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Results of Bilateral Negotiations and Russia's Accession to the WTO
21 November 2006
Results of Bilateral Negotiations and Russia's Accession to the WTO

The following resource was developed as part of the monthly USRCCNE Newsletter. To subscribe to the USRCCNE Newsletter, simply send an email to jwilson@usrccne.org with the title "Subscribe USRCCNE."

Results of Bilateral Negotiations
on Russia's Accession to the World Trade Organization (WTO) 
November 19, 2006

The source for the following information, unless otherwise indicated, is The Office of the United States Trade Representative. It has been collated and indexed here to make it maximally useful to Chamber members.

Table of Contents (click to jump to each section)

1.  Press Release from the Office of the United States Trade Representative
         a. Background on the issues
2.  Non-Agricultural Goods Market Access
         a. Tariffs on information technology
         b. Measures concerning encryption technology
3. 
Action on Critical Intellectual Property Rights Issues
4.  Bilateral Market Access Agreement on Services
5.  Agricultural Goods Market Access
6.  U.S.-Russia Business Council Press Release
7. 
Coalition for U.S.-Russia Trade Press Release
8.  AmCham Russia President's Statement

See Also
1.  A Guide to WTO and PNTR Processes
2. 
Russia's WTO Ascension: A Status Report

  1. United States, Russia Sign Bilateral WTO Market Access Agreement:     back to top

Hanoi - U.S. Trade Representative Susan C. Schwab and Russian Minister of Trade and Economic Development German Gref today signed a bilateral market access agreement that is an important element in Russia’s accession to the World Trade Organization (WTO). Completion of this bilateral agreement marks a significant milestone in Russia’s bid to join the WTO.

"I am pleased that we have concluded this important agreement in connection with Russia’s WTO accession negotiations. This is a strong and far-reaching commercial agreement that meets the high standards of President Bush’s market-opening trade agenda and moves Russia closer to full integration into the global, rules-based trading system. Russia has become an increasingly important destination for American agricultural goods, a range of services, and manufactured products – and as Russia’s market opens further as a result of its WTO membership, its importance will only grow,” Ambassador Schwab stated.

The bilateral agreement will create significant new opportunities for U.S. producers and exporters of industrial and agricultural goods, as well as U.S. services providers, when it enters into effect. The agreement also provides for the immediate implementation of some market opening actions for industrial and agricultural goods.

The agreement resolves long-standing bilateral issues related to trade in agricultural goods, and also puts in place a strong and enforceable bilateral blueprint for protection and enforcement of intellectual property rights (IPR). Implementation of the commitments on IPR, agriculture, and industrial goods will be essential to completing the final multilateral negotiations on the overall accession package.

“We worked through many difficult issues and the agreement sets the stage for closer cooperation in many commercial areas, as well as moving Russia closer to joining the WTO’s rules-based trading system and reinforcing Russia’s economic reforms, which is so essential to Russia’s own growth and development,” said Ambassador Schwab.

"It is significant that our signing takes place on the margins of the meeting of the Asia-Pacific Leaders. APEC represents the most dynamic trading region of the world. Russia is an important Pacific partner and WTO Membership ultimately will strengthen our cooperation in economic matters. We will work diligently with other APEC Members, our trading partners, and Russia on the multilateral aspects of the accession negotiation. We still have work to do, but today’s agreement puts new energy and momentum into the negotiating process. We will continue to work closely with domestic stakeholders and the U.S. Congress in the next phase of the negotiations," added Schwab.

BACKGROUND     back to top

The WTO bilateral market access agreement signed today will generate significant benefits and resolves many issues in agriculture. Effective immediately, Russia will apply international norms and science-based measures that address impediments to U.S. agricultural exports of beef and beef by-products and pork and pork by-products and products of biotechnology. Russia’s government has confirmed its commitment to compliance with existing bilateral agreements (e.g., the bilateral Meat Agreement) and application of internationally recognized SPS measures with regard to agricultural trade.

U.S. 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, wine, poultry, pork, and beef, among others, will benefit from the market access provisions of the bilateral agreement. Russia’s tariff commitments include participation in the Information Technology Agreement (ITA), which will result in the duty-free entry of IT products, such as computers and semiconductors. Russia has also agreed to substantially reduce its tariffs on both wide body and narrow body civil aircraft and parts. Tariffs on chemical products are harmonized at 5.5 and 6.5 percent, in accordance with the Chemical Tariff Harmonization Agreement, and Russia will reduce tariffs on construction and agricultural equipment, scientific equipment, and medical devices. Russia’s tariffs, when fully implemented, will average 5 percent in these sectors. And Russia’s overall bound tariff rate on industrial and consumer products will average around 8 percent.

With respect to other non-tariff barriers, the agreement sets out an understanding on procedures for importing technology products with encryption (such as mobile phones, operating systems, and other products). In addition, Russia will reduce export duties on ferrous (steel) scrap and eliminate its export duty on copper cathode.

