The Hindu Business Line : US-Russia WTO deal

If American and Russian official sources are to be believed, the long-drawn negotiations between the two countries on Russia joining the World Trade Organisation have ended in success with the deal set for signing later this week, when Presidents Vladimir Putin and George Bush meet in Hanoi at the Asia-Pacific Economic Cooperation forum's summit. This, no doubt, will be a shot in the arm for the WTO (Russia is the only major economy that is not yet a part of it), but the more interesting point is to see how the nuts and bolts of the bilateral agreement have been arranged, especially as in the course of the extended talks, both Washington and Moscow have taken firm positions.

Among the areas in which there have been serious differences between the two sides are piracy of American goods and intellectual property rights (IPRs), sales of US farm products, and American access to Russia's banking and insurance sectors. If the official US version of the bilateral agreement is to be believed, it would appear that Washington has had its way in all these areas. Thus, the two sides have `resolved' long-standing issues that had impeded US exports of beef, pork, poultry and products of biotechnology; the Russians have agreed to allow up to 100 per cent ownership of banks, broker dealers, and investment companies; and, on insurance, Moscow will allow foreign companies to operate through subsidiaries, "including 100 per cent foreign-owned non-life insurance companies". On IPRs, the two countries have agreed "to a binding blueprint for actions to address piracy and counterfeiting and improve protection and endorsement of IPRs before Russia completes its accession to the WTO." Of special interest is the fact that the 2003 Bilateral Meat Agreement, the continuation of which had become uncertain owing to Moscow's queries about the hygienic standards of US exports, will now remain in force till 2009.

Washington has, therefore, wrung significant concessions from Moscow to protect and promote its $1-billion-a-year farm export market and its $2-3 billion industrial and consumers goods market. The question is: What has Moscow got in return? Admittedly, membership of the WTO is an important prize in itself. Though, this will work the other way too, in that the WTO will also gain with Russia as a member. But, probably, the Russians have not declared some of the gains made in the sphere of, say, energy — a sector in which they are crucial European players; the Russian domestic energy market itself is, however, hemmed in by a severe lack of competition because of the dominance of the state-owned Gazprom. While the Europeans have drawn attention to this fact, the US-Russia agreement maintains a telling silence on the subject.