- The Washington Times - Friday, November 10, 2006

The United States and Russia have reached a deal that would pave the way for Russia to join the World Trade Organization, the two countries announced yesterday.

“We have an agreement in principle and are finalizing the details,” U.S. Trade Representative Susan C. Schwab said.

She and Russian Economic Development and Trade Minister German Gref hope to sign the agreement during the Asia-Pacific Economic Cooperation (APEC) summit next week in Vietnam.

Russia, the last major economy not a member of the 149-member WTO, has tried for 10 years to join the Geneva trade organization, which sets international trade and investment rules. As a member, the Russian economy stands to grow by $10 billion annually through increased trade and foreign investment.

U.S. and Russian officials resolved issues over U.S. meat and poultry exports, and Russia agreed to cut tariffs on manufactured goods, the trade representative’s office said. The cuts are expected to help U.S. sales of civil aircraft and parts, medical and scientific equipment, agriculture, power generation, construction equipment, information technology, and chemicals.

National Association of Manufacturers Vice President Frank Vargo called the announcement a “historic step.”

“Russia is the only large economy not yet in the WTO, and it is simply too big to leave it outside,” he said.

Russia agreed to help exports in the service industries, including companies in construction, finance and telecommunications services. Settling a long dispute, Russia said it would allow full foreign ownership of banks once Russia has joined the WTO, and will allow foreign insurance companies to operate through subsidiaries, although it may impose limits if foreign investment becomes too high.

The Securities Industry and Financial Markets Association praised the agreement, saying it would “further integrate Russia into the global economy.”

“It will create new opportunities for securities firms and their customers, opening Russian markets to American firms and providing American expertise and capital to Russia’s economy,” association Co-Chief Executive Marc Lackritz said.

Russia also said it would take steps to better protect intellectual property rights, another major U.S. concern.

The agreement, Mrs. Schwab said, “is a clear indication of Russia’s efforts to participate fully in and benefit from the rules-based global trading system.”

But Russia still has a long way to go toward WTO membership.

Every member country must agree to Russia’s membership, and Russia must reach trade deals with each member. It has yet to sign a trade agreement with Costa Rica, as well as with its former Soviet neighbors Moldova and Georgia, with whom relations are strained.

Georgian officials have signaled that they would seek to block Russia’s membership after Russia imposed sweeping sanctions against Tbilisi in response to the arrest of several of its military personnel in a spying row.

Observers have suggested that progress over Russia’s bid would be linked to concessions from Moscow over how to respond to Iran’s disputed nuclear program.

Russia has resisted a push from Europe and the U.S. for sanctions against its trade partner, Iran. But analysts have said that a deal over the WTO could persuade Moscow to soften its opposition to punishing Tehran for its refusal to halt sensitive uranium enrichment.

In the U.S., Congress must grant Russia permanent normal trade relations status for U.S. companies to take advantage of the benefits of Russian WTO membership.

Lawmakers have raised objections to Russia’s WTO bid for a variety of reasons, including the country’s weak intellectual property protections, its support of Iran’s nuclear program and its pricing of natural-gas exports.

Mr. Vargo noted the intellectual property measures in the agreement, saying, “A lesson we learned from China’s WTO accession is that we have to see intellectual property enforcement come up to speed before — not after — we sign on the dotted line.”

Still, intellectual property rights are likely to remain an area of contention. Mrs. Schwab has said that before it can join the WTO, Russia must shut down the Web site allofmp3.com, which the U.S. says illegally sells copyright music around the world. The Web site remained in operation yesterday.

Russia also is rewriting its copyright and patent law, and that has drawn criticism from U.S. manufacturers, drug companies and recording companies. The U.S. trade office said those issues remain unresolved.

The agreement sets the stage for further progress with Russia on intellectual property rights issues through the next phase of WTO negotiations, the trade office said.

This article is based in part on wire service reports.

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