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EU, Moscow Say Russia Should Join WTO This Year

The International Economic Forum opened in St.Petersburg on June 4.
BRUSSELS/ST. PETERSBURG (Reuters) -- The European Union and Russia have said that Moscow's long-delayed bid to join the World Trade Organization should be completed this year, the EU's trade chief said.

"We have agreed that WTO accession should be completed by the end of the year," Trade Commissioner Catherine Ashton said following a meeting with Russian Economy Minister Elvira Nabiullina in the margins of the St. Petersburg Economic Forum.

"I welcome the commitment that minister Nabiullina has shown today. We have a common understanding on the gaps that need to be bridged now," Ashton said in a statement to Reuters.

But U.S. Trade Representative Ron Kirk struck a cooler note after talks with Nabiullina. "I think that may be a bit premature," he told Reuters when asked about the time frame voiced by Ashton.

Russia, which had annual gross domestic product of $1.7 trillion in 2008, is the largest economy outside the 153-member WTO and Russian officials are optimistic a breakthrough might finally be on the cards after starting negotiations in 1993.

Prime Minister Vladimir Putin, said on June 3 that desire to join the WTO has not been dented by the economic crisis and supporters says accession to the trade club would help further integrate Russia into the world economy.

"There is a good window of opportunity [for Russia to join WTO] at the moment -- probably the best in recent years. So if we don't use this opportunity it would be a shame," said Russia's chief WTO negotiator Maxim Medvedkov.

"Considerable progress was made with the EU Commissioner on WTO questions," he added. "After our meeting with the EU, we are looking at the whole process with a large amount of optimism."

But there is a powerful domestic lobby which says Russia's development will be stunted by entry and senior Kremlin officials have warned that Moscow is losing patience with Western promises to let it join the trade body.

WTO Delays

Moscow's accession stalled after the United States put the issue on ice over its opposition to Russia's military incursion into Georgia in 2008.

A spat between Moscow and Washington over a Russian ban on some U.S. beef imports because of health concerns related to the outbreak of the H1N1 virus has also hampered Russia's WTO bid.

Some investors say the global economic crisis could give powerful emerging markets such as Russia an opportunity to strengthen their position on the global stage.

Russia's Sberbank on June 4 announced a 500 million euro ($708 million) cash injection for German car maker Opel, while several Arab countries used the forum to urge Russians to invest in them.

"You cannot undervalue the significance of joining the WTO.... It will give an extra impulse to the development of economic ties," said Severstal majority owner Aleksei Mordashov.

Moves by Moscow to place duties on imports of timber and cars from the EU, and threats of further tariffs on other goods ranging from shoes to furniture have also hurt the WTO talks.

"Until today, Russia has refused to discuss export duties on wood, but is now open to discussing these duty levels and the principles behind the tariff," an official with knowledge of the June 4 talks told Reuters. "There were also positive discussions on railway fees, food safety and sanitary rules."

Ashton told journalists that the timber tariffs remained an issue "but that does not mean there has been no progress".

Europe's top business lobby, BusinessEurope, wrote to Ashton on Thursday demanding "effective remedial action" against Russia if Moscow imposes duties on additional products such as raw materials, clothing and agricultural products.

Chief negotiators are expected to meet on the issue next week with a further meeting at ministerial level on June 23-34.