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Putin Says U.S. Is Stalling Over WTO

01.01.70

President Vladimir Putin on Wednesday accused the United States of stalling on Russia's long-sought bid to join the World Trade Organization.

The United States is "artificially pushing back the negotiating process," Putin told the annual meeting of business leaders from the Russian Union of Industrialists and Entrepreneurs, or RSPP, the powerful business lobby.

"We have received a list from our American colleagues that requires additional negotiations on issues that we considered settled long ago," Putin said in televised remarks at the Kremlin meeting.

The letter with the additional demands was signed by U.S. President George W. Bush and arrived a few weeks ago, Economic Development and Trade Minister German Gref told Interfax.

Putin and Gref did not specify the nature of the additional demands.

Officials in the White House and the Office of the United States Trade Representative were not immediately available for comment Wednesday night.

Russia needs to complete negotiations with only the United States, Australia and Colombia before its 13-year journey to the WTO is completed. The main obstacles had been U.S. demands for Russia to protect intellectual property rights and to open up its financial sector by letting foreign banks set up foreign-owned branches. Currently, a bank must first open a subsidiary that is majority Russian-owned.

Many Russian and U.S. officials have expressed hope in recent weeks that Russia would be able to complete WTO negotiations so that formal entry procedures could be started this summer.

Gref, who was not at the Kremlin meeting, said that despite the new demands, "we are still optimistic that we will be able to complete negotiations in the shortest possible time."

RSPP president Alexander Shokhin told reporters after the meeting that Putin's announcement about the new U.S. demands had stunned participants.

"It came as a surprise not only to the business community, but to some government members," Shokhin said.

He said, however, that he had observed a split within the U.S. administration over whether Russia should be allowed to join the WTO while it chairs the Group or Eight industrialized nations this year. He said the new demands could be a signal that opponents of a quick ascension were winning.

Joining the WTO could significantly ease access to foreign markets for many Russian producers, although some industries fear that the tough competition that would result from the removal of trade barriers could threaten their very existence.

The business community is divided over the benefits of joining the WTO. While metals producers are eager for better export terms, carmakers, banks and those in the agriculture sector tend to be more skeptical and cautious.

Putin on Wednesday reiterated that Russia was not ready to join the WTO at any cost.

"Right now, it is more important for us on which terms we join," Putin said.

He specifically addressed steel magnate Alexei Mordashov, a strong backer of Russia's joining the WTO, saying there were other sectors that expected the government to make balanced decisions, Interfax reported.

Putin's frustration over the WTO bid was an unexpected development in a meeting dedicated largely to the improvement of the education system, as well as business-state ties and taxes.

Shokhin said business was interested in education reforms to ensure a steady supply of qualified managers, technicians and low-level specialists.

He said RSPP was pushing for the creation of a new agency to monitor education standards and to develop curricula for in-demand professions.

In a separate initiative, Ruben Vardanyan, head of Troika Dialog, said he was working with a group of large companies to create a business school that could offer international-standard MBAs in Russia. The school is to enroll its first students in 2008.

To help fund the education reform, the business community is seeking legislation that would allow the establishment of endowment funds and low-interest, long-term student loans.

Vardanyan said he hoped the legislation allowing endowments would be passed this year or next.

Anatoly Karachinsky, CEO of IT holding company IBS and the head of RSPP's committee on education reform, insisted that big business was supporting the education initiative on its own and that would be wrong to view it as an unofficial tax imposed by the state. He said businesses would need the qualified graduates who would come out of a reformed education system.

Putin has named education as a priority for Russia's G8 presidency.

In recent years, donations by big business have become a regular way for the state to fix problems in various spheres. Putin, for example, awarded expensive Toyota Land Cruisers and Lexus sedans to Olympic athletes who won medals in Turin. Although the cars were funded by the private sector, they were presented by Putin.

Vardanyan conceded that most of the education efforts would not bear their fruits for this generation. "It says in the Bible that it takes 40 years. Twenty years have passed since [the start of perestroika in] 1985. So there are another 20 years ahead of us," he said.

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard dEstaing

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Olivier Giscard dEstaing
COPAM, France
Mika Ohbayashi

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Mika Ohbayashi
Institute for Sustainable Energy Poliy
Bill Pace

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Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group