News and Analysis • Volume 10 • Number 6 • September 2006
Russia Sets Accession Ultimatum
Russia has threatened to rescind the United States’ current chicken and meat quotas unless the two countries can agree on the terms of its WTO accession by the end of October.
At the and of yet another negotiating round between the two countries in late September, Russia’s chief negotiator Maxim Medvekov said the number of questions still to be settled was ‘reduced to a minimum’. That minimum, however, promises to be a tough nut to crack. The US continues to insist on greater market access concessions for chicken, beef and pork, and appears to have hardened its stance on intellectual property and financial services. Russia’s Minister of Economic Development and Trade German Gref said after the meeting that his government may terminate existing quota agreements on poultry (the US counts for threequarters of Russia’s imports), pork and beef – and possibly other agricultural products – in October if the US does not lower its demands.
When the two sides failed to finalise a bilateral agreement at the St Petersburg G-8 Summit last July, the principal reason appeared to be Russia’s reluctance to open its market wider for imported meat. Since then, US politicians have reminded the administration that more progress has to be made on other issues as well.
On 13 September, a bi-partisan group of four House Representatives wrote in a letter to US Trade Representative Susan Schwab and Treasury Secretary Henry Paulson that Russia’s financial services offer contained ‘several serious deficiencies’, which could jeopardise Congressional approval of the WTO accession deal. The letter highlighted two of those shortcomings in particular: the 49-percent ceiling for foreign ownership of a number of financial services sectors including subsidiaries of foreign insurance firms, and Russia’s refusal to allow foreign banks to open direct branches, rather than operate through Russian-registered subsidiaries. The letter said that Russia must agree to phase out the 49-percent cap, allow 100-percent foreign ownership of subsidiaries in all financial services sectors, as well as allow foreign banks to establish direct branches within two years. So far, the Russian government has strongly resisted such demands.
Intellectual property is another US priority, and its accession negotiators are demanding steps that demonstrate Russia’s seriousness with regard to enforcing IPR legislation. However, in July, President Putin warned that Russia would stop abiding by WTO rules if its accession bid were blocked: “If for some reason we cannot reach agreement, we will no longer be responsible under accords that we have not only approved but that we are fulfilling, despite the fact that we are not a member of this organisation.”
Vietnam’s Accession May Be Delayed
Vietnam’s Trade Minister Truong Dinh Tuyen said in September that his country would not join the WTO ‘at any cost’, and could miss its unofficial deadline for wrapping up the WTO accession process by the November Summit of the Asia Pacific Co-operation Forum, which will take place in Hanoi.
Vietnam had hoped to reach a multilateral agreement on its terms of accession at the 10-11 October meeting of the WTO General Council. Bilateral negotiations have already concluded with a number of WTO Members, but the results still need to be ‘multilateralised’, i.e. accepted by the WTO membership as a whole. However, Minister Tuyen told the press on 29 September that, during the latest round of multilateral talks, some trading partners had raised issues already resolved bilaterally. Agriculture, intellectual property protection, textiles and financial services have been the key issues of the negotiations. In the US in particular, textile producers are requesting guarantees that the government will react if domestic manufacturers are injured by a flood of cheap imports once the quotas currently imposed on Vietnamese textiles are eliminated. Vietnam – already a frequent target of anti-dumping duties by both developed and developing countries – fears that such measures will further increase after WTO accession.