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Russia’s FinMin says WTO entry talks near end

Russia is nearing the end of its bid to join the World Trade Organization (WTO) but still faces “difficult” talks with the European Union on timber export duties, Finance Minister Alexei Kudrin said on Tuesday.

“The WTO accession talks are nearing conclusion. There is intense work going on. Officials from the United States and the European Union are constructively working with us,” Kudrin said in a speech. “We are holding difficult but constructive talks on timber duties (with the European Union),” Kudrin, who heads the government’s World Trade Organization commission, told reporters later. Russia is the largest economy outside the WTO. Kudrin said he would travel next week to Saudi Arabia and the United Arab Emirates, two of the three countries, with which Russia has yet to conclude bilateral deals. Ex-Soviet neighbor Georgia is the third. “Almost every week we undo a knot. The number of unsolved issues is diminishing,” Kudrin said. He declined to predict a date for Russia’s accession, but said: “We have a feeling, that there is positive movement.” Kudrin said WTO accession would be the next major milestone in Russia’s economic development after the 2006 liberalization of capital movement. Kudrin, Russia’s economic policy tsar and said to be the leading authority on economic issues for outgoing President Vladimir Putin, met European Trade Commissioner Peter Mandelson in Brussels last week.


His schedule indicated he wanted to achieve a breakthrough in the talks before an expected government reshuffle in May after the inauguration of President Dmitry Medvedev. Brussels has yet to give final clearance for Russia’s WTO bid, mainly because of the dispute over Russian export duties on timber, that hurts paper and pulp producers in Nordic EU states. President Vladimir Putin imposed export duties on raw timber in 2007 to promote the development of Russia’s wood-processing industry, adding to the costs of Swedish and Finnish paper firms, such as Stora Enso, the world’s biggest paper producer, UPM-Kymmene and M-Real. The duties are due to rise to 25% from 20% on April 1, one of a series of planned increases.

Credit ratings agency Standard & Poor’s said a planned increase in the duty to 80% from January 2009 would be “potentially devastating” and raised the risk of downgrades for companies in the Nordic forest products sector. The Bank of Finland has said the higher duties could lead to job cuts and lower national economic output. About 20% of raw wood used by Finnish paper mills comes from Russia. Russian WTO negotiator Maxim Medvedkov, who said last year Russia had a solution to the timber export duties row, said the issue was still being discussed with the EU, along with six or seven other duties. “Our disagreements are diminishing but we have not so far reached common ground. We need a little bit more time,” Medvedkov told Reuters. Russian officials declined to reveal the proposals. (Reuters)