key issue for US copyright groups that
have long complained about rampant compact-disc and computer-software
piracy in Russia.

WTO membership would mark a milestone for Russia, demonstrating to the
world that it adheres to the rules of global trade, has eradicated the
last vestiges of socialism and is fully integrated into the world economy.

But the country faces several more months of negotiations before it can
join the WTO. Once the bilateral deal with the US is signed, it must
enter multilateral talks under WTO auspices in Geneva, which will set the
final rules for its entry into the organization. Analysts say the US has
kicked some of the more contentious issues in its trade talks, such as
protection of intellectual-property rights, to the multilateral forum,
and negotiations there could drag on for months.

Russia also has to wrap up bilateral deals with Costa Rica, Georgia and
Moldova, and some officials in the latter two countries have threatened
to block Russia's WTO accession in retaliation for trade sanctions Moscow
has imposed on them.

In practical terms, WTO membership may have little impact for Russian
companies, since the country's main exports -- oil and gas -- are rarely
subjected to protective tariffs. But it would safeguard some companies,
such as steel producers, from arbitrary sanctions while allowing Western
companies greater access to the potentially huge Russian market for
agricultural goods, aircraft and finance.

Last month, executives from 13 major US corporations, including Chevron
Corp., Citigroup Inc. and Ford Motor Co., wrote to Messrs. Bush and Putin
urging them to wrap up a WTO agreement, saying it was in the economic
interests of both countries to reach a deal.

Andrew Somers, head of the American Chamber of Commerce in Russia, said
the deal would give a huge boost to the US-Russian economic relationship.
"This will facilitate the conclusion of major industrial transactions
between US and Russian companies, including those in strategic sectors,"
Mr. Somers said.

Obstacles to Russia's WTO bid still remain. The US Congress must decide
whether to approve "permanent normal trade relations," or PNTR, with
Russia before it can join the WTO. That would entail removing a Cold
War-era trade restriction known as the Jackson-Vanik amendment that
linked US trade benefits to the emigration policies of communist
countries.

Congress recently approved PNTR for Ukraine, which is hoping to join the
WTO this year. But Russia is still subject to Jackson-Vanik, which it
dismisses as an anachronism, and some in Moscow fear a
Democrat-controlled Congress will be less likely to repeal it than a
Republican one. Democrats have traditionally taken a harder line on
Russia's human-rights record than Republicans.

Top World News 

� Hamas accepts peace conference proposal

� Iran vows retaliation if Israel strikes

� Bush, team to meet with Iraq Study Group

� Iraq gunmen kill 10 Shiites, abduct 50

� Typhoon slams into northeastern Philippines

Today's Top News 

� Grass-roots get more say at Party meet

� Green impact 'ignored by media'

� China Mobile inks deal with News Corp

� Cross-dressers draw Chinese audience

� Gunmen kill 10 Shiites, abduct 50

Most Commented/Read Stories in 48 Hours

20071125 http://www.hellomandarin.net