TRADE-RUSSIA: Cold Peace Descends on WTO Talks

By Kester Kenn Klomegah Reprint | | Print |

Kester Kenn Klomegah

MOSCOW, Jan 6 2006 (IPS) - Russia hopes to sign necessary agreements to join the WTO this year despite significant differences with the United States.

“Predictions that we might join the WTO (World Trade Organisation) by mid-2006 are quite realistic,” economic development and trade minister German Gref said in an interview published in the Vremya Novostei newspaper. Gref said deals had been signed with Paraguay, the Philippines, Nicaragua and Canada during the Hong Kong trade ministers meeting last month.

But even as the Russian trade delegation reaches agreements with most WTO member countries, key differences with the United States remain. The two sides have managed to reach an “agreeable formula” on airplane tariffs, intellectual property rights and agriculture, but failed to find common grounds in the financial services market, Gref said. “It’s time to wrap up after several years of negotiations,” he said. “But we also hope for flexibility from trade partners. We will not assume obligations that we cannot carry out, or which limit our rights.” Better access to the Russian market for foreign airplane makers and financial services firms, and enforcement of intellectual property rights have been among the most contentious issues in the bilateral negotiations over U.S. backing for Russian entry into the trade organisation. Joining the 149-member trade club requires negotiating bilateral agreements with member countries, and Russia is still stuck in talks with the United States, Switzerland, Australia and Colombia. “The plan to join the prestigious institution did not look very realistic from the beginning when people started lobbying away furiously for their own special interests which are irreconcilable with membership requirements,” director of the Institute for Globalisation Studies Prof. Boris Kagarlitsky told IPS. “The position at the official negotiations would consequently become difficult in the extreme.” Some sectors of the economy that are not significant have nevertheless been an obstacle. Kagarlitsky said many officials have focused narrowly on protecting the automobile industry, forgetting the low level of production. Russia manufactured 965,000 cars last year, down 5.4 percent from 2004, according to the Federal Statistics Service. Kagarlitsky said that whenever talk of WTO membership comes up, government officials are quick to cite protection for the automobile industry because its representatives have been the most vociferous opponents of trade liberalisation. “And of course, everybody notes right off that under the long-standing protectionist policies, the owners of the auto factories simply did not learn any new manufacturing technicalities, and this has negatively affected the industry,” he said. He was referring to Russian made Volga and Lada cars whose production gets progressively more expensive in comparison to foreign made automobiles. “What’s happening with Russia’s membership of the world trade body is only one fundamental aspect of a larger nationwide economic crisis which has to be solved,” Kagarlitsky said. A senior government official said last month that Moscow is not prepared to make any more concessions, especially when it comes to allowing foreign banks to open branches in Russia and cutting the 20 percent import tariff on aircraft. But there are signs that officials are giving up some of these positions for the sake of WTO membership. “We hope (to finalise all bilateral negotiations) in the new year,” economic ministry official in charge of WTO negotiations Maxim Medvedkov told IPS. “We are planning negotiations with all countries with which we still have differences. ” But Russia will not change its position on market access for foreign banks and insurance companies, Medvedkov said. “We are constantly studying this position and always come to the same conclusion,” he said. “Those proposals that Russia has already made for access to the financial service markets give our partners a much better opportunity than currently for effective work on our market. A further liberalisation, especially concerning access by direct branches, is simply dangerous. Therefore, we can’t approve our partners’ requests.”

In the case of Colombia and Australia, talks are stuck on trade in sugar.. An agreement with Switzerland is likely this month.