US Trade Representative Comments On Russia's WTO Accession

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

31 March 2006

Speaking on Wednesday, following the European Union's recent warning to Russia over its World Trade Organisation accession, US Trade Representative, Rob Portman appeared to suggest that the United States is taking a more measured stance.

The European Commission earlier this week warned that it will block Russia's application to join the World Trade Organisation unless Moscow follows through on an agreement to abolish taxes charged on European airlines that fly over Siberia, en route to Asian destinations.

The Financial Times quoted EC Transport Commissioner Jacques Barrot as stating that the current fees for flights over Siberia are "exorbitant" and must be scrapped before the EU "can agree any entrance to the WTO" by Russia.

The European Commission claims that European airlines have paid about EUR350m ($421m) a year to take more direct routes to destinations such as Japan and China by flying over Siberia - effectively cancelling out any savings made by using less fuel.

After negotiations in 2004, the EU and Russia initially agreed that the levy would be phased out by the end of 2013, but Europe has accused Moscow of failing to clarify how and when the tax will be abolished.

However, Barrot stated that the EU is hoping to leverage Pascal Lamy's position as the new director-general of the WTO to force Moscow's hand. Lamy was the EU's chief trade negotiator at the time of the 2004 agreement.

“Mr Lamy reminded me a month ago that there was always a tacit agreement that entrance to the WTO would involve removing these charges," Barrot stated.

In a statement, meanwhile, Mr Portman explained that "We're making steady progress with Russia on completing their bilateral accession agreement which is a part of Russia’s bid to join the World Trade Organization (WTO). The United States believes it is in the interests of the US and the global economy to have Russia in the rules-based WTO system. We hope and believe we are close to concluding our bilateral negotiations. The negotiations must move on two tracks: completing bilateral agreements and then completing multilateral negotiations on how Russia will transform its trade regime to conform to WTO rules."

"Accession negotiations are complex and take time. But I must be clear: the remaining issues with Russia's accession – both bilateral and multilateral – are not new problems and they are not dissimilar to those issues addressed by others who have acceded to the WTO. We have been clear about those issues throughout the negotiations. The United States is working hard with Russia and our trading partners on both aspects of the negotiations."

"Russia must live up to the rules and obligations which all WTO members accept, whether it is on Sanitary and Phyto Sanitary standards, customs regulations or greater protections for intellectual property rights, for example. In negotiations last week, we narrowed differences on bilateral issues and pushed the multilateral process forward. Consistent with the commitment of President Bush, we will continue to work in good faith with the Russians to move this process forward to a successful conclusion."

Russia is hoping to complete its WTO membership negotiations later this year.

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