Russia has undertaken market access and national treatment commitments in a wide array of commercially significant services sectors. U.S service suppliers will benefit, in particular, from more open access in infrastructure services sectors such as telecommunications (including satellite services), computer and related services, express delivery, distribution, financial services and audio visual services.

The bilateral market access agreement also includes important provisions that will strengthen IPR protection in Russia. Under the terms of the agreement, Russia will take action, starting immediately, to address piracy and counterfeiting and further improve its laws on IPR protection and enforcement, both stated priorities of the Russian Government, which has confirmed its commitment to implementing this agreement. The agreement also sets the stage for further progress on IPR issues in the ongoing multilateral negotiations.

Russia and other WTO members must complete the multilateral part of these negotiations before Russia becomes a WTO member and its WTO commitments go into effect. In addition, for U.S. farmers, ranchers, businesses and investors to enjoy the benefits of many of Russia’s commitments, Congress will need to enact legislation terminating application of the Jackson-Vanik amendment to Russia and authorizing the grant of permanent normal trade relations (PNTR) to Russia. Russia has been negotiating its terms of accession to the WTO, and previously the General Agreement on Tariffs and Trade 1947 (GATT), since 1993. The next step in Russia’s accession process is completion of multilateral negotiations on a Working Party Report and Protocol of Accession that details the changes Russia will make to bring its trade regime into conformity with WTO rules.

  2.  Non-Agricultural Goods Market Access     back to top

The United States and Russia have reached agreement in principle on a bilateral market access agreement that, once implemented, will lower tariffs and remove non-tariff barriers for a wide range of U.S. goods and services, including industrial products.

Tariffs: Russia’s accession to the World Trade Organization (WTO) will expand current access and create new market access opportunities for U.S. exporters in one of the world’s fastest growing markets. Russian tariffs on industrial products will be bound at an average of 8 percent, a reduction of approximately 36 percent from rates applied in 2000, the base year for the market access negotiations. Industrial goods important to the U.S. - Russian commercial relationship will realize even larger tariff cuts and will face an average tariff of 6.5 percent in Russia’s market.

Industrial goods represent approximately 70 percent of total U.S. exports to Russia, averaging $2.1 billion between 2003 and 2005. The concessions obtained on these exports to Russia are most significant in the information technology, civil aircraft, chemicals, and capital goods and equipment sectors:

  • Information Technology and Telecommunications: Russia will join the Information Technology Agreement (ITA). Information technology products from computers to telecommunications equipment will enter the Russian market duty-free in accordance with the ITA. Russia will implement 95 percent of its ITA commitments within three years of accession     back to top
  • Civil Aircraft: Russia’s tariff concessions will yield significant market access opportunities for the U.S. civil aircraft industry. Tariffs on wide body aircraft will be reduced from 20 percent to 7.5 percent over 4 years following accession. Civil aircraft parts, including engines, will be reduced to an average of 5 percent. Leased aircraft will also enjoy reduced tariffs. Effective immediately, Russia will proved dramatically reduced tariffs on leased narrow body aircraft with less than 50 seats and with between 115 and 160 seats. Such aircraft can be made available under leasing agreements entered into between now and January 1, 2011.
  • Chemicals: Russia has agreed to join the Chemical Tariff Harmonization Agreement. Tariffs on chemical products along the processing chain are harmonized at 5.5 and 6.5 percent in accordance with the Agreement.
  • Capital Goods and Equipment: Russia has agreed to substantial tariff reductions in construction and agricultural equipment as well as scientific equipment and medical devices. Russian tariffs will average 5 percent in these sectors.

Non-tariff Measures

  • Encryption Technology: In a significant move to liberalize trade in technology products with encryption (mobile phones, operating systems, and a wide variety of products), Russia will set up a streamlined interim system for the import of goods with encryption capability within three months after signing the U.S.-Russia WTO bilateral market access agreement.
    • Russia will implement transparent, nondiscriminatory, and WTO-compatible procedures and will allow import of most commercially traded information technology and telecommunications goods after a one-time notification, or in some cases, with no encryption-related requirements at all.
    • After evaluating the operation of this interim system, Russia will develop final regulations.
    • Russia and the United States will continue to consult on the treatment of goods with encryption and the operation of its import procedures to further liberalize trade in this area.      back to top
  • Metal Scrap: Russia will reduce export duties on ferrous (steel) scrap to one-third of current levels over the five years following accession, allowing freer trade in this important input to steel. Russia will also eliminate its export duty on copper cathode in the four years after accession.

