US demands set back Russia’s WTO bid: Putin

By Tom Miles

MOSCOW (Reuters) – President Vladimir Putin vented his
frustration on Wednesday at the slow progress of Russia’s talks
to join the World Trade Organization, saying new demands put by
the United States had thrown the process back.

“We have received a list of questions from our American
colleagues requiring additional agreement which we considered
settled long ago,” Putin told a Kremlin meeting with Russian
business leaders.

Putin added that the U.S. move “artificially pushes back
the course of the negotiating process.”

Russia is the largest economy outside the 149-member WTO
and its negotiators hope to wrap up entry talks — already
under way for 13 years — during its inaugural presidency this
year of the Group of Eight powerful nations.

Moscow has struck bilateral deals with all of the WTO’s
existing members except for the United States, Australia and
Colombia.

Talks with Washington, regarded as the biggest challenge,
have snagged on U.S. calls for Russia to open up its financial
sector by allowing foreign banks to open branches rather than
subsidiaries.

Russia is concerned any concessions would expose its weak
financial sector — it has over 1,200 banks — to foreign
takeovers. Officials point out that Citigroup has carved out a
strong market position in Russia under the existing rules.

Washington is also worried about rampant video and software
piracy in Russia and has raised concerns over rules covering
agricultural imports, diplomats say.

Discussions last week in Geneva made little headway on a
comprehensive entry deal, a final hurdle which requires the
backing of all of the WTO’s existing members for Russia to join
the trade club.

DOUBLE STANDARDS

Putin’s comments amplified exasperation already expressed
by Russian government leaders, who have accused Washington of
applying double standards by signing a bilateral WTO entry deal
with neighboring Ukraine on March 7.

Ukraine, which moved out of Russia’s political orbit when a
pro-Western leadership was swept to power in the ‘Orange
Revolution’ of 2004, has enjoyed the strong political backing
of President George W. Bush’s administration.

But relations with Russia have cooled, with a recent White
House national security strategy document criticizing Putin’s
record on democracy.

Investors are already positioning themselves to profit from
a boost to trade and growth that Russia — already into the
seventh year of an oil-driven economic boom — can expect when
it joins the WTO.

“It’s extremely important to move in a direction that will
allow us to take advantage of WTO membership,” steel magnate
Alexei Mordashov, a leading backer of WTO entry, told Putin.

Mordashov, Russia’s 7th-richest man with a fortune
estimated by Forbes magazine at $7.6 billion, controls steel
firm Severstal, which stands to win from the improved access to
export markets WTO entry would bring.

U.S. Boeing and Europe’s Airbus, meanwhile, are vying for a
$3 billion aircraft order from Aeroflot, with both angling for
a long-term partnership with the Russian aerospace industry
when trade barriers come down.

But Putin said that Russia would not join the WTO at any
price. “For us it is not a question of whether or not we join
the WTO,” he said. “Right now, it is more important for us on
what terms we join.”