In 1993, Russia applied for accession to GATT. In compliance with procedures, a Working Party on accession came into being. Representatives of interested GATT countries became Working Party members. The mandate of the Working Party (renamed as the Working Party on Russia's WTO accession after the WTO’s establishment) consists of studying the trade regime in Russia and working out requirements for Russia's participation in the WTO.
Russia’s WTO accession negotiations started in 1995. Initially, they focused on a detailed study of the economic mechanisms, trade and political regime in Russia at multilateral level in terms of their conformity with the WTO rules and regulations.
Submitting initial tariff offers on goods and offers on government support for agriculture in 1998, as well as presenting the first draft of Specific Commitments on Services with the List of Exemptions from the Most Favored Nation (MFN) in 1999, allowed Russia to initiate a series of bilateral negotiations with all interested members of Russia's WTO accession Working Party. Since 2000, negotiations have been made full-scale, covering all aspects of Russia’s accession to the WTO.
At present, there are 58 member countries (EU counts as one) in the Working Party on Russia's WTO accession (in December 2003 Stefán Jóhanesson, Iceland’s Ambassador to the WTO, was appointed as the new chairman of the WP) involved in negotiations: over 50 of them are involved in the negotiations on goods market access and more than 30 work on services market access.
Negotiations are held at the WTO Secretariat in Geneva both at multilateral level (formal and informal meetings of the Working Party on systemic issues, the plurilateral consultations on agriculture and a series of pressing issues, i.e. consultations with a limited number of participants, between interested Working Party members) and at bilateral level in Geneva, in Moscow, or in the respective capitals of Russia’s partners on issues relating to access to the goods and services markets.
The Russian delegation in charge of accession to the WTO is holding negotiations on four major issues. Documents and proposals approved by the Commission for Accession to the WTO and the Russian Government form the basis for the negotiation process.
1. Negotiations on access to the goods market
The main subject of negotiations is setting the maximum level of import customs duties, which Russia will have the right to levy after WTO accession. The Russian delegation held a series of intensive negotiations with 20 Working Party member-countries in the fall of 2004. These include Norway, the United States, Australia, Japan, Canada, Brazil, Thailand, Mexico, India, Switzerland, Singapore, Taiwan, Venezuela, Malaysia, Bulgaria, the Philippines, Uruguay, Egypt, Cuba, and Colombia.
Negotiations with 15 other countries (Japan, India, Turkey, the Philippines, Croatia, Peru, Norway, Costa Rica, Argentina, Australia, Canada, Bulgaria and Egypt) were held in Geneva in February 2005.
At present, Russia has reached consensus on almost 90 % of tariff positions with its partners. However, problematic spheres, in which the sides have so far failed to find agreements, remain. They include agriculture, aviation equipment, cars, furniture, etc. Negotiations have been completed with 33 countries, including Thailand, Chile, Taiwan, Venezuela, Singapore, the Republic of Korea, China, New Zealand, Israel, Indonesia, Turkey, the European Union (EU), Iceland, Cuba, Mexico, and Norway.
It should be noted that the signing of protocols with the European Union in May 2004 gave tangible momentum to bilateral talks with other countries. In accordance with bilateral agreements, the initial level of “bound” customs duties should not exceed a single customs rate that is currently being applied, while not a single customs rate is supposed to drop against today’s levels in the first year after Russia joins the WTO. The level of customs protection for basic agricultural products will not decrease either. Russia has the right to increase the rates of customs duties during the period in transition. The Russian Federation has fixed its right to apply tariff quotas for three types of meat (beef, pork and poultry) in volumes that will satisfy the Russian side (today’s level plus 2 %-2.5 % of annual growth) and ensure sufficient level of tariff protection until 2009 inclusive.
The completion of bilateral talks with China became another major achievement. The protocol was signed on October 14, 2004, after three years of difficult and intensive talks.
China joined tariff talks with Russia in April 2002, in the third month after it joined the WTO. The initial requirements included demands that Russia decrease its applicable tariffs twofold or threefold on all 3763 requested tariff lines in one or two years.