  3. Action on Critical Intellectual Property Rights Issues       back to top

The United States and Russia have agreed on a binding blueprint for actions that Russia will take to address piracy and counterfeiting and improve protection and enforcement of intellectual property rights (IPR), both stated priorities of the Russian Government, starting immediately. This agreement sets the stage for further progress on IPR issues in Russia through the next phase of multilateral negotiations, during which the United States and other WTO members will examine Russia’s IPR regime. This binding agreement is an integral part of the United States – Russia WTO bilateral market access agreement, and implementation of the commitments on IPR will be essential to completing the final multilateral negotiations on the overall accession package.

The agreement requires action on critical IPR issues, including:

  • fighting optical disc piracy;
  • fighting Internet piracy;
  • protecting pharmaceutical test data;
  • deterring piracy and counterfeiting through criminal penalties;
  • strengthening border enforcement against piracy and counterfeiting;
  • bringing Russia’s laws into compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and other international IPR standards; and
  • continuing training and bilateral cooperation on IPR protection.

Fighting Optical Disc Piracy

The United States and Russia agreed on the objective of permanently closing down production of optical media containing pirated and counterfeit material.

Russia will:

  • Terminate leases, and refuse new leases, for optical media factories on restricted military-industrial sites;
  • inspect licensed plants regularly, day and night;
  • find and shut down unlicensed plants;
  • find and inspect warehouses for pirated and counterfeit goods; and
  • take criminal actions where there is evidence of commercial scale piracy.
  • Russia will also strengthen regulation of optical media plants, including working to enact legislation by June 1, 2007, to deny licenses to past offenders.

Fighting Internet Piracy

The United States and Russia agreed on the objective of shutting down websites that permit illegal distribution of music and other copyright works. The agreement names the Russia-based website allofmp3.com as an example of such a website.

Russia will:

  • take enforcement actions against the operation of Russia-based websites;
  • investigate and prosecute companies that illegally distribute copyright works on the Internet;
  • work to enact legislation by June 1, 2007, to stop collecting societies from acting without right holder consent,
  •  work to enact legislation implementing the 1996 World Intellectual Property Organization (WIPO) Internet treaties.

Protecting Pharmaceutical Test Data

Russia will work to enact legislation by June 1, 2007, to protect undisclosed information (such as test data) submitted to obtain marketing approval of pharmaceuticals.

Russia has proposed legislation that would provide a period of protection of at least six years.

During this period:

  • no one else may rely on such data in support of an application for product approval without the right holder’s consent;
  • notice of subsequent applications for registration will be provided;
  • subsequent applications will not be granted unless the applicant submits its own data or has the right holder’s consent; and
  • products registered without such data will be removed from the market.

Deterring Piracy and Counterfeiting through Criminal Penalties

The Russian Government will propose to Russia’s Supreme Court that it clarify practices relating to imposition of penalties for IPR crimes, including:

  • imposition of penalties that take into account the high degree of public harm from IPR infringement; and
  • the objective of preventing future crimes.

Strengthening Border Enforcement Against Piracy and Counterfeiting

The United States and Russia agreed on the objective of strengthening enforcement against piracy and counterfeiting at Russia’s border.

Russia will significantly increase export inspections to find shipments of counterfeit or pirated goods and refer cases to appropriate authorities for investigation and prosecution.

Russia will work to enact legislation by June 1, 2007 strengthening Customs officials’ authority to take actions on their own initiative, and will encourage Customs officials to use such authority.

Bringing Russia’s Laws into Compliance with International Standards

The United States and Russia agreed on the objective of fully implementing the TRIPS Agreement and other IPR-related international agreements upon accession. 

Russia is examining changes to its laws required to implement and comply with these agreements. These changes will include:

  • amendments to provide protection to trademarks and geographical indications that comply with TRIPS Agreement obligations on rights of trademark owners;
  • broader authority to order seizure and destruction of machinery and materials used in the production of IPR infringing goods;
  • appropriate remedies for trademark counterfeiting; and
  • other measures to provide for more effective enforcement.

Russia will ensure that any changes in its laws, including those made in the context of Part IV of its Civil Code, made prior to its accession to the WTO do not reduce consistency with key international IPR standards.

Hotline and Training and Bilateral Cooperation

Russia and the United States will set up a hotline between the United States Trade Representative and the Minister of Economic Development and Trade to exchange and follow-up on information regarding piracy and counterfeiting.

A bilateral working group will assess progress in quarterly meetings.

IPR Enforcement in Russia

The new agreement covers key areas cited in USTR’s April 2006 Special 301 Report, such as optical disc and Internet piracy, and lack of data protection. 

Following release of the Special 301 Report, Russia has reported increasing numbers of enforcement actions, including:

  • more than 4,500 criminal cases for infringement of copyright or related rights in the first nine months of 2006, compared to 2,924 in all of 2005;
  • more than 1,600 convictions for copyright offenses in first the nine months of 2006, compared to 1,450 convictions in all of 2005; and
  • more than 500 criminal cases for trademark infringement in the first six months of 2006, compared to 545 in all of 2005.

