HANOI, Vietnam, (AP) -Russia and the United States signed a key trade agreement Sunday, removing the last major obstacle in Moscow’s 13-year journey to join the World Trade Organization.
The deal, inked on the sidelines of a gathering of Pacific Rim economies, is a powerful vote of confidence in Russia — the largest economy still outside the 149-member WTO — and signals its integration into the global trading system.
It also marks a bright spot in the two countries’ relations that have been marred by disagreements over Iran’s controversial nuclear program and Washington’s fears of a roll back of democratic freedoms under Russian President Vladimir Putin.
“I am very pleased to be here today to have the opportunity to celebrate this very important milestone as Russia moves one important step closer to becoming a member of the WTO,” said U.S. Trade Representative Susan Schwab.
“Russia belongs as a full-fledged member of the WTO,” she said. “We look forward to continuing these efforts to improve the economic and commercial ties between our two nations.”
Russia’s Trade and Economic Development Minister German Gref called the deal a “historic step — the last step — that signifies the return of Russia to the market principles of the world economy.”
As part of the deal, Gref said that Russia had pledged to cut import tariffs on a range of goods — including aircraft, computer technology, agriculture and machinery.
Speaking after the signing ceremony Gref defended those concessions. “I think we found the necessary balance… On all positions that were sensitive for us we found a compromise.”
The two countries also managed to overcome the high-profile question of Russia’s shaky record on protecting intellectual property rights. Pirated films, music and software in Russia cost U.S. companies nearly US$1.8 billion in 2005.
Schwab said that while talks with Russia on the piracy question would continue at the stage of multilateral negotiations, she expressed satisfaction with Russia’s progress.
Before it can join the WTO, Russia must consolidate the bilateral agreements it has forged with 57 countries. Gref said he expected that process to be completed mid-next year.
After that, the WTO needs to vote to approve Russia’s membership.
But some question marks remain. Georgia and Moldova have threatened to block Russia’s bid because Moscow has blocked key exports from those nations. Gref said Saturday that he hopes that those problems would also be resolved by mid-2007.
Membership in the WTO would mean Russia, a big oil and gas exporter, would receive the same favorable tariff rates for its products as other members. Also, Russia and other member countries would have to follow WTO rules in trade disputes.
Freer trade would give Russian companies more opportunities to sell their goods on world markets. Joining the WTO also might make its sizable market of potential customers even more attractive to companies in the U.S. and elsewhere.
“This creates a favorable background for all our activities, including solving complicated international problems,” said Putin after holding a bilateral meeting with U.S. President George W. Bush after the conclusion of the Asia-Pacific Economic Cooperation summit.
The trade deal was widely anticipated. On Nov. 10, both sides announced that all the main questions had been settled and all that remained was for a few technical questions to be nailed down.
Before the U.S. can trade with Russia under a WTO agreement, Washington must establish normal trade relations with Moscow.
For that, Congress would still have to pass legislation removing Russia from the 1974 Jackson-Vanik amendment, which ties Russia’s trade status to whether the country is allowing Jews to freely leave the country.
Though the amendment is widely considered an anachronism, the newly elected Congress, which convenes in January, will be controlled by Democrats, who are less receptive to free-trade agreements than Republicans.
About four months ago, U.S. and Russia had appeared on the verge of an agreement. But in a major embarrassment for Moscow, it failed to materialize — right before the summit of leaders of the world’s wealthiest countries that Putin was hosting in St. Petersburg.
Observers have suggested that the deal with the U.S. may have been used as a political incentive to encourage Moscow to back a U.S. proposed sanctions package, punishing Iran for its controversial nuclear program.