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Russia: WTO Membership Not Expected Soon

Moscow, 14 March 1997 (RFE/RL) - The European Union's ambassador to Moscow says he does not expect Russia to enter the World Trade Organization (WTO) before 1999 at the earliest.

Ottokar Hahn, who heads the European Commission's delegation to Moscow, told European business leaders last night that there were major obstacles to Russia's accession to the WTO. He said he did not agree with optimistic scenarios that Russia would enter the global trade club next year.

Russian Minister of Foreign Economic Relations Oleg Davydov has said he expects Russia to enter the WTO this year, while other officials have said the accession process would be completed in 1998.

Hahn said the opposition-dominated Duma was certain to slow down adoption of the legislation required for WTO membership. He said the EU strongly backs Russia's application, and has been providing technical assistance to help complete its bid.

EU officials have said in the past that Russia must bolster its market economy, implement fair trade policies, harmonize legislation and lower tariffs before it can hope to join the WTO, the successor organization to the General Agreement on Tariffs and Trade (GATT).

Some observers say Russia is in no hurry to join the WTO because it would require the government to take politically-sensitive steps, such as agreeing to trade liberalization in the textile and steel industries.

Davydov was quoted last month as saying Russia would "freeze" liberalization of foreign trade for five years. He said more time was needed to complete structural reforms of Russian industry sectors before abolishing more trade barriers.

As Davydov put it: "Only in five or six years from now will Russia be on an equal footing with the West." He continued: "Until then we will control our market like other countries, particularly the European Union, which are putting up barriers to Russian exports."

Russian news reports have speculated that the criteria for Russian membership in the WTO would be eased in exchange for Moscow giving a green light to NATO's eastward expansion. But with China knocking on the WTO's door, and the legal complexities involved in joining the organization, this possibility is considered unlikely.

Trade has figured prominently in talks between Russian President Boris Yeltsin and EU leaders in Moscow this month. Trade with the EU accounts for about 40 percent of Russia's total foreign trade turnover, which is more than Russia's trade with members of the Commonwealth of Independent States (CIS).

Ambassador Hahn said the EU was pressing ahead with concluding separate bi-lateral trade agreements with Russia. He said an agreement on steel trade would be concluded by the end of the month.

Hahn also said he expects the EU's basic agreement with Russia, known as the Partnership and Cooperation Agreement (PCA), to come into force this summer. Russia ratified the agreement last year, but approval has been held up in several European parliaments.

The agreement is designed to promote closer political and economic ties between Russia and Europe, paving the way for a future free-trade area. Hahn said negotiations on a free-trade area are due to start in 1998.

In the meantime, Russia and the EU have concluded interim agreements, which provide for consultations before tariff increases and measures against discrimination in imported goods. But business leaders say trade policy is only part of the problem.

The head of the European Business Club, Lucien Blanc, said investment would start to pour into Russia once it enters the WTO. But he said the uncertain legal framework for investment in Russia was preventing new European businesses from entering the Russian market.

Lucien pointed to the unfavorable tax climate and regulations that are not implemented consistently. He said changes in investment conditions in Russia would not come overnight.