AMBASSADOR'S MEETING WITH TRADE MINISTER

C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 005847 SIPDIS SIPDIS SECSTATE PASS AGRICULTURE ELECTRONICALLY STATE PLEASE PASS TO USTR - RHODE/KLEIN/FIELD EUR/RUS NSC WARLICK E.O. 12958: DECL: 12/17/2017 TAGS: ECON ETRD EINV RS SUBJECT: AMBASSADOR'S MEETING WITH TRADE MINISTER NABIULLINA Classified By: Ambassador William J. Burns for reasons 1.4 b and d. ¶1. (C) Summary. In a December 17th meeting with the Ambassador, Trade Minister Nabiullina acknowledged the GOR faced time pressures to conclude multilateral WTO discussions but was optimistic that a deal could be reached by mid-February. While issues such as state-owned enterprises and agricultural subsidies continued to be problematic, she argued that the differences were technical, not substantive, in nature. Complicating matters, however, were the still unconcluded bilateral deals with Georgia and Saudi Arabia, and the UAE's recently opened talks with Russia. On IPR, Nabiullina underscored that Russians understood adequate IPR protection was in their own self-interest, and pledged to boost enforcement efforts. She expressed interest in negotiating a bilateral investment treaty with the U.S., but emphasized that conclusion of WTO talks was the priority. Nabiullina said she hoped to travel to the U.S. in the first quarter of the year. End Summary. The Political Calendar -------------- ¶2. (C) Underscoring that WTO membership was the top economic priority of the Putin Administration, Nabiullina expressed some disappointment that a deal had not been concluded by now. "The GOR has been negotiating for a long time, but we are committed to seeing this through," she said, and added it was imperative to reach an agreement before Putin left the presidency. ¶3. (SBU) However, she noted that complicating this time frame were the still unconcluded negotiations with Georgia and Saudi Arabia. Regarding the latter, she stated that the November 22-24 visit of Sultan bin Abdulaziz did not provide any stimulus to their negotiations. An additional complication was UAE's recent decision to open bilateral discussions with Russia. The Issues -------------- ¶4. (C) From Russia's point of view, the remaining issues were just technical, and could be hammered out in the next two months. That said, on state-owned enterprises (SOEs),Russia had significant difficulty with the direction of the discussion and the proposed language by the United States, she stated. The GOR could not certify that SOEs that provide vital services - such as state-owned hospitals and schools - operate solely on a commercial basis since they provided necessary and mandated social benefits and services. As such, Russia could not accept the U.S. proposed language on SOEs. According to Nabiullina and her staff, they were waiting for the U.S. response to alternative language proposed by the GOR. 5.(C) On TBT and SPS, Nabiullina stated that she believed that the chapters could be completed by the end of January. She noted that the issue of agricultural support levels were more problematic, but did not state how the MEDT intended to try to get the Ministry of Agriculture on board. The Ambassador noted that the sudden imposition of rules that would shut off frozen poultry imports and reduce the number of customs declaration points for imported meat could complicate endgame negotiations. ¶6. (SBU) On IPR, Russia, she stated, understood acutely that it was in its self-interest to adopt adequate IPR measures. This change in attitude was one of the most significant developments in recent years. In response to her query about U.S. IPR concerns, the Ambassador underscored the importance of demonstrable enforcement activity and quick passage of amendments to Part IV of the Civil Code. Bilateral Investment Treaty -------------- ¶7. (SBU) Acknowledging that the United States was the only major economic power with which Russia did not have a bilateral investment treaty (BIT),Nabiullina agreed with the Ambassador that such a treaty would be useful in practical and symbolic terms. However, she underscored that completion of the WTO was the top priority. ¶8. (SBU) Nabiullina stated that she hoped to travel to MOSCOW 00005847 002 OF 002 Washington sometime in the first quarter of the year, perhaps in February, and would be interested in meeting with members of Congress. The timing of her trip would depend on the status of WTO negotiations, as well as domestic concerns about economic conditions. Regarding the latter, she noted that the GOR was increasingly concerned about the rising inflation rate, expected to be close to 12 percent for this year, and its effect on GDP growth. BURNS