After numerous rounds of talks and reciprocal concessions from both sides, all the positions have been agreed upon. Disputable issues predominantly concerned manufactured clothes, footwear, electro-technical household appliances and electronic devices. Russia signed bilateral protocols on completion of bilateral talks on access to the market of goods with Chile, Taiwan, and Singapore within the framework of the Asia-Pacific Economic Cooperation (APEC) summit that was held in Chile on November 21-22, 2004 and as part of President Vladimir Putin’s state visit to Chile. The Russian delegation held a series of talks with the Brazilian delegation in the city of Brasilia on November 22, 2004. The protocol on completion of talks with Venezuela was signed in Moscow on November 26 during the visit of Venezuelan President Hugo Chavez to Moscow. The protocol on completion of talks with Thailand was signed on November 30.
2. Negotiations on agricultural issues, alongside the tariff aspect, include discussions of the levels of domestic support for the agricultural sector (within the framework of the so-called “yellow basket”) and agricultural and food export subsidies. Such issues are usually discussed at multilateral consultations, in which members of the Quadro Group (the United States, the European Union, Japan, and Canada), the Kenyan group of states (the leading liberally minded exporters of agricultural products) and other interested countries can participate. These negotiations are extremely complicated. The Russian delegation submitted a package of documents containing new AMS proposals at a meeting in Geneva in October 2003. The last round of agricultural consultations was held in Geneva on June 21, 2005. In reply to numerous requests of the Working Party member-countries, the Russian side presented figures on the size of domestic support in 2001-2003 in a format required by the WTO. Russia’s position on the allowable size of state support remained unchanged.
Working Party member-countries reacted positively to receiving information on the current level of agricultural support and noted that it was a vital aspect that would help to advance the negotiating process. Besides, the countries voiced their interest in stepping up negotiations and their earliest completion.
3. Negotiations on the services market access are aimed at coordinating positions on the access of foreign services suppliers to the Russian services market. Russia signed a protocol with Kyrgyzstan in October 2003. Negotiations on services were completed with 16 members of the Working Party: Hungary, the European Union, China, Korea, Taiwan, Thailand, Turkey, Chile, Singapore, Venezuela, New Zealand, Mexico, and Norway. Talks with six more countries entered the final stage.
A series of bilateral talks with the U.S. delegation was held in Paris on January 28, 2005 and in Geneva on February 13-15, 2005. The Russian side held a series of negotiations with Canada, Australia, Egypt, Norway, the United States and Japan in Geneva between February 13 and 18, 2005.
The United States, Canada, Japan, Switzerland, Norway, Australia, and India are the main members of the Working Party with whom talks on services are under way.
The negotiations are particularly tough on such sensitive sectors as the financial, “energy” and telecommunications markets, the access to which is of special commercial interest to the leading WTO members. Besides, some countries are interested in improving the conditions of access to the Russian market for individual suppliers of services (India, Canada, Switzerland).
Russia agreed to take commitments on nearly 100 service sectors (out of 155 sectors under WTO classification). In some cases, Russia’s stance provides for tougher conditions of work with foreign suppliers in the Russian market compared to the conditions provided by applicable laws. Such a position will allow for the use of additional instruments of protecting national suppliers from foreign competition in future.
4. Negotiations on systemic issues are aimed at setting the measures, which Russia is to implement in the legislation and its application as a WTO member.
The talks are based on the draft report of the Working Party – the key document, which lists the rights and obligations Russia will assume as a result of all negotiations. The WTO countries’ requirements in that area can be generally divided into three groups as follows:
1. Russian legislation and law-enforcement practice is not in compliance with the WTO regulations. The main concerns of WTO members are certain provisions of the current legislation on customs, excessive demands to imported goods, procedures in the area of sanitary, as well as veterinary and phytosanitary control. Participants of negotiations require unconditional fulfillment of all relevant WTO provisions. This is a standard requirement to all acceding countries.
2. Russia’s application of some regulatory aspects, which are basically allowed in the WTO, may be stipulated by certain requirements or commitments set forth in the Working Party Report. These requirements are “subject to negotiations.”
3. Requirements which are clearly beyond the scope of WTO commitments, (the so-called "WTO+" requirements) such as joining the agreements on government procurement or civil aircrafts, equalization of internal, and external prices for energy resources.
The basic elements of the Working Party’s inquiries on systemic issues are as follows:
1. Liberalization of measures of non-tariff regulation from the point of view of licensing rules, especially in such areas as imports of alcoholic and pharmaceutical products into Russia, the regime of exports of diamonds and metals of the platinum-containing group, and the imports of communication and ciphering equipment.
