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Russia And Allies Signal Joint But Separate WTO Bid

GENEVA (Reuters) -- Russia, Kazakhstan, and Belarus hope to join the World Trade Organization together as a single customs union as soon as possible, negotiators for the three ex-Soviet states said on October 15.

But in a retreat from the customs union plan announced in June, they said they would pursue their candidacies as separate states to preserve what had already been laboriously negotiated, while coordinating closely on the talks.

And for the customs union, which comes into force on January 1, 2010, to operate a common external tariff, Kazakhstan and Russia will have to renegotiate some of the import duties they have already agreed with WTO members.

"Now we're back in business," Russia's chief WTO negotiator Maxim Medvedkov told a news conference after the three states briefed WTO members to on their revised accession plans.

"We strongly believe that this project will facilitate trade and investment, will be business-friendly...and will contribute to the overall efforts of WTO members to see a world based on the same set of rules with minimum trade barriers."

The three states will start consultations with members from October 16 as they await a formal resumption of negotiations.

Many officials from WTO members think the effort to yoke the three candidacies will simply delay the process further and it may yet prove impossible for the three to join at the same time.

EU trade chief Catherine Ashton said she hoped Russia would not abandon the possibility of joining the WTO alone.

"Russia needs to see strategically it is better to be in the WTO. It doesn't prevent it having strong relationships with their near neighbours," she told Reuters.

Drawn-Out Process

Russia is by far the biggest economy still outside the 153-member WTO. It has been negotiating to join for over 16 years, and Kazakhstan and Belarus also launched membership talks in the mid-1990s.

Moscow has been frustrated by the slow pace of negotiations, which many officials say is politically motivated.

But only days after EU and US officials spoke of Russia finally completing its bid this year, Prime Minister Vladimir Putin threw the talks into turmoil by announcing on June 9 that the three states would join together as a customs union.

The union, which will create a single market of 165 million people, is part of Moscow's efforts to rebuild ties with its former Soviet neighbours.

But there is no precedent for countries to join the WTO as a customs union and the proposal perplexed members because many trade issues such as farm subsidies would not be handled by a customs union that would concentrate on trade in goods.

Such areas will be negotiated separately with different outcomes, although the three states' plans to develop the customs union economically would encourage coordination here.

And while Kazakhstan's negotiations, like Russia's, are reasonably advanced, little work has been done on Belarus.

Because Kazakhstan has already agreed to cut some tariffs to lower levels than Russia has, the existing agreements will have to be adjusted.

Kazakh chief WTO negotiator Zhanar Aitzhanova said the fact that businesses would access a market of 165 million people rather than only Kazakhstan's 16 million would compensate for any increase in duties.

"We believe that these are new economic dimensions which will be constructively taken into account in the course of the adjustment process by our counterparts," she said.

Both she and Medvedkov said it was too soon to predict when the accession process would be completed.

"It's too early to establish a date to open the vodka," Medvedkov said.