WASHINGTON — The decision by the U.S. and Russia to formally sign a bilateral trade deal is a major step in Moscow’s bid to join the World Trade Organization and open its markets to more foreign investment.
The agreement, inked Sunday during an economic summit in Hanoi, capped 13 years of often contentious negotiations. But several hurdles remain for Russia because of concerns about intellectual property rights violations.
To complete its WTO bid, Russia must sign bilateral market access accords with Costa Rica, Georgia and Moldova, then complete multilateral negotiations within the WTO. Congress will also need to grant permanent normal trade relations status to Russia for U.S. companies to gain the full benefits of the country’s membership in the WTO.
“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 essential to Russia’s own growth and development,” U.S. Trade Representative Susan Schwab, who signed the pact with Russia’s Minister of Trade & Economic Development, German Graf, said in a statement.
Russia is a small supplier of apparel and textiles to the U.S., with imports valued at $92.6 million in 2005, but it represents opportunities for retailers seeking to open stores and distribute goods.
Russia will open its markets to the wholesale, retail and franchise sectors, allowing foreign distributors to operate as 100 percent foreign-owned enterprises upon its entry into the WTO, according to the USTR’s office. The bilateral accord will allow U.S. firms to distribute most products with “minimal limitations” and provides for direct sales by individual commission agents.
Schwab said the WTO market access agreement “puts in place a strong and enforceable bilateral blueprint for protection and enforcement of intellectual property rights,” but the jury is still out on whether Congress will ultimately grant permanent normal trade relations status to Russia. Several Democrats, poised to take control of the House and Senate next year, have voiced concerns over Russia’s intellectual property violations.
Rep. Sander Levin, who will likely chair the House Ways & Means subcommittee on trade when Democrats gain control, said in a statement: “While this marks an important first step….a range of very serious issues remain that need to be considered in regard to Russia’s accession to the WTO, including the need for an effective safeguard mechanism, strong protections for intellectual property rights and strong and effective antidumping rules.”
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Under the terms of the agreement, Russia will take action, “immediately to address piracy and counterfeiting, and further improve its laws on IPR protection and enforcement,” the USTR office said. The pact also “sets the stage for further progress on IPR issues in the ongoing multilateral negotiations.”