Russia has provided information showing that through September, Russian authorities continue their efforts on IPR enforcement, with raids at comparable levels to last year. We believe that Russia is committed to more aggressive actions before the end of the year.

The bilateral agreement calls for stronger enforcement. The U.S. Government will continue working with stakeholders to closely monitor implementation of Russia’s commitments.

  4.  Bilateral Market Access Agreement on Services     back to top

U.S. services suppliers will benefit in a wide range of sectors, including banking and securities, insurance, telecommunications, audio-visual services, distribution, express delivery, energy services, environmental services and professional services, when the WTO agreement enters into effect.

Banking and Securities: Russia has agreed to bind most existing market access and to offer some liberalization of treatment of foreign bank subsidiaries, including:

  • allowing 100 percent foreign ownership of all commercially meaningful types of noninsurance, Russian financial companies, including banks, broker dealers and investment companies, upon accession;
  • exempting foreign proprietary electronic networks for trading of securities (e.g., ECNs) from a 20 percent single investor limit on ownership of stock exchanges;
  • allowing foreign-invested companies to own and trade the full range of securities (including state securities, bullion and new instruments once they are approved), lead-manage Russian securities issuance, and participate in financing of privatization of government- owned firms.
  • allowing cross-border services such as financial leasing, financial information and data processing, credit cards and other types of payments, and advisory services and, starting in 2008, asset management services to sophisticated investors;
  • returning to consideration of bank branching upon joining the OECD or in the next multilateral round of negotiations whichever comes first.

Insurance: Russia will provide a significant level of market access and national treatment for U.S. insurance companies, including 100 percent foreign ownership of non-life insurance firms upon accession. Limits on the number of life insurance licenses granted to foreign insurance firms, as well as foreign participation in a small number of mandatory insurance lines will be phased out 5 years from the date of accession. Russia will allow foreign insurance companies to open direct branches for life and non-life insurance, reinsurance and services auxiliary to insurance nine years from the date of its accession.

Discretion to Limit New Foreign Direct Investment: Russia retains the discretion to limit new foreign direct investment in banking and insurance and insurance branches, if foreign investment exceeds 50 percent of total investment in the sector. The calculation of the 50 percent ratio excludes foreign investment: 1) made by January 1, 2007; 2) in firms privatized after Russia’s accession; 3) in internal branches; and 4) over 51 percent after it has been in place in Russia for 12 years, unless Russia makes a formal decision annually to continue to include such investment.

Russia has also agreed to conduct within 5 years from the date of accession an overall review of the discretionary foreign investment limit and whether it is necessary to keep it in place. USTR has taken the firm position that this discretion to limit new foreign investment in financial services in Russia’s accession agreement will not serve as an acceptable precedent in the context of any other WTO accession negotiations, the Doha Round, or any regional or bilateral trade agreement.

Telecommunications: Russia will open its telecommunications services market both on a facilities and non-facilities basis to all foreign suppliers. Sectoral coverage is comprehensive and Russia will allow foreign telecommunications companies to operate as 100 percent foreign owned enterprises. Russia also accepted the pro-competitive WTO Basic Telecommunications Reference Paper establishing an independent regulator, obligations to prevent anti-competitive behavior by the dominant supplier, transparency obligations and interconnection requirements.

Audio-Visual Services: Russia will open its market to U.S. audio-visual service suppliers in several important sectors, such as motion picture distribution and projection services, as well as the sale of television and radio programs to television and radio stations. Russia will allow foreign audio-visual companies to operate as 100 percent foreign-owned enterprises.

Energy Services: Russia has made commitments in energy and energy-related services that will provide some market access to U.S. energy service companies.

Express Delivery Services: Russia will allow foreign express delivery companies to operate as 100 percent foreign-owned enterprises upon accession. Russia’s membership in the WTO will ensure the unrestricted delivery of documents, parcels, packages, and other items through all relevant modes of supply, and guarantee that foreign express delivery operators will receive treatment no less favorable than that accorded to domestic express delivery operators.

Distribution: Russia will liberalize the wholesale, retail and franchise sectors, allowing foreign distributors to operate as 100-percent foreign-owned enterprises upon its accession to the WTO. U.S. distributors will be allowed to engage in the distribution of most products, including pharmaceuticals, with minimal limitations and on terms comparable to those of domestic distributors. In addition, Russia’s commitments for distribution provide for direct sales by individual commission agents.

Business Services: Russia’s commitments for business services will ensure market access and national treatment for a wide variety of professions, including lawyers, accountants, architects, engineers, health care professionals, advertising and marketing professionals and management consultants. U.S. service suppliers in these sectors will be allowed to operate as 100 percent foreign-owned enterprises and in most cases will enjoy full national treatment. In addition, Russia’s commitments for computer and related services will ensure a high level of market access, including 100 percent foreign equity investment in this rapidly growing sector, in which U.S. companies are globally competitive.