2. Ways of bringing the regimes of technical barriers in trade and sanitary measures in Russia in line with the WTO rules, improving the application of laws in the aforementioned spheres (primarily in part of mandatory certification and registration, repeated certification and confirmation assessment).
3. The joining of non-mandatory WTO agreements (including trade, civil aviation equipment and government purchases).
4. The removal of restrictions on foreign investments in various spheres.
5. Ways of brining the legislation and practice of applying laws in the field of protection of intellectual property in compliance with WTO rules.
6. Ways of liberalization of the Russian energy market, decreasing state interference, creating conditions for the reduction of costs for exporting Russian gas, including free access to transit through pipeline transport, and insuring the participation of foreign companies in construction (and, possibly, in the running of pipeline transport in Russia).
7. The abolition of the “national component” term in investment agreements.
8. The compliance of application of tariff quotas with WTO standards, including the Agreement on Agriculture, and reduction of spheres of their application.
9. The implementation of purchase-sale deals by state trade enterprises on a commercial basis as well as equal participation of foreign companies in such deals.
The energy package: the position of the Russian side was fixed in the wording for the Working Party’s report and in bilateral agreements with the European Union. It consists in that the Government of the Russian Federation intentionally pursues a policy designed to ensure that industrial consumers in Russia receive gas at prices, which allow them to cover the expenses of producers and distributors, on the one hand, and also to gain profit in the process of carrying out normal commercial activities, on the other hand. This principle is not applied to gas sales for private consumers.
The Working Party holds regular meetings in Geneva to discuss the draft of its Report.
The Working Party discussed the first draft of its Report on Russia’s accession to the WTO at its 14th and 15th sessions in the spring of 2002. This document prepared by the WTO Secretariat sums up the results of talks that have been on since 1995 with an aim to study Russia’s trade regime and its compatibility with the WTO rules. Over these years, the Russian delegation has submitted nearly 200 analytical documents and more than 1000 legal acts in English to the WTO Secretariat.
The 16th meeting of the Working Party held in December 2002 started to consider the second edition of the draft Report and agreed to intensify the accession talks. The 17th, 18th, and 19th official sessions of the Working Party were convened in March-April 2003 to discuss the second edition of the draft Report. The Working Party held its 20th official session in July, 2003 to discuss the third edition of the draft Report. Multilateral consultations on currency regulation, telecommunications as well as bilateral talks on the access to the markets of goods and services and systemic issues were held at the same period of time.
The fifth WTO ministerial conference was held in Cancun, Mexico, in September 2003. It was expected to sum up interim results of the new round and pass decisions on further development of multilateral trade talks. These negotiations are open to all WTO members and candidate states that are in the process of accession. However, it is the WTO members that are eligible to pass decisions on the results of the talks. Practically all directions of multilateral trade talks may affect Russia’s current and long-term interests as well as its position in the world trading system after Russia joins the WTO. The Russian delegation that held negotiations with representatives of more than 30 countries on accession issues took part in that forum. Similar meetings were held in autumn 2003 during the APEC summit in Bangkok and within the framework of international economic forums.
The Working Party held its 21st session on October 28-30, 2003, to discuss all the nine updated sections of the draft Report. The session also considered the results of the lawmaking work in Russia. Concurrently, multilateral consultations on telecommunications and banking services, tariff quotas and exemptions from the MFN regime in trade with services and agriculture were held. They were accompanied by a series of bilateral talks on the access to the market of goods and services as well as systemic issues.
The 22nd meeting of the Working Party took place on February 2-6, 2004. Ten renewed sections of the draft Report as well as the results of Russia’s legislative efforts to adjust its laws to the WTO rules and norms were discussed and approved. Multilateral consultations on the new version of the Customs Code of the Russian Federation, agriculture, and tariff quotas were held. Simultaneously a regular round of bilateral talks on access to the markets of goods and services as well as on some systemic issues took place.
At the Working Party’s 23rd meeting (March 29-April 2, 2004), a number of renewed sections of the draft Report were discussed and subsequently approved. Consultations on agriculture and tariff quotas were also held.
The 24th meeting of the Working Party took place on June 16, 2004, with discussions concerning thirteen renewed sections of the Report. As a result of the meeting, a decision was taken to revise the consolidated text of the draft Report’s third version in August-October, so as to present it for discussion at the 25th Working Party’s meeting.
