Russia: A Million Ways to Hold Up Negotiations

Chief Russian WTO negotiator Maxim Medvedkov


A Million Ways to Hold Up Negotiations
// Maxim Medvedkov tells Kommersant what Russia plans to do once it's in the WTO
The Russian delegation was able to do more than expected at the consultations on Russia's membership in the World Trade Organization in Geneva last week, Ministry of Economic Development and Trade director of trade negotiations maxim Medvedkov tells Kommersant. In an interview with correspondent Alexey Shapovalov, he even talks about how Russia will position itself in the organization once it becomes a full member.
How do you assess the negotiations in Geneva?

Positively. And that's not just our assessment. One doesn't always feel like praising oneself, but that is the assessment of many of our partners and the chairmen of our working groups. The plan was maximally fulfilled, the ten sections of the working report that we presented were practically approved. Georgia reserved the right to discussions on two of them.

Negotiations with Saudi Arabia took an unexpected turn. What demands did they put forward?

We did not get the impression that our Saudi Arabian partners want anything significantly more than the countries with which we have concluded negotiations. We met twice. The discussion has not touched on specifics yet. They promised to give us an enquiry with specific demands. There's not likely to be anything toxic. Information has appeared in the media that Saudi Arabia wants to discuss price formation on fuels and access to the financial services market. That really happened. But it was sort of secondhand. I'm note sure the idea is the Saudi's.

It's hard to exclude the likelihood that the United States could be prompting them.

Any WTO country could be prompting them theoretically. We have no counterarguments to that other than those we laid out for the European Union and U.S. for three years.

If it is a U.S. initiative, couldn't negotiations with Saudi Arabia stretch out another three years?

But why? What sense is there, following your logic, for the U.S. to ask Saudi Arabia to demand the negotiating goals that the U.S. couldn't get?

Since the signing of the bilateral agreement with it, much has changed in relations with the U.S., especially politically…

There probably were changes, but we haven't felt them in the trade negotiations yet. On the contrary, we have a normal relationship with the U.S. delegation. If they wanted to slow down the process, they could do it without the help of the Saudis. There are a million ways to hold up negotiations.

What in your view are the most problematic of the sections of the report left to be agreed on?

I think the most complex section is the one concerning agriculture, that is, the volume of budget support we will be able to apply within the limitations of the so-called yellow box of obligations. We have been in negotiations with the U.S., EU, Australia, Canada – a total of 12-15 countries have been involved in agricultural negotiations. We explain how we will support the agro-business sector in the WTO, but the discussion hasn't gotten to numbers yet. That has to be done in the next two or three months.

They said earlier that the figure of $9 billion in support for Russian agricultural had been agreed on.

It hadn't been agreed on. It was used by Russia as the number that we were prepared to agree to and to defend. A number of interesting questions arise. That number should be seen in the context of the development of the WTO. There are two possible scenarios. The pessimistic one for the WTO is if the Doha round of negotiations fail and, under the current agreement on agriculture, the figure of $9.2 billion, if it is agreed on, will be reduced by 20 percent in the course of several years. Then it turns out that we don't need $9 billion now, but the $7 billion we will receive in four years will be exactly what we need. The other scenario is if the Doha round is successful. Then our figure will be reduced by more than 50 percent. The conditions of the new agreement on agriculture foresee a big reduction for the category of country that the Russian Federation is in. It is too little for us.

That is, it is unrealistic to agree on $9 billion?

The question is how things will develop in Doha. We will fight for $9 billion. There are many other thing that we didn't think we would get that we got. It is a question of negotiating. Against the background of the ideological conflict between supporters and opponents of agriculture liberalization in the WTO, it will take a lot for us to defend the protectionist figure.

How does Russia intend to emerge from the dead end in the question of duties on lumber?

It's a good question, how to get emerge… Because, if we look at it from a legal point of view, we can do anything we want until accession to the WTO. From the point of view of the agreements that were reached with the EU three years ago, we have to seek a joint solution to the problem.

Does Russia have a firm position on the Doha round, and, if so, what is it?

We have a position on individual elements. As an example, we are carefully watching what is happening in the negotiations on services, including energy services. It's interesting for us. It is hard to enter that market. We are following the negotiations carefully and we have some idea of how to move in the direction of liberalization once Russia accedes to the WTO. We are watching negotiations on agriculture, our fate depends a lot on how they turn out. If it's failure, it will be necessary to take certain measures of domestic support, and others if they are successful. But whether we accede to the WTO or not, our agriculture will remain seriously dependent on outside markets. It is already obvious to many that, if the Doha round is successful and the EU and U.S. take on obligations to lower the volume of support for agriculture and import duties, it will be a manifold win for Russia.

In other words, if Russia accedes to the WTO before the completion of the Doha round, it will stay on the side of the developing countries?

I didn't say that. Besides agriculture, there are more than 20 negotiating points, and our positions there may coincide with the developed countries. In agriculture, our position, if we accede before the conclusion of the Doha round, will be based on the access to the market that we provide our partners. We will not demand anything more nor take anything less. We always understood that we cannot compete with the agro-business of the U.S. or EU with the Russian budget.

If a new agency is established to be responsible for working with the WTO and you are offered the top position, will you take it?

I have an oral contract to work for the government service until the date of accession to the WTO. It is very interesting work, but I would like to test myself in another area. I think we will finish the process by the end of the year, and then it will be time to think of the future. From my point of view, the chances of the negotiations finishing in 2007 are greater. In 2008, the issue may temporarily take a backseat.
Alexey Shapovalov