Russian President Putin (right) and Trade Minister Gref looked content at the signing ceremony of the long-awaited bilateral deal with the US on Russia's accession to the WTO.
Photo: Dmitry Azarov
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Russia and the US Lay their Cards on the Table
// Details of the two nations’ WTO agreement are disclosed
U.S. and Russian trade officials have disclosed terms of the agreement on Russia’s accession to the WTO. Russia had to guarantee the United States nearly free access to most markets – from computer technology to law. Russia managed to secure general terms for the entry only in exchange of concessions and complying with WTO additional agreements.
The signing of the bilateral deal between the United States and Russia on Russia’s accession to the WTO in Hanoi on November 19 was largely a formal occasion. Russian Economic Development and Trade Minister German Gref explained that the two parties initialed the agreement back on November 6. The Office of the U.S. Trade Representative Susan Schwab published key terms of the deal as early as on November 11. However, when the signing ceremony in Hanoi was put off for one hour “for technical reasons”, Russian negotiators were apparently panicking. It seems that Russia’s negotiating team was expecting some kind of a trick put up to the last moment even after it had given up a lot of Russia’s “special positions” at WTO talks.
Russian Economic Development and Trade Minister German Gref said Russia managed to achieve the accession to the WTO on general terms without special demands. Normally parties do not disclose details of their positions till the final agreement is struck– and Russia must still hold multilateral talks over the WTO’s entry.
The Office of the U.S. Trade Representative and the Russian Economic Development and Trade Ministry have decided to publish special notes (trade facts in the United States and an information message in Russia), revealing the nature of the agreement that was signed in the presence of Russia and U.S. presidents in Hanoi on Sunday. Unlike China Russia managed to avoid joining a number of additional WTO agreements by signing bilateral deal with the United States, a wide range of trade-offs to other WTO members and adopting part of additional WTO agreements de-facto. Some disagreements with the U.S. have been settled not in the bilateral agreement but in the so-called exchange letters – documents that concern only the United States and Russia and their mutual stances. Sources of Kommersant say that the parties have signed six exchange letters. Two documents run about sanitary control regime for U.S. meat exports to Russia. Another exchange letter covers intellectual property and another one deals with mutual obligations on GM food. The content of other letters has not been disclosed yet.
Just up to the last moment, Russia and the United States were unable to reach the final agreement on terms of opening Russia’s two key economic sectors, automobile and finance industries. As far as the latter goes, Russia agreed to let in foreign insurance companies after nine years of transition. However, they will not be eligible to work with life insurances. Russia also promised rapid liberalization of the banking market and the resumption of talks next year on admitting banks of full foreign ownership to the country. In the automobile industry, Russia has guaranteed to bring down import duties to 15 percent from 25 percent before 2014.
In addition, Russia managed to shrink from singing the WTO optional deal on civilian aircraft trade. Russia has not denied foreigners access to the market as such but took it as an agreement which is not at all obligatory.
Finally, Russia’s numerous compromises at talks with the United States were left almost unannounced. Russia pledged to lift duties on copper in four years, cut duties on scrap metal by three times in five years’ time and allowing foreigners to be involved in trade, computer and software product markets as well as the distribution of goods an business services industry. In almost all these sectors Russia agreed to accept 100-percent overseas-owned companies which are going to enjoy the same rights as their Russian counterparts. Some Russian negotiations even found it hard to remember in interviews with Kommersant correspondents the nature of the restrictions that Russia to promise to lift or the schedule.
The bilateral agreement has become one of the last documents that Russia needed to strike on its way to the World Trade Organization. Russia has not signed deals with Salvador, Costa Rica and Guatemala but has initialed them. Sri Lanka has recently been anxious to sign a similar treaty with Russia but German Gref immediately flew to Colombo and promised to scrap loose tea import duties. Russian-Vietnamese WTO deal is another blueprint to be signed as Vietnam which has just entered the WTO has not formalized its WTO membership yet.
Now Russia is to hold multilateral talks. This is when Georgia and Moldova will have time to present their demands. The EU, Georgia and Moldova are most likely to try to secure WTO agreements similar to the American on and bargain other trade-offs. Small-sized countries normally need one or two months to prepare the WTO agreement after the end of bilateral agreements. Russia’s delegation, however, gives the timeframe of seven or eight months for the accession. Negotiations should be over next summer, so Russia may enter the WTO early next fall.
Dmitry Butrin
All the Article in Russian as of Nov. 21, 2006
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