Multilateral consultations on technical barriers in trade as well as on sanitary and phitosanitary measures took place in Geneva on November 4-5, 2004 within the framework of preparations for the 25th meeting of the Working Party.
A discussion concerning the consolidated text of the third version of the draft Report by the Working Party on Russia’s accession to the WTO - a major document reflecting the obligations assumed by Russia as it accedes to this organization - took place in the course of the 25th meeting of the Working Party (November 15-18, 2004). It was noted that the text presented at the meeting constituted a good basis for the final version of the document. As a result of the meeting the Working Party’s member-countries prepared a number of additional questions to the Russian delegation.
The 26th meeting of the Working Party was held on February 14-18, 2005. A discussion dealing with the answers by the Russian side to the questions posed earlier by the Working Party’s member-countries took place during the session. The next meeting was scheduled for the middle of April 2005.
The 27th Working Party’s meeting took place in Geneva on April 13-15, 2005. Issues pertaining to systemic legislative development were raised alongside those of “fine tuning” the current Russian legislation to bring it in line with the WTO norms. Trilateral consultations with the EU and the US on questions of Russia’s obligations were held, in addition to bilateral talks with Canada, Japan, Switzerland and Mexico concerning access to the markets of goods and services. Talks with Japan were fully completed. The protocol with Turkey was signed on April 17, 2005, during the visit of Minister G.O. Gref to Ankara.
During the course of the 28th meeting of the Working Party that took place in Geneva on June 21-24, 2005, came a series of bilateral negotiations about the conditions of access to the markets of goods and services, consultations on systemic issues, multilateral consultations on agriculture, sanitary and phitosanitary measures in trade, as well as multilateral discussions on the Working Party’s draft Report.
Multilateral consultations on agriculture, on sanitary and phitosanitary measures in trade were held on June 21. The Russian side presented information about the course of legislative activities in the field of sanitary and phitosanitary measures, about the present system of veterinarian inspectors, and about plans to introduce a system of insurance against risks.
The Russian Federation Minister for Economic Development and Trade G.O. Gref delivered a speech at the Working Party’s official session on June 24, 2005.
On January 14, 2005 Minister G.O. Gref had a meeting with S. Nakagawa, Japan’s Minister of Trade and Industry. In the course of the meeting, the parties discussed the issues of access to the markets of goods and services, as well as systemic issues.
On January 31 G.O. Gref had a meeting in Zurich with the US Trade Representative R. Zoellick. During this meeting, the US suggestions made at the talks on Russia’s accession to the WTO were discussed in a specific way. As a result of this meeting, the parties succeeded in bringing together their approaches on a number of important directions in bilateral negotiations.
On February 24, 2005, a Russian-American summit took place in Bratislava. During the meeting of the Presidents of the two countries, a statement was made about their aspiration to complete bilateral negotiations before the end of 2005.
On March 21, 2005, a meeting of the EU Trade Commissioner P. Mandelson and Minister G.O. Gref took place in Moscow, with a discussion on a number of urgent systemic issues.
On June 6, 2005, an annual Ministerial Conference of the APEC ministers of trade took place in Seoul. At this conference G.O. Gref and R. Portman who head the trade departments of Russia and the United States respectively, met each other for the first time. Talks with Australia, Canada, Mexico, and Malaysia were held there, too.
Commission of the Russian Federation Government on the WTO Issues was formed in August 1997. In July 2004 it was transformed into the Governmental Commission on Issues of the World Trade Organization and Interaction with the Organization for Economic Development and Cooperation. M.Ye. Fradkov, Chairman of the Russian Federation Government, became the Head of this reformed Commission. Coordination of the WTO accession process and elaboration of the Russian negotiating position is a major function of the Commission. Its first session took place on September 21, 2004. This body is composed of the representatives from the key ministries and departments.
Bringing the Russian legislation in line with the WTO rules is the key element of Russia’s efforts at home
In 2000, the Expert Council for Foreign Trade Legislation and Foreign Investment was established at the State Duma Committee for Economic Policy and Entrepreneurship in order to find out what the state authorities, NGOs, scholars, businessmen and law experts think about Legal regulation of foreign investment and foreign trade in terms of WTO requirements and about coordination of the legislative work related to the WTO accession.
