News and Analysis • Volume 10 • Number 7 • November 2006
Russia, US Agree on WTO Accession Pact
Russia’s drawn-out quest for WTO membership cleared a major hurdle with the conclusion of its bilateral negotiations with the US on 10 November.
The major element in the breakthrough was Russia’s promise to open its market to US beef and pork. Russia has restricted imports of both on sanitary grounds, beef due to concern about BSE or ‘mad cow disease’ and pork because swine meat may be infected by a parasitic roundworm (trichinae) that can cause serious damage to human health when ingested. Russia agreed to lift import restrictions on US beef from animals younger than 30 months upon the signature of the bilateral agreement, and to accept imports of meat from older animals when the World Organisation for Animal Health certifies that the US is a ‘controlled risk’ country for BSE. The certification is expected in May 2007. With regard to pork, Russia accepted freezing as an efficient means to mitigate trichinae contamination, but will not lift its import ban on fresh meat.
While the details of the agreement have not been made public, sources say Russia also made concessions in foreign companies’ access to its banking and financial sectors, and agreed to take stronger action to fight the piracy and counterfeiting of foreign goods.
According to Russian news agencies, President Putin asserted that his government had “managed to bargain and negotiate levels of support for agriculture that never have been employed and are not being employed now.” While President Putin gave no details, the RIA-Novosti agency cited officials suggesting that Russia would have the right to an annual subsidy envelope of US$9.2 billion, or about four times the level applied today.
The US was the only major WTO Member not have concluded a bilateral accession agreement with Russia, which is by far the largest economy outside the world trade body.
Multilateral Talks Likely to Be Tough
The next phase of the process will be multilateral negotiations to finalise Russia’s terms of accession. This, however, is complicated by Georgia’s 12 October request that no further meetings of the Working Party on Russia’s WTO Accession be held until Russia lifts the economic sanctions it imposed when Georgia briefly detained four Russian soldiers charged with spying. Russia has cut transport and postal links with Georgia, expelled hundreds of Georgians from its territory, and is threatening to more than double the price of its gas exports to Georgia. On 8 November, Georgian Prime Minister Zurab Nogaideli rejected state-owned Gazprom’s offer to reduce the price hike if Tbilisi handed over control of its domestic gas distribution network to Russia. Gazprom now says that unless Georgia agrees to pay US$230 per 1,000 cubic metres of gas in 2007 (the current price is US$110), supplies will be cut.
With the conflict still unresolved, WTO Members are likely meet informally to work on the final accession package. Many hurdles remain, including a continued push from the US, the EU and others for stronger measures to prevent and punish intellectual property rights violations. If that fails, several analysts have predicted that US copyright and trademark groups will do everything in their power to prevent Congress from approving permanent normal trade relations with Russia. The EU is likely to maintain pressure on Russia to phase out the fees it charges European airlines that fly over Siberia sooner than the 2013 deadline Russia has already agreed to. Some countries will also try to renegotiate previously-concluded – but not yet signed – bilateral deals, including Georgia, which requested the re-opening of negotiations in July after Russia banned imports of Georgian wine, mineral water and many agricultural products citing sanitary and phytosanitary concerns.
WTO spokesman Keith Rockwell has suggested that the final phase of Russia’s accession could be even longer than the 20 months it took China to wrap up multilateral negotiations after the conclusion of bilateral deals.