#10
Russia's WTO membership bid stalling over telecoms,
financial sector access: official
June 20, 2002
By JONATHAN FOWLER, Associated Press Writer
GENEVA - Russia's seven-year-old bid to join the World Trade Organization is stalling because Moscow insists on protecting its telecommunications business and financial sector from foreign competition, a senior European trade official said Thursday.
"We still have a limited number of problems, but of a very serious nature," European Union negotiator Herve Jouanjean told reporters after a three-day meeting on Russian accession. "On financial services and telecoms there's enormous work to be done."
"Frankly speaking I would say it is totally unrealistic to fix dates," he added.
In December, EU trade chief Pascal Lamy said Russia is likely to enter the WTO which sets the rules of global trade in 2003 or 2004 if it continues to open up its markets. But on Wednesday in St. Petersburg, WTO director-general Mike Moore offered a more cautious three-year time frame.
However, the bid was boosted two weeks ago when the U.S. Commerce Department formally recognized Russia as a market economy, following a similar EU move.
Russian officials had long complained about the U.S. and European refusal to recognize their nation as a market economy despite having shed its communist-era command economy more than a decade ago, especially since other former Soviet republics have been granted the status.
During this week's talks at WTO headquarters, Russian negotiators proposed a series of new limits on foreign participation in firms in Russia which would apply during a transition period if the country joins the international organization.
Deputy Trade Minister Maxim Medvedkov told reporters the restrictions - including a 49 percent limit on foreign ownership of telecommunications companies and a 25 percent cap in the life insurance business - were needed to protect Russian firms.
"We cannot afford, right from the date of accession, to have a total opening of key markets that are important domestically," he said. "We're prepared to join the WTO but we're not prepared to pay a price that's excessive."
Russia also wants to continue to use tariffs to protect its aircraft manufacturers and its automobile industry which employs 1.2 million people Medvedkov said. Nor would Moscow open its agricultural market to competition until other countries dropped their own subsidies, he said.
Medvedkov said a healthy Russian economy was "in the interests of all WTO members."
"The cake is big, and it's tasty," he added.
Jouanjean said Russia was stalling because the government was concerned by domestic opposition to trade liberalization.
Russian authorities "have to manage their own internal constituencies, so it's not easy for them," Jouanjean told reporters. "But there is still solid work to be done before we are satisfied."
Russia needed to make more concessions and change its rules faster, he said.
"We'll have to see if they have another pocket deeper than they have now," he added. "Maybe they will have to change trousers to have deeper pockets."
Medvedkov denied the government was backtracking on trade reforms, saying that 20 laws already had been passed by Russia's parliament from a major package of 53 legal changes.
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