US, Russia appear close to major trade agreement

By
July 15, 2006 03:18

Russia is the largest economy by far still outside the 149-nation WTO.

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US, Russia appear close to major trade agreement

putin 88. (photo credit: )

Russia appeared close to gaining a long-sought economic goal: US support for membership in the World Trade Organization, the group that sets the rules for global trade. US and Russian trade negotiators were working to wrap up the talks so that a deal could be announced by US President George W. Bush and Russian President Vladimir Putin when the two leaders meet for talks Saturday. Officials close to the talks stressed that not all details had been finalized, but speculation of an imminent agreement was heightened when it was announced Friday that the discussions were moving from Moscow to St. Petersburg. US Trade Representative Susan Schwab and her counterpart, Russian Economics Minister German Gref, have been meeting since Wednesday, racing the clock in hopes of getting an agreement that has been one of Russia's major economic goals for years. Russia is the largest economy by far still outside the 149-nation WTO, and Putin's government sees membership as a way to demonstrate that the economy has made great strides since the collapse of the Russian ruble in 1998, which triggered shockwaves through the global financial system. "I think Russia realizes and President Putin realizes that it is in Russia's own best interests to be fully integrated into the global economy," Schwab told reporters last week. The United States is the last country whose support Russia needs for its membership application, a process that began in 1994. Those talks have at times been tense, with Russian officials complaining that the United States was holding Russia to higher standards than other nations seeking WTO membership. But US officials have insisted that they need to get strong assurances in areas such as the protection of intellectual property rights to avoid some of the problems that the United States is now facing with China. China was admitted to the WTO in 2001. But America's trade deficit has soared to record levels with China since that time. The United States complains that China has been slow to honor commitments it made to open up the vast Chinese economy to more US manufactured goods and farm products and to crack down on massive piracy of American copyrights and patents. The protection of US intellectual property was one of the final sticking points in the Russia negotiations. Other items under dispute included Russia's use of what the United States sees as faulty science to block imports of American farm products such as chicken products and the handling of American service companies such as banks and insurance firms. Russia agreed this week to allow greater operation of American insurance firms but refused a US request to allow American banks to set up branches directly without having to obtain partnerships with Russian financial firms. Once an agreement is reached, Russia will then have to move from one-on-one negotiations with individual countries to multilateral WTO talks to complete final membership details. While some believe that process can be wrapped up in six months, others think that time frame is too optimistic. Membership in the WTO assures Russia that it will receive the same favorable tariff rates for its products as all other nations in the WTO. Other countries also must follow WTO rules in trade disputes with Russia, protecting it from unilateral sanctions not authorized by the WTO. For the US to complete its obligations to allow Russia into the WTO, the US Congress will have to pass legislation removing Russia from the 1974 Jackson-Vanik amendment tying Russia's trade status to whether it is freely allowing Jewish emigration. That debate could be complicated for Russia by complaints that Putin has been backsliding on democratic reforms and places unnecessary restrictions on US companies trying to do business in Russia.


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