Environmental Services: Russia will liberalize its environmental services market, allowing U.S. environmental services companies to supply a range of services from sewage services for industrial waste to noise abatement services, in all relevant modes of supply. Foreign service suppliers will be allowed to operate as 100 percent foreign-owned enterprises and will enjoy full national treatment.

  5. Agricultural Goods Market Access     back to top

Russia imported nearly $1 billion of U.S. agricultural products in 2005, an increase of over 20 percent from 2004 levels. As part of its WTO accession, Russia will bind its tariffs on all agricultural products, thereby providing more predictability on its tariff rates once Russia joins the WTO. Tariffs, after accession, cannot be increased except under WTO rules. U.S. 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, wine, poultry, pork and beef, among others, will benefit from the market access provisions of the bilateral agreement, once Russia joins the WTO.

Meat Agreement Products (Poultry, Pork and Beef): Poultry was the top U.S. export to Russia in 2005 (over $600 million). Russia imported nearly $45 million in fresh and frozen pork in 2005. Prior to the 2003 trade restrictions, Russia was the top market for U.S. exporters of frozen beef livers. The agreement represents major progress in these sectors. Trade between Russian and the United States in poultry, pork and beef, until 2009, is governed by the bilateral Meat Agreement that entered into force in 2005. The Meat Agreement established tariff rate quotas (TRQs) for beef, for poultry and for pork, and a 15 percent tariff for U.S. high quality beef.

  • The bilateral agreement on agricultural tariffs incorporates the in- and over- quota tariff rates, quantities eligible for the in-quota tariff rates and U.S. country specific allocations of the Meat Agreement through 2009 for beef, pork and poultry. Russia also agreed to bind its 15 percent tariff for U.S. high-quality beef.
  • The Meat Agreement calls for bilateral negotiations in 2009 to determine if the TRQs will remain or if Russia will provide tariff-only treatment for these products.
  • The WTO bilateral agreement between Russia and the United States sets out framework, including time tables, for WTO negotiations on the post-2009 provisions for products currently covered by the TRQs in the Meat Agreement. These provisions are intended to avoid disruption of trade, and to provide U.S. exporters of beef, poultry and pork with predictability if Russia chooses to maintain the TRQs or to implement a tariff-only system.
  • If Russia employs TRQs after 2009, the TRQs will be based on the in- and over- quota rates for TRQs in 2009 and the country- specific allocations set out in the Meat Agreement. If Russia moves to tariff-only treatment for any of the three commodities (beef, pork, poultry) post-2009, key U.S. beef, pork and poultry tariff lines:
    • will receive duties below Russia’s current over- quota rates (which will apply to the other tariff lines covered by current TRQs) and
    • are subject to provisions to ensure a level playing field for the tariffs applied to U.S. products relative to other competitors.

Beef offals: Russia’s tariff rates for beef offals employ ad valorem (percentage) rate and a specific rate, e.g. “x percent, but not less than y euros per kilogram”. Russia will reduce its percentage tariff livers and certain other frozen offals falls from 15 to 12.5 percent within 2 years. The “per kilogram” component receives cuts comparable to the changes in the percentage tariffs.

Apples: Russia will lower its specific tariff rate for apples by 70 to 85 percent within 5 years.

Grapes, raisins and pears: Russia will reduce tariffs on grapes, raisins and pears from 10 percent to 5 percent within 4 years.

Cherries: Russia will lower its tariff on fresh cherries from 10 percent to 8 percent within 2 years.

Oranges and grapefruit: The form of Russia’s current applied tariffs for oranges and grapefruit are similar in structure to those for beef offals, with the percentage component set at 5 percent. Russia will bind its current applied tariff rates for oranges and grapefruit upon accession, and to lower the specific components within one year.

Almonds, walnuts, pistachios and macadamia nuts: Russia will bind it current applied rate of 5 percent on almonds, walnuts and pistachio nuts upon accession.

Wheat and barley: Russia will bind its current applied rate of 5 percent for durum wheat, common wheat and barley upon accession.

Corn: Russia will bind its tariff for corn (grain) at zero upon accession.

Dairy:

  • Whey--Russia agreed to establish a TRQ of 15,000 metric tons, with a 10 percent in-quota duty, for special types of whey that U.S. suppliers have developed. The over-quota rate is 15 percent. In addition, Russia will reduce the duty from 15 to 10 percent after 3 years on two other whey tariff lines where the U.S. supplied nearly $1.4 million in 2005.
  • Cheeses--Russia’s tariff bindings on cheese are generally 15 percent. In a few cases, these rates are achieved after 3-4 years. Also, Russia agreed that if the product description for a cheese tariff line contain a term like “Edam” such product descriptions are not intended to indicate the origin of the goods or be used as a basis for assigning tariffs.

