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Russia: Trade Relations Should Be Equal, Says U.S. Chamber

Washington, 15 November 1996 (RFE/RL) - The U.S. Chamber of Commerce says Russia should begin to be accepted into global groups like the World Trade Organization (WTO), but only after it makes its domestic markets less protectionist and puts its foreign trade arrangements on an equal basis for all countries.

The Chamber is an organization that represents primarily small businesses. Its Board of Directors this week adopted a series of positions on major trade issues facing President Bill Clinton and the U.S. Congress following the elections, and a statement on relations with the Russian federation was on that list.

The chamber's board says that it has supported a variety of assistance programs to help Russia in the transformation from central planning to a market economy, but that now the United States must revamp all of its aid programs away from taxpayer paid and toward business and trade based.

"The vast proliferation of U.S. government assistance programs and the plethora of assistance providers supported by the taxpayers' money raise the question of the efficiency and efficacy of U.S. assistance," the chamber said.

It said the United States must adopt a "consistent commercial policy" towards Russia, a policy that must set the groundwork from which Moscow could begin joining global bodies such as the WTO, the Organization for Economic Cooperation and Development (OECD), the Paris club of official creditors and the G-7 group of major industrial nations.

As the United States and other members of the WTO prepare to open accession talks with Russia, the chamber says, it is an appropriate time to make business conditions in Russia more predictable and transparent, the competition more fair, and trade relations with other nations more equal.

In domestic Russian markets, the chamber says U.S. companies are facing increasingly tough competition both from "Russia's rebounding domestic producers and other foreign companies."

Most U.S. companies doing business in Russia are "justifiably concerned" with the European Union's (EU) design to sign a preferential trade agreement with Russia -- an agreement the chamber says would impose "reverse tariff preferences in favor of EU suppliers."

Equally important, says the chamber, is the lack of fairness in competition with Russia's domestic companies. Many Russian firms, especially recent or currently state-controlled monopolies, are emerging from the first stages of market adjustment and capital accumulation, it says, but are relying on "considerable political clout as their main competitive weapon."

It says that recent import tariff hikes and "other manifestations of protectionist tendencies signal the growing strength of anti-competitive forces in Russia."

The chamber says that part of Russia's accession to the WTO should be a program to educate the dominant Russian enterprises in the WTO's practices and disciplines. "Unless these companies are conscious and educated participants in the process of integration in the world trading system, the WTO accession documents are likely to be hollow pronouncements."

Among the points it says United States and WTO negotiators need to deal with in Russia are:

Emerging protectionist tendencies, including high tariffs.

Persistent trading through state-controlled companies and specialized financial groups.

Inadequate notices for regulatory changes which impede foreign firms in Russia.

Complex and frequently confusing customs practices, as well as selective customs enforcement that fosters the black market.

Non-market agricultural trade practices, including discrimination against food imports.

Restrictions on foreign suppliers of financial, communication and other services.

Inconsistencies between federal and local regulations.

Lack of transparency in trade arrangements with other CIS states along with interference with foreign investment in neighboring markets.

Opaque government procurement procedures.

Inefficient enforcement of economic rights, including intellectual property rights.

Arbitrary duty exemptions which distort competition.

Restrictions on access to certain natural resources.

The U.S. chamber says it is especially concerned with Russia's many free-trade agreements and customs unions with other former Soviet countries. Many of these agreements or proposed pacts preserve export restraints on key products -- restraints the chamber says "continue to handicap interstate trade."

It says that while each country should be admitted to the WTO on its own terms, "the interdependency of the CIS economies must be given serious consideration in the course of pre-accession negotiations."