Thursday, March 23, 2006

GENEVA — Russia is pressing to wrap up a 13-year bid to join the World Trade Organization before it hosts the Group of Eight summit this summer, subject to a series of U.S. commercial demands, senior diplomats and trade officials say.

The talks can certainly “close before the G-8 summit,” said Robert Vastine, president of the influential U.S. Coalition of Service Industries, a Washington-based umbrella group that represents major services corporations.

But he indicated the ball is squarely in President Vladimir Putin’s court.

“I see no sign of the U.S. letting down on its demands and I hope they remain firm,” said Mr. Vastine, a former senior Treasury official.

One dispute involves financial services, especially insurance, with Washington insisting that foreign-controlled firms be allowed to establish branches in Russia.

Russia’s push to enter the WTO follows a furious dispute with Washington this winter over natural gas supplies — a row that for a brief period threatened to derail the WTO effort as well.

Russia cut off natural gas supplies to Ukraine, prompting Secretary of State Condoleezza Rice to accuse Russia of using its energy resources as a political weapon and suggest that Russia was not fit to lead the G-8.

“When you say you want to be … responsible actor in the international economy, then you play by its rules,” Miss Rice said at the time.

Russia’s action plunged much of Western Europe into a mid-winter panic: The pipelines extend through Ukraine and gas supplies suddenly plummeted for much of the continent.

Russia quickly backed down, turned the gas back on and settled its differences with Ukraine.

With the entry of China into the WTO in December 2001, and Saudi Arabia last year, Russia is the only major global economic power outside the agency that oversees most world trade in goods and services worth over $11 trillion a year.

Russia’s deputy trade minister and chief WTO negotiator, Maxim Medvedkov, is holding talks all this week in Geneva with Dorothy Dwoskin, assistant U.S. trade representative and chief U.S. negotiator.

In the gas dispute, Russia denied U.S. charges that its actions were politically motivated. In negotiations over joining the WTO, Russian Foreign Minister Sergei Lavrov turned the tables by accusing Washington of holding up talks for political reasons.

Mr. Vastine dismissed Mr. Lavrov’s assertion in a telephone interview yesterday.

“That’s just not true,” he said, noting that the United States has a solid track record of isolating commercial agreements from political considerations.

Even in the aftermath of the September 11 terrorist attacks, Mr. Vastine said, Washington has managed to keep commercial dealings separate from broader political and strategic issues.

According to diplomatic sources close to the Kremlin, the Russians were rattled by the expedited economic and political treatment given recently by the Bush administration to neighboring Ukraine, which is also a candidate to join the 149-member WTO, and is expected to join ahead of Moscow.

The new ambassador from Ukraine is becoming a frequent visitor to the White House, where yesterday he was present as President Bush signed a landmark trade bill lifting Cold War sanctions on the former Soviet republic.

Russia is still subject to those same restrictions, under a law widely known as Jackson-Vanik, meaning it requires a presidential waiver to obtain normal tariff rates.

Issues holding back a U.S.-Russia deal to join the WTO include lack of progress related to intellectual property protection, demands for better market access for certain U.S. agricultural products and civil aircraft, branching rights for U.S. insurance companies and Russian agricultural subsidies.

A senior Russian official said the Kremlin has agreed to increase the maximum stake foreigners can have in the country’s banking sector from 12.5 percent up to 50 percent,

Similarly for insurance the maximum stake foreigners can have in the sector, he said, would be increased from 25 percent to 50 percent.

To secure WTO entry, Russia has agreed to bring its average industrial tariffs down to single digits and to lower other trade and investment barriers to many sectors of its economy.

Russia is to host the G-8 summit in St. Petersburg in July. Besides Russia, the group includes the United States, Britain, Canada, France, Germany, Japan and Italy.

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