Soybeans. soybean meal and soybean oil: Russia will bind its tariff on soybeans at zero and cut its tariff on soybean meal from 5 percent to zero within 2 years. The form of Russia’s tariff on soybean oil is similar in structure to beef offals, with the applied percentage component set at 15 percent. Russia agreed to bind its current applied tariffs for soybean oil, and to lower the specific components within one year.

Pet food: The form of Russia’s tariff on soybean oil is similar in structure to beef offals, with the applied percentage component set at 20 percent. Russia will reduce the percentage tariff on pet food from 20 to 10 percent within 5 years. The “per kilogram” component receives cuts comparable to the changes in the percentage tariffs.

Breakfast Cereals: Russia will reduce tariffs on breakfast cereals (e.g., corn flakes) from 15 to 10 percent within 4 years.

Frozen Fries and Potato Chips: The form of Russia’s tariffs on frozen fries and potato chips are similar in structure to beef offals, with the applied percentage component set at 15 percent. Russia will reduce the percentage tariffs on frozen fries and potato chips from 15 to 12 percent within 3 years. The “per kilogram” component receives cuts comparable to the changes in the percentage tariffs.

Soups: Russia will reduce tariffs on soups from 15 percent to 13 percent within 3 years.

Snack Foods: The form of Russia’s tariffs on corn chips and similar snack foods are similar in structure to beef offals, with the applied percentage component set at 15 percent. Russia will reduce the percentage tariffs on these snack foods from 15 to 10 percent within 3 years. The “per kilogram” component receives cuts comparable to the changes in the percentage tariffs.

Wine: Russia will reduce its tariffs on wine from 20 percent to 15 percent within 6 years, and more rapidly in some cases. As part of the accession, Russia agreed not to restrict the importation, marketing or sale of wine originating in the United States on the basis of either the wine-making practices and procedures used to produce the wine, or the wine specifications. Tariff bindings for wine in the Russian schedule are specified at the 6-digit tariff level and no special tariff line break-outs for geographical indications will be provided at that or any other level.

  6. Non-Tariff Measures Affecting U.S. Agricultural Trade     back to top

Russia agreed to address non-tariff measures that currently impede U.S. agricultural exports of beef, pork, poultry, and products of modern biotechnology. The commitments below take effect immediately (upon signature of the WTO bilateral market access agreement).

Certification of Pork and Poultry Facilities for Export to Russia: Prior to the bilateral agreement, Russia and U.S. officials jointly inspected all pork or poultry facilities that wanted to export product to Russia. This process prevented exports from new plants, or plants needing to remedy a deficiency found during the joint audit, until the next joint inspection occurred. U.S. exporters also noted concerns about the time it took Russian officials to formally approve facilities after the inspection and to provide an updated list of approved facilities to its customs officials so trade could begin.

The bilateral agreement establishes a new procedure for inspection of these facilities whereby Russia:

  • Authorizes the U.S. Department of Agriculture’s-Food Safety and Inspection Service (FSIS) to certify new facilities and/ or facilities needing to remedy a deficiency found in the annual joint audit by Russian and USDA officials. If a facility fails a joint inspection, it will be de-listed until it is re-certified by FSIS.
  • Agrees to specific time frames to respond in a timely and predictable fashion and list the facilities approved by FSIS; and
  • Implements a new process whereby the annual joint audits will review:
    • up to 50 percent of the newly certified facilities FSIS since the last joint inspection;
    • up to 100 percent of the facilities that at the most recent (previous) joint inspection were found deficient but in the interim were approved by FSIS; and
    • 10 – 15 percent of the other facilities currently eligible to export pork and poultry to Russia, including pork plants that previously could only export frozen pork for further process but now can export pork for retail sale.

BSE (Trade in Beef and Beef By-Products): Exports of U.S. beef and beef by-products to Russia have been restricted since the 2003 case of bovine spongiform encephalopathy (BSE) was discovered in the United States. Russia immediately banned all U.S. exports of beef and beef by-products (e.g. offals), thereby closing the largest export market for U.S frozen beef livers.

Under the bilateral agreement, Russia agreed on a two-step process to open its market to de-boned beef, bone-in beef and beef by-products.

  • First, Russia will immediately open its market to de-boned beef, bone-in beef and beef byproducts from cattle under 30 months of age. The United States and Russia agreed on an export certificate to be used by U.S. suppliers. Russian and U.S. veterinarians agreed to jointly inspect all slaughter facilities desiring to export beef to Russia in an expeditious and timely manner so that trade resumes quickly. After the initial joint inspection of a beef slaughter facility, the inspection and certification process for pork and poultry will apply.
  • The second step occurs once the General Assembly of the World Organization for Animal Health (OIE) takes a decision on the U.S. risk-status with regard to BSE. At that time, Russia and the United States will immediately re-negotiate the export certificate consistent with the language in the bilateral agreement. This means that an OIE designation of the United States as a controlledrisk or negligible risk country would open Russia’s market to U.S. beef of all ages (excluding the specified risk materials that the OIE requires to be removed).
  • Russia and the United States also agreed that the presence of commercially accepted levels of bone fragments, other than from the skull and vertebral column, will not be the basis for rejecting imports of beef and beef by-products.

