#6402 #6403
#12 - JRL 6403
Kommersant
August 14, 2002
THIS WON'T DO!
Alexander Livshits on Russia's prospects of joining the WTO
Author: Irina Granik
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
THE DEBATE OVER GRANTING RUSSIA MARKET ECONOMY STATUS SUPPORTS APPREHENSIONS THAT EUROPE IS IN NO HURRY TO GIVE RUSSIA ACCESS TO ITS MARKETS. ALEXANDER LIVSHITS, FORMER PRESIDENTIAL ADVISOR AND FINANCE MINISTER, COMMENTS ON THE SITUATION.
Ivan Materov, First Deputy Minister for Economic Development, said yesterday that Russia's accession to the World Trade Organization in 2003-04 is an optimistic forecast. The latest scandal over conferring market economy status on Russia supports apprehensions that Europe is in no hurry to give Russia access to its markets.
Alexander Livshits, former presidential advisor and finance minister, and now the deputy general director of Russian Aluminum, comments on the situation.
Question: European Commission President Romano Prodi said in late May that the European Union intended to grant the status of market economy to Russia. European Union nations are to approve this decision on September 18. Meanwhile, it turned out that the European Union commission on trade policy is preparing some explanations for this agreement, which may turn this market status into a formality. How would you comment on this?
Alexander Livshits: In fact, the situation is strange. Russia and the EU held a summit in late May. Romano Prodi announced a remarkable new item - according to which the European Union was prepared to grant Russia market economy status. This is a very important fact for us. The EU is Russia's main trade partner. At the same time, the EU is conducting many antidumping investigations against Russian companies. By the way, Russian companies are losing $1.3 billion a year as a result of such investigations.
All the EU had to do after Romano Prodi's statement was to start a juridical procedure.
The EU currently proposes some additions. Firstly, the EU's antidumping services have the right to start antidumping investigations if they suspect that the state regulates prices for energy carriers. It should be noted that investigating bodies will ignore Russia's market status. Secondly, if the EU asks Russia to prove that it does not regulate prices, Russia will have to prove this on the basis of international accounting standards. Implementations of these standards in Russia will take several years. Thirdly, environmental subsidies may become a subject of antidumping investigations as a result of which Russia may be ousted from European markets.
Question: Are such requirements applied to other countries with market economies?
Alexander Livshits: Formally, these are common requirements. However, Europe has chosen requirements, which are exclusive for Russia. Exactly Russia sells chap energy resources. Exactly Russia has not implemented international accounting standards. Exactly Russia cannot complain to the World Trade organization about the EU, since Russia is not a member of the WTO. However, we have repeatedly discussed these problems during negotiations. Russia told Europe that it carries out reforms and will cut prices for energy carriers. However, Russia promised to do this gradually. However, our principal position will not change: Russian energy carriers will remain cheaper than in Europe. This is a natural advantage. Europe wants to collect import duties. For what? For the peculiarities of the Russian nature. We have rich reserves of gas and coal. We have Siberia. We have hydroelectric power plants. We are producing cheap electric energy. To make Russia increase prices for energy carriers is as good as to make China sell rice at world prices.
Question: Does this mean that the European Commission's proposals nullify the market status?
Alexander Livshits: If all amendments are passed in the current format the status will remain a pointless political declaration. On the one hand, Europe cannot deprive Russia of the status. On the one hand, Europe does not want to grant it. This is why the European Commission has invented this mechanism.
Question: Such changes in the European Commission's position are an uncommon thing. To all appearances, very strong lobbyists have intervened in the game.
Alexander Livshits: This is not an antidumping policy, this is protectionism. A strange one. European companies are not weak, and I don't understand what they are afraid of. I don't think that Russia is strong enough to sink the European market.
The question of who is lobbying for this project in the European Commission should be addressed to political analysts. All I know is that Russia has some time to change the situation. I think Moscow should mobilize three resources: the resources of those Europeans who want to develop relations with Russia; Russia's political resources; and the resources of the Russian business community. Russia needs to express its position within a month.
(Translated by Alexander Dubovoi)
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