Decree of the government of the Russian Federation dated August 8, 2001 # 1054 approved a Plan for bringing legislation of the Russian Federation to conformity with rules and regulations of the World Trade Organization. The Plan provides for elaborating a series of draft laws, which would enable to solve the problem of legislation discrepancy with WTO provisions.
By the end of 2004 this plan of actions was nearly fulfilled, with the passage of the new version of the Customs Code of the Russian Federation (May 28, 2003, No 61-FZ), the laws On the Foundations of State Regulation of External Trade Activities (May 28, 2003, No 61-FZ), On Special Anti-Dumping and Compensatory Measures During the Importation of Goods (December 8, 2003, No 165-FZ), On Currency Regulation and Currency Control (December 10, 2003, No 173-FZ), On Technical Regulation (December 27, 2002, No 184-FZ), and a set of laws on intellectual property rights protection. On November 11, 2004, the President of the Russian Federation signed a draft of changes to the Customs Code of the Russian Federation (in its part related to customs fees). Examination of departmental acts and regional legislation with the purpose of determining their conformity with the WTO requirements is under way.
Some bills providing for amendments to a number of laws currently in force are presently under consideration at the State Duma of the Russian Federation. Thus, a draft federal law On Introduction of Amendments to the Russian Federation Law On Customs Tariff (in its part related to customs valuation of goods) is being prepared for consideration in the second reading.
Consultations between the Russian delegation and representatives of the Commonwealth of Independent States (CIS) member countries are conducted on regular basis. Decisions aimed at improvement in the EurAsEC countries interaction at the WTO accession talks were taken in 2002–2003 during the EurAsEC meetings at the heads of state level. The EurAsEC Intergovernmental Council discussed these questions at the heads of government level in Alma-Ata (February 2004), Astana (June 2004) and Minsk (August 2004).
A group of high-level experts on forming the Single Economic Space in the territories of Russia, Belarus, Kazakhstan, and Ukraine has been conducting a comparative analysis of the “quartet’s” position at the WTO accession talks. These results were used for coordinating negotiation stances both for the process of creating the Single Economic Space as well as for coordinating the WTO accession efforts by the countries concerned.
The Russian Ministry of Economic Development has been holding nearly 500 meetings with representatives of business circles to discuss Russia’s position at negotiations with various unions of exporters, importers, and associations of producers since 2000. The Ministry also holds regular consultations with the Russian Union of Industrialists and Entrepreneurs, the Chamber of Commerce and Industry, other business associations, and representatives of science and public organizations. A round table session to discuss, among other issues, the regional aspects of Russia’s accession to the WTO was held at the Ministry for Economic Development and Trade in March, 2004, as part of Minister G.O. Gref’s consultations with the heads of agencies responsible for external economic linkages of the Russian Federation subjects.
As a result, more than 140 regional conferences on problems of Russia, WTO, and the interests of Russian businesses were organized in all federal districts and in more than 45 regions and territories within Russia. They were initiated by the Russian Ministry of Economic Development, the Russian State Duma Committees, the Russian Union of Industrialists and Entrepreneurs, the Chamber of Commerce and Industry, as well as regional administrations and local legislative bodies.
The Working Group of the Presidium of the Russian Federation State Council on the issue of Russia’s WTO accession created in the summer of 2003 is finalizing preparations of a report with the participation of regional representatives. This report is to be examined at the Russian Federation State Council meeting. In 2004, the Ministry for Economic Development and Trade organized training of civil servants on practical aspects of Russia’s forthcoming WTO membership in 18 regions of the country. According to the data accumulated through independent public opinion polls, in the middle of 2004, more than half of all Russians supported Russia’s WTO accession (while, in 2001, such supporters accounted for less than 20 percent of the population)
In 2001-2003, Russian science and business circles have prepared more than a dozen collective reports on the assessment of social and economic consequences of Russia’s accession to the WTO.
As the negotiations intensified in 2003-2005, the Russian delegation entered the final stage of the accession talks, during which the most complicated and thorny issues are to be resolved. Accession terms with the key trade partners are under continuous discussions. It is important to note that Russia will not to accede to the WTO on any terms. The terms of accession in all aspects (tariffs, agricultural commitments, services market access, systemic commitments) will be based on real conditions of the Russian economy and prospects of its development in order to ensure the necessary protection for national producers, while simultaneously preserving an adequately competitive environment.