Trichinae (Trade in Frozen Pork): Prior to the bilateral agreement, Russia only accepted freezing as mitigation for trichinae if U.S. frozen pork was used for further processing. Costly testing for trichinae was required of all U.S. frozen pork destined for retail sale.

  • Under the bilateral agreement, Russia agreed to accept freezing as mitigation for trichinae for U.S. frozen pork for further processing and for retail sale. The United States and Russia also agreed on an export certificate to be used for trade in frozen pork.

Biotechnology: U.S. suppliers of products of modern biotechnology have faced an unpredictable regulatory environment in Russia. For example, product registrations and approvals in the area of feeds halted in 2004 initiated legislative reforms and began work on the development of a new permanent regulatory system for all products of modern biotechnology. Russia has very recently taken steps to put in place an interim regulatory system until a permanent system can be finalized.

  • Russia agreed to maintain an interim approval and registration system for products of modern biotechnology that is science-based, transparent, predictable and consistent with the WTO Agreement. In addition Russia will establish a permanent biosafety regulatory system for products of modern biotechnology that is science based, transparent, predictable and consistent with the WTO Agreement. The United States will have an opportunity to comment on the interim and permanent approval and registration systems for these products, and Russian officials will take U.S. comments into account.
  • Russia agreed to register products covered by all pending applications that have received a favorable science-based risk assessment by November 15, 2006. Russia and the United States agreed to hold annual consultations on the status of applications for re-registration of products whose registrations have expired during that year and to establish an ongoing bilateral consultative mechanism to discuss issues of regulatory development in the area of agricultural biotechnology.
  • Russia will ensure that implementation of its law on labeling for products of modern biotechnology will be transparent, predictable and consistent with WTO provisions. The United States will have an opportunity to comment on Russia’s labeling regime, and U.S. comments will be taken into account by Russian officials.

Avian Influenza: In February 2006, Russia agreed to amend the U.S.-Russia Coordinated Response on Avian Influenza to make it consistent with OIE guidelines by accepting the OIE definition of notifiable avian influenza (AI) and the OIE time periods for banning poultry exports if notifiable AI were to be detected in U.S. commercial poultry. As a result, previous bans on U.S. exports of poultry from countries and adjacent countries that report non-notifiable avian influenza (i.e., non-H-5 or H-7 low pathogenic) in commercial poultry were eliminated. The bans on U.S. poultry exports from any state that might detect notifiable AI in commercial poultry were also shortened from 6 to 3 months.

  7.  U.S.-Russia Business Council Cites Accord as "Milestone" in U.S.-Russia Commercial Relations      back to top

Washington, D.C. - The U.S.-Russia Business Council (USRBC), a trade association representing some 300 U.S. and Russian corporations, hailed as a milestone in U.S.-Russia commercial relations the conclusion today of an agreement in principle on Russia’s bilateral commitments for WTO accession.

"We strongly support Russia’s integration into the global trading system on commercially meaningful terms, and we applaud this important step by Russia to take on the legal commitments that will ensure greater market access and transparency," said USRBC President Eugene K. Lawson. "We look forward to reviewing the details of the agreement."

The emphasis in negotiations will now shift to Working Party discussions in Geneva, where multilateral-based commitments, including Russia’s compliance with the intellectual property provisions of the Agreement on TRIPs, must be resolved. "We will continue to support the multilateral process of Russia’s accession toward successful conclusion so that Russia’s entry into the WTO is realized in the coming months," said Lawson.

Brian Cox, USRBC’s Executive Vice President noted, "Our members are very upbeat about the growth of the Russian market across a broad range of sectors, and Russia’s WTO membership will enhance their ability to take advantage of the opportunities there." Russia has averaged nearly 7 percent growth over the past 7 years and per capita income has risen sharply. More and more U.S. businesses are taking notice of Russia’s dynamism and are reorienting their global business strategies accordingly.

USRBC serves as the Secretariat for the newly-formed Coalition for U.S.-Russia Trade, a fast-growing grouping of trade associations and companies strongly supportive of Russia’s entry into the WTO. The Coalition will be the driving force for the business community’s effort to educate Members of the U.S. Congress and their staff on the thriving bilateral U.S.-Russia economic relationship and the opportunities for U.S. business opened up by Russia’s WTO entry. At the appropriate time, the Coalition will urge Congress to provide Permanent Normal Trade Relations (PNTR) to Russia which is necessary for U.S. companies, farmers and workers to enjoy the benefits of Russia WTO agreement and compete on a level playing field with other foreign competitors.

