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Russia: Moscow Nears Deal With U.S. On WTO Entry

The WTO might soon be voting on Russia's entry (epa) PRAGUE, November 14, 2006 (RFE/RL) -- Russia's quest to join the WTO appears to be nearing its end -- and what looks like a happy end after 13 years of stormy negotiations.

Russia and the United States announced on November 10 that they had agreed in principle for Russia to join the 150-member trade body.

Presidents George W. Bush and Vladimir Putin are due to sign a formal agreement when they meet on November 18-19 in Hanoi, Vietnam, on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit.

Hurdle Cleared

The deal lifts the biggest obstacle to Russia's WTO membership, which Putin has made a cornerstone of his presidency.

Daniel Griswold, the director of the Washington-based Cato Institute's Center for Trade Policy Studies, says Russia's accession is now just around the corner.

"This accession agreement with the United States was far and away the biggest hurdle and now that that's behind us, it's clear sailing," Griswold says. "It's just a matter of signing on the dotted line and I think Russia is on its way to becoming a member of the WTO."
"This accession agreement with the United States was far and away the
biggest hurdle and now that that's behind us, it's clear sailing."

U.S. business groups welcomed the pact with Russia, the only major world economy still outside the WTO.

Griswold says Russian membership will translate into safer and less politically charged trade relations with the country.

"I think Russia's membership in the WTO will put our trade relations on a firmer foundation. The rule of law will apply. This will prevent, for example, the United States from arbitrarily imposing quotas on Russian steel or something else. It will prevent the Russian government from banning the imports of U.S. poultry in a fit of pique or some kind of diplomatic tit-for-tat. And it will further open the Russian market," Griswold says.

"They have made progress, of course, since the Soviet era -- not as much as they should have made -- and their joining the WTO will get in writing commitments from the Russian government to have a more open economy, just as it did from the Chinese," he adds.

Big Boost

Joining the WTO is likely to give Russia's $1 trillion economy a boost similar to the one China experienced after its accession in 2001.

It would give Russia greater access to Western markets and would stimulate service industries such as banking and telecoms.

Natalya Orlova, the chief economist at Alpha Bank in Moscow, says WTO membership will also significantly enhance Russia's status within the international trade community.

"For Russia, it represents a very important change in its geopolitical, political, and economic position within the international community, because by becoming a WTO member, Russia will be able to influence the drafting of trade rules and their modification in the future," Orlova said. "And this is, of course, very important."

A number of sticky issues, however, still stand in the way of Russia's WTO entry.

Congressional Scrutiny

The announced trade pact with the United States is expected to face harsh scrutiny in the U.S. Congress, which following last week's elections is now controlled by the Democratic Party.

Congress cannot block Russia's WTO accession, but it is required to grant Russia "Permanent Normal Trade Relations" status and remove a set of Cold-War-era trade restrictions known as the Jackson-Vanik amendment.

Senator Max Baucus (Democrat, Montana), who is due to head the Senate Finance Committee, has cautioned that Russia will have to crack down on piracy of U.S. goods and lift a ban on U.S. meat imports before Congress can give its green light.

Russia also needs to sign bilateral trade deals with three other members of the 'working party' on Russia's WTO accession -- Costa Rica, Georgia, and Moldova -- to wrap up the negotiation phase and free up its bid to a vote by all members of the bloc.

Concerns are mounting in Russia that Georgia, which is involved in a bitter diplomatic row with Moscow, could seek to hamper its WTO bid.

Both Georgia and Moldova accuse Russia of imposing a wine embargo as retribution for steering away from Moscow's political orbit.

But Konstantin Zatulin, a State Duma deputy and director of the state-sponsored Institute for CIS Studies in Moscow, is confident that Georgia will not block Russia's WTO accession.

"I think the objections to Russia's entry into the WTO that Georgia has very recently expressed are ordinary attempts at using levers to upset Russia," Zatulin said. "To a large extent, Georgia's behavior is not independent. Whether it will do so or not is largely going to depend on those who controls the current Georgian leadership -- the Americans."

Frozen Trade Conflicts

But Moscow's WTO negotiations with Tbilisi and Chisinau are likely to be strained. Georgian Prime Minister Zurab Noghaideli said on November 13 that Tbilisi will give its approval for Russia's accession only when Russia cracks down on what he termed illegal trade via border crossings in the unrecognized republics of Abkhazia and South Ossetia.

And Russia could still encounter further obstacles even after completing the negotiation phase. China, for example, waited two years after finishing talks before it was finally accepted into the WTO.

But experts are confident that once Russia is a member, the WTO will prove an effective tool for pacifying trade relations between Russia and its former Soviet neighbors.

(RFE/RL correspondent Heather Maher contributed to this report from Washington.)

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