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Tuesday, April 11, 2006

Cold War II Begins . . . at Russia's Request

From the Moscow Times

U.S. Using WTO to Contain Russia

By Anna Smolchenko Staff Writer

Fearful of Russia helping Iran build a nuclear bomb and the Kremlin reverting to authoritarianism, the United States is once again threatening economic retaliation. At issue is Russia's long campaign to get into the World Trade Organization, which would open markets around the globe to Russian goods.

While Moscow has resolved trade disputes with many countries, it has yet to iron out all its differences with Washington, a prerequisite for admission to the 149-member WTO. The United States is the last major country to put up obstacles to Russian entry to the WTO. On the surface, the outstanding WTO issues are purely economic -- intellectual property rights, for instance, or keeping Russian markets open to American poultry exports, an issue that has recently arisen.

But just beneath the surface, the politics surrounding Russia's quest to join the global trade organization are clearly visible.

U.S. Senator Bill Frist, the majority leader and one of a handful of Republicans likely to run for president in 2008, indicated Monday that the political chasm separating the United States and Russia figured into the resolution of trade disputes.

Speaking at a news conference after meeting with Foreign Minister Sergei Lavrov, Frist said Russia's disregard for the rule of law, human rights violations and other "anti-democratic" tendencies "color the position of the United States."

Frist added that "our Congress plays a major role in whether Russia will ultimately be admitted to the WTO."

A senior congressional aide, speaking on condition of anonymity because of the sensitivity of trade talks, said the U.S. House of Representatives would be a "major stumbling block" for Russian ascendancy to the WTO.

"It will be an uphill battle," the aide said of Russia's effort to gain admission. "A lot of those requirements are genuine trade requirements, but others have to do with political steps. Many congressmen were raised in fear of the Soviet Union. To a certain extent, Russia is still being treated as a Cold War adversary."

Congress showed its willingness last month to use global trade to further a political end when it freed Ukraine from the 1974 Jackson-Vanik trade provision.

The move came as U.S. ally Viktor Yushchenko, celebrated in Washington for leading Ukraine's 2004 Orange Revolution, was heading into tough parliamentary elections.

By contrast, the United States has not lifted Jackson-Vanik for Russia, making it possible, if not probable, that Ukraine will gain admission to the WTO before Russia.

Jackson-Vanik makes it impossible for Russia to gain most-favored-nation trading status with the United States; even though Russia is granted yearly waivers, graduating from Jackson-Vanik is widely believed in Washington to be a necessary step toward WTO admission. Frist traveled to Moscow and St. Petersburg with Senator Judd Gregg of New Hampshire and Senator Richard Burr of North Carolina. Gregg and Burr are also Republicans.

Numerous other senators and House members have voiced uneasiness about granting Russia admission to the WTO as long as the Kremlin restricts press freedom and nongovernmental organizations, and denies voters the freedom to pick their own regional governors.

Representative Curt Weldon, a Republican from Pennsylvania; Senator Joe Biden, a Democrat from Delaware; and Senator John McCain, a Republican from Arizona are among those who are skeptical about granting Russia WTO membership. McCain is seriously considering a presidential bid. Biden has been mentioned as a possible contender.

The United States recently slapped Russia with a list of 10 more requirements that Moscow must meet to gain WTO admission.

President Vladimir Putin, responding to the U.S. move, accused Washington of deliberately keeping Russia out of the world trade body.

Anastasia Zimonina, a spokeswoman for the Economic Development and Trade Ministry, the agency handling WTO negotiations, buttressed Putin in an interview last week, citing a letter sent by U.S. President George W. Bush to Putin. "The requirements indicated in Bush's letter to Putin, we could say, are new aspects of old issues," she said.

One issue that particularly galled Russians, she said, was airplanes. The question of plane tariffs had been resolved, Zimonina said, but the United States has put forth new demands about aircraft leasing. U.S. trade representatives have similarly accused the Russians of playing politics with the trade negotiations.

Andrei Kushnirenko, a senior trade official at the ministry, said that most of the issues to be resolved involved agriculture.

Dorothy Dwoskin, a senior trade negotiator at the U.S. Trade Representative's Office, in Washington, said the pharmaceutical and financial services industries were also a concern for U.S. negotiators.

Late last month, the U.S. Trade Representative's Office issued its annual report on trade barriers, noting that Russian barriers to U.S. drugs were a key sticking point in the WTO negotiations.

Russian import requirements, for example, include obtaining an "expert's analysis," the report said. The government also requires "phytosanitary certificates" for incoming styrofoam cups and furniture, the report said.

The protracted WTO debate has apparently prompted some Kremlin officials to rethink the wisdom of seeking membership in the trade organization.

On Monday, an unidentified government official was quoted in Izvestia as saying that WTO membership could harm the Russian economy.

Pavel Katkov, a spokesman for the Economic Development and Trade Ministry, declined to comment. Zimonina, the ministry spokeswoman who normally deals with WTO accession issues, was unavailable Monday.

Anton Strouchenevsky, an economist with investment bank Troika Dialog, dismissed talk of Russia opting out of the WTO. "I wouldn't get excited over these declarations," he said. "The WTO negotiations process is very politicized, and it's largely politicians, not economists, who do the negotiating."

He added that the latest fireworks were evidence, if anything, that negotiations were proceeding.

Zimonina, however, sounded a philosophical note. "Why is it happening?" she said of the ongoing debate. "Because nothing is agreed until everything is agreed."

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