US And Russia Close To Bilateral Market Access Agreement

by Glen Shapiro, LawAndTax-News.com, New York

14 November 2006

It emerged on Friday that the United States and Russia expect shortly to conclude bilateral negotiations on market access issues related to Russia’s accession to the World Trade Organization (WTO).

The two sides hope to sign a bilateral agreement this week at the APEC meetings in Hanoi.

"We have an agreement in principle and are finalizing the details. We are also holding consultations with the Congress and our cleared advisors. This agreement will mark an important step in Russia attaining membership in the WTO," explained US Trade Representative Susan C. Schwab.

She continued:

"It is a clear indication of Russia’s efforts to participate fully in and benefit from the rules-based global trading system. We came close to completing our work in July, but needed more time to conclude a strong commercial agreement that will be of benefit to both our countries. Minister Gref and I hope to sign the agreement in Hanoi on the margins of the APEC meeting."

The agreement aims to create new market access opportunities for US providers of goods and services to the Russian market, addresses long-standing trade irritants between the two sides and puts trade relations on a more cooperative course.

It additionally sets the stage for an intensification of work in the multilateral phase of negotiations, where the United States will work in close collaboration with Russia and other trading partners on Russia’s Protocol of Accession and Working Party Report, encourages greater transparency and a strengthening of the rule of law in Russia and fosters economic reform in Russia, which will improve the conditions for expanded commercial relations between the two countries.:

According to the USTR, the agreement addresses issues in several key areas, namely:

Agriculture:

• Long-standing issues that had impeded US agricultural exports of beef, pork, poultry, and products of biotechnology have been resolved. These commitments take effect upon signature of the bilateral market access agreement.
• Tariff commitments have been made which will benefit US farmers, ranchers, and food processors of wheat, corn, barley, apples, pears, grapes, raisins, almonds, walnuts, pistachio nuts, dairy, soybeans, soybean meal, soybean oil, pet food, pork, beef and poultry, among others, once Russia joins the WTO and the agreement is applied.

Industrial Goods:

• Russia agreed to cut tariffs on manufactured goods to an average of 8%. Industrial goods important to the US–Russian commercial relationship will realize even larger tariff cuts. Sectors that will benefit from substantial tariff cuts include civil aircraft and parts, medical and scientific equipment, agriculture, power generation and construction equipment, information technology, and chemicals.
• Russia also will establish a much more transparent system for the import of electronic goods with encryption, a major US export, which permits a simple one-time notification of many products and sets specific ground rules for granting licenses for products that require an import license.

Services:

• Russia agreed to provide improved market access for US service suppliers in a broad range of important sectors, including audiovisual, construction, distribution, express delivery, engineering, environmental, financial, telecommunications, fixed satellite, and business services.
• On banking and securities, Russia agreed to allow up to 100% foreign ownership of banks, broker dealers, and investment companies upon accession.
• On insurance, Russia will allow foreign insurance companies to operate through subsidiaries, including 100% foreign-owned non-life insurance companies, and branching after a transition period.
• Russia retains the discretion to impose limits on new foreign direct investment in the banking and insurance sectors, if the ratio of foreign investment (excluding many investments) to total investment in the sector exceeds 50%.

Intellectual Property Rights:

• Together, the two countries agreed to a binding blueprint for actions to address piracy and counterfeiting and improve protection and enforcement of intellectual property rights before Russia completes its accession to the WTO. This agreement set the stage for further progress with Russia on IPR issues through the next phase of multilateral WTO negotiations, so that Russia will fully implement TRIPS upon accession.
• Russia has agreed to take specific actions, and to enact laws by specific dates, to fight optical disk piracy and internet piracy, and work to enact laws by specific dates to protect pharmaceutical test data, establish tougher criminal penalties for IP crimes, strengthen border enforcement, and bring its IPR legislation into line with international norms. There are specific deadlines built into the agreement.
• Russia has committed to fully implement the TRIPS Agreement and other IPR-related international agreements upon accession, and to ensure that any changes to its existing legislative regime for IPR, including those made in the context of Part IV of the Civil Code, do not reduce consistency with key international IPR standards.

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