"Not enough people are aware of all the positives in the U.S.-Russia commercial relationship, and of the potential damage to U.S. interests if the U.S. Congress does not extend PNTR to Russia," said Cox. "Congress does not have a vote on Russia’s WTO accession. However, if it does not grant PNTR for Russia, U.S. business and agriculture will not be able to take advantage of any of the concessions that we have just finished negotiating under the bilateral agreement. We will be working hard in the coming months to ensure that U.S. firms realize the benefits of the accession terms and do not cede market share to competitors when Russia’s WTO accession occurs."

For additional information, please contact Randi Levinas, Director of Policy and Programs, at (202) 739-9196; or Svetlana Minjack, Director of Communications and External Affairs, at (202) 739-9182.

  8. Coalition for U.S.-Russia Trade Hails Agreement between the U.S. and Russia      back to top

Washington, D.C. - The Coalition for U.S.-Russia Trade, an organization of U.S. companies and trade associations committed to Russia’s entry in the World Trade Organization (WTO), commended both the U.S. and Russian governments for reaching an agreement in principle on Russia’s bilateral commitments for WTO accession. Based on publicly available information, this appears to be a strong, commercially meaningful agreement.

“This historic step brings Russia closer to membership in the WTO’s system of global trade rules. We look forward to reviewing the details. There can be no doubt that having Russia in the WTO on strong commercial terms will benefit U.S. manufacturing, services and agricultural industries. This builds on our already strong, mutually beneficial partnership in the dynamic Russian domestic market,” noted Eugene K. Lawson, President of the U.S.-Russia Business Council, which serves as Secretariat to the Coalition.

“The U.S. and Russia have worked very hard to reach an agreement that brings Russia into the WTO as a member in good standing. We are very pleased that the two governments took the time necessary to work through some difficult market access issues,” said Scott Miller of Procter & Gamble, a Coalition Co-Chair. “This bilateral agreement represents another crucial step forward by Russia towards greater market liberalization, and we look forward to Russia’s WTO membership. Now our focus shifts to the multilateral process in Geneva, where the Working Party on Russia’s accession must address Russia’s multilateral commitments on matters such as customs valuation, the protection of intellectual property rights (compliance with the TRIPs Agreement), agricultural subsidies, and import licensing. In anticipation of a final accession agreement that comprehensively addresses U.S. interests, at the appropriate time we will launch our campaign in the U.S. Congress to graduate Russia from the Jackson-Vanik provisions of U.S. law and provide Russia with Permanent Normal Trade Relations (PNTR). This legislation is necessary to keep U.S. companies and workers on an even competitive playing field with other foreign competitors in this important market.”

Members of the Coalition for U.S.-Russia Trade include U.S.-Russia Business Council, Business Roundtable, Coalition of Service Industries, Emergency Committee for American Trade, National Association of Manufacturers, National Foreign Trade Council, American Chamber of Commerce in Russia and U.S. Chamber of Commerce. Corporations on the Coalition’s Steering Committee include American International Group, Inc.; The Boeing Company; Cargill, Inc.; Caterpillar, Inc.; Chevron Corporation; The Dow Chemical Company; Eli Lilly and Company; Ford Motor Company; General Electric; Intel Corporation, and Procter & Gamble.

The Coalition for U.S.-Russia Trade is a broad-based group of U.S. companies and trade associations across every major sector of the U.S. economy. It supports stronger U.S.-Russian economic ties and, specifically, Russia’s integration into the rules-based system of the WTO on strong, commercially meaningful terms.

  9. AmCham Russia President's Statement on U.S.-Russia Bilateral Agreement on WTO     back to top

The announcement by USTR and the Ministry of Economic Development and Trade that an agreement in principle has been reached between the U.S. and the Russian Federation on Russia's accession to the WTO is a major positive milestone in the relations between our two countries.  The anticipated signing of this agreement in Hanoi next week will be a legacy of the two presidents and a testament to their leadership in bringing our two countries closer together through economic engagement.  This accord reflects a strong commercial agreement that will be of benefit to both our countries and should contribute to expansion of bi-lateral commerce and trade. 

After the anticipated signing of the bi-lateral agreement, the next stage will be the multilateral negotiations among WTO member countries to finalize Russia's accession.  We understand this final stage will take 3-4 months, at the end of which Russia will formally accede to the WTO.

The American Chamber of Commerce in Russia has been and remains a strong supporter of Russia’s accession into the WTO, and will direct its efforts at the appropriate time to advocate repeal of the anachronistic Jackson-Vanik amendment and thereby grant Russia Permanent Normal Trade Relations status required of the U.S. government by WTO rules.

Andrew B. Somers President
American Chamber of Commerce in Russia

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