RUSSIA'S WORKING LEVEL WTO NEGOTIATORS IN DENIAL

C O N F I D E N T I A L MOSCOW 002530 SIPDIS STATE PLS PASS USTR (BHAFNER) E.O. 12958: DECL: 08/24/2018 TAGS: ETRD EINV ECON RS SUBJECT: RUSSIA'S WORKING LEVEL WTO NEGOTIATORS IN DENIAL REF: A. MOSCOW 2434 ¶B. MOSCOW 2410 ¶C. MOSCOW 2316 Classified By: Economic Minister-Counselor Eric T. Schultz, Reasons 1.4 (b,d). ¶1. (C) SUMMARY: Deputy Trade Negotiations Director Andrey Kushnirenko of the Ministry of Economic Development (MED) told us August 21 that Russia still believes it could accede to the WTO by the end of 2008. In his view, there are few issues that remain to be resolved with WTO members. He said FM Lavrov's recent comments about WTO accession (Ref A) were made in reaction to comments from Commerce Secretary Gutierrez questioning Russia's accession. Kushnirenko acknowledged that the conflict with Georgia was an added complication, but claimed (implausibly) that Russia might invoke Article XIII of the Marrakesh Agreement establishing the WTO to circumvent Georgian objections. END SUMMARY. -------------- WTO: Only a Few Issues Left -------------- ¶2. (C) In a meeting with ECON officers August 21, MED Trade Negotiations Deputy Director Andrey Kushnirenko told us that MED believes it will still be possible for the GOR to complete accession negotiations by the end of 2008. Ukraine had not asked for bilateral market access negotiations with Russia and there were few outstanding issues that remained to be resolved with other WTO members. On the question of state-owned enterprises, he noted that the Russian interagency was still reviewing the U.S. draft language for that section of the Working Party Report. Kushnirenko claimed that Russia was still waiting for a response from USTR for the tariff rate quota section of Russia's consolidated tariff schedules. ¶3. (C) On other outstanding issues, Russia and the EU still needed to agree on export subsidies and on a timber tariff level, but Kushnirenko felt the two sides could reach compromises. Saudi Arabia had demanded Russia agree to a market pricing structure for domestic sales of gasoline and liquefied natural gas, but Russia had not yet agreed to make such a commitment. On agriculture, Kushnirenko felt that recent discussions between Agriculture Minister Gordeyev and the Cairns Group had been "constructive." In his view, the two sides were within sight of reaching agreement on the level of domestic agricultural support and a gradual phase-out period after which most agriculture subsidies would end. (NOTE: Kushnirenko's rosy assessment of the negotiations with the Cairns Group is not consistent with what we have heard from Australian and New Zealand diplomats in Moscow and Geneva, who say the two sides are still far apart on an acceptable subsidy level.) ¶4. (C) Kushnirenko felt that all of these differences could be resolved relatively quickly. He expected that the WTO Secretariat would keep to the current schedule and that another multilateral round of informal discussions of the Working Party Report would take place in Geneva in late September or early October. -------------- What About Georgia? -------------- ¶5. (C) On Russia's WTO negotiations with Georgia, Kushnirenko noted that Georgia's main objections centered on Russian customs checkpoints with Abkhazia and South Ossetia. Before Georgia had suspended further WTO talks following Russia's April 16 declaration of closer ties to the two regions, there had been some areas on which the two sides had been close to a resolution, and some areas where they were still far apart. However, he said Russia had not agreed to make any commitments to Georgia. ¶6. (C) Kushnirenko observed that if Russia was unable to resolve its WTO differences with Georgia, Russia would consider invoking Article XIII of the Marrakesh Agreement Establishing the WTO. He did not explain how Russia believed that this Article could be used to overcome Georgia's opposition to Russia's WTO accession. -------------- Russian WTO Opponents Gaining Strength -------------- ¶7. (C) FM Lavrov's recent frustration with the slow pace of accession and with "Western countries" wanting to link accession to the Georgia conflict (Ref A) stemmed from the Russian media's characterization of statements from Commerce Secretary Gutierrez that Russia still "had a lot to do" to achieve WTO entry, according to Kushnirenko. He noted that the heightened rhetoric about accession would strengthen Russian WTO opponents. That would make it more difficult for MED to win GOR and Duma approval of legislative reforms that Russia needed to pass as part of its commitments to WTO members in advance of accession. -------------- COMMENT -------------- ¶8. (C) Kushnirenko's comments on Georgia and Article XIII are nonsensical. Russia cannot use that section of the Marrakesh Agreement to break the WTO deadlock with Georgia. Regardless of the GOR's negotiators' desires, it is increasingly difficult to see how Russia could overcome the many obstacles it faces to accession this year in the current climate, or that it even wants to (reftels). BEYRLE