July 15, 2006

Russian WTO entry bid talks falter

By Douglas Busvine

ST PETERSBURG, Russia (Reuters) - Russia and the United
States failed on Saturday to strike a bilateral deal allowing
Russia to join the World Trade Organization but agreed to set a
deadline to wrap up talks within three months.

Negotiators who have been discussing Russia's 13-year-old
WTO bid virtually non-stop since Wednesday were unable to
achieve a final breakthrough on a key "deliverable" ahead of
the Group of Eight summit in St Petersburg.

"There is more work to be done," President George W. Bush
told journalists after meeting summit host Vladimir Putin. "The
intention to achieve an agreement is there."

U.S. Trade Representative Susan Schwab negotiated into the
early hours on Saturday with Russian Economy Minister German
Gref, but the two sides ran out of time.

"It's a complex process," Putin told a joint news
conference with Bush. "We will continue to talk while standing
up for our interests."

The talks made breakthroughs on financial services and
defense of intellectual property rights, but foundered on the
relatively minor issue of safety inspections on U.S. exports of
frozen beef and pork, Gref said.

"I expect this problem can be solved by the end of October
and we will be able to sign a deal," Gref told reporters,
adding this would enable Russia to seal entry terms by next

Schwab said the two sides were drafting a "blueprint" aimed
at reaching a final deal within two to three months.

"We've made significant progress, in fact virtually closed
the industrial tariff side, virtually closed the services side,
excellent progress on intellectual property rights and very
close on agricultural issues," Schwab said.

Russia is the largest country outside the 149-member trade
club, and a bilateral deal with Washington would remove the
last major obstacle to its accession.

The failure of the bilateral WTO talks is likely to
undermine efforts by G8 leaders here to revive the stalled Doha
round of global trade talks.

WTO chief Pascal Lamy was due to brief the G8 on the Doha
round, which must reach agreement soon or fail, as Bush loses
his power to "fast track" trade deals in mid-2007. Britain and
Germany are pushing hard on the issue.


Rampant video and music piracy in Russia has infuriated the
U.S. entertainment industry and, ahead of mid-term elections
this autumn, top U.S. Democrats have lobbied against Russia's
WTO bid.

"We're tough negotiators," Bush said. "The reason why is
that we want the agreement we reach to be accepted by the
United States Congress."

Twenty Senate Democrats published an open letter this week
expressing "serious concerns" over the possibility of a
Russia-U.S. WTO deal, which would require the approval of U.S.
lawmakers to take full effect.

As its part of any pact, the United States would have to
provide Russia the same tariff treatment all other WTO members
enjoy. This would require Congress to grant Russia "permanent
normal trade relations."

Gref said the theme of intellectual property had been
closed and would not be reopened, under a road map which would
allow the multilateral WTO admissions procedure to run parallel
to the Russia-U.S. bilateral talks.

He cautioned that Russia's WTO bid could fall prey to
electoral politics if there was any further delay. Both Russia
and the United States hold presidential elections in 2008.

"If we don't close the talks next spring we will fall into
the election cycle. It will be our last chance," said Gref.

(Additional reporting by Darya Korsunskaya and Steve