* Admission ends 18-year talks for largest economy outside
* Deal to boost trade and investment and cut geopolitical
* U.S. Congress needs to repeal measure to free up Russia
By Tom Miles and Douglas Busvine
GENEVA/MOSCOW, Dec 16 Russia won admission
to the World Trade Organisation on Friday after 18 years of
negotiations, finally gaining full integration into the global
economy two decades after the Soviet Union collapsed.
Russia's $1.9 trillion economy was the largest outside the
WTO, and accession will help reduce the dependence on energy
exports that left it badly exposed to the oil price collapse of
Accession by Russia, with the second-largest nuclear arsenal
after that of the United States, into a rules-based club should
limit the danger of any repeat of regional conflicts like its
2008 war with Georgia.
Trade conflicts have repeatedly exacerbated tensions between
Moscow and the South Caucasus state and the WTO could offer a
forum to address disputes before they escalate.
"This result of long and complex talks is good both for
Russia and for our future partners," President Dmitry Medvedev
said in a message to a WTO ministerial meeting in Geneva that
formally approved Russia's membership.
Russia now has six months to ratify its membership and could
become the WTO's 154th member 30 days later. Deputy Prime
Minister Igor Shuvalov, who led entry talks, said it expected to
do so after a presidential election next March.
"The latest will be May," he told reporters on the sidelines
of the WTO's ministerial conference in Geneva, shortly after the
WTO approved Russian accession. "We need some time and we would
like that process to be supported by the people."
Even by the standards of trade talks, Russia's negotiations
have been tortuous, suffering a series of reverses during the
12-year rule of Vladimir Putin, now prime minister and planning
a return to the presidency, which he held from 2000-08.
Negotiations were close to a result in 2009 when Putin,
frustrated at additional demands from existing members, launched
a regional trade bloc with ex-Soviet republics Kazakhstan and
Belarus that torpedoed the accession process.
Talks resumed in earnest only in late 2010 and achieved a
critical breakthrough in October when Russia finalised terms
with the United States and the European Union.
Agreement on a Swiss-brokered border monitoring deal for two
Georgian regions that broke away after a brief Russian-Georgian
war in August 2008 cleared the final stumbling block to a deal.
"I just happen to know a few things about marathons -- the
last mile is the worst, the toughest," WTO head Pascal Lamy said
at a two-hour ceremony. "The best moment in a marathon is where
you cross the finishing line."
China's entry into the WTO a decade ago unleashed a decade
of export-led growth but, with the global economic outlook
darkening, Russia is unlikely to enjoy the same sort of uplift,
Oil, gas and metals account for four-fifths of Russia's
exports and, while bulging trade and current account surpluses
have helped Moscow pay down debts and accumulate the world's
third-largest foreign reserves, they have also buoyed the rouble
and made it hard for new industries to compete on world markets.
Growth could nonetheless benefit by 3.7 percent over the
medium term and by 11 percent in the long run, according to a
study for the World Bank by economist James Tarr, with consumers
and service industries likely to be the biggest winners.
The real gains will come in the form of a more secure
environment for foreign investors, who have long complained of
corruption, insecure property rights and weak rule of law, while
fast-growing Russian firms could expand more easily abroad.
WTO accession can also provide an anchor for economic
reforms, opposed by entrenched domestic business interests, that
are needed to wean the economy off its dependence on natural
resources and promote investment-led growth.
Putin, with an eye to the concerns of powerful industrial
oligarchs, has avoided publicly promoting the benefits of
membership and, although ratification is assured, he still faces
objections from a newly-invigorated opposition at home.
He has a tough path to the presidential election next March
after the majority of his ruling United Russia party was slashed
in a Dec. 4 parliamentary election, and the opposition protested
against alleged fraud in the vote.
"We have warned for the past five years of the risks of such
an unacceptable step as joining the World Trade Organization,"
said Vladimir Kashin, deputy leader of the opposition Communist
party, which doubled its share of the vote to 20 percent.
The Communists argue that lowering trade barriers will hurt
Russia's agricultural sector and make it tough for manufacturers
to compete -- a claim rejected by Russian officials in Geneva.
Shuvalov said consumers would win thanks to "more serious
competition, better quality goods and lower prices".
The deal buys time for Russia's fast growing auto sector,
giving manufacturers seven years to prepare for a reduction of
import tariffs in a country that is poised to become Europe's
largest car market.
Industries such as steel would benefit from recourse to WTO
anti-dumping procedures. Economy Minister Elvira Nabiullina
estimated that Russian industry could benefit by $2 billion a
year from an end to discrimination against Russian exports.
Russia's accession represents a success for the diplomatic
'reset' with Moscow launched by U.S. President Barack Obama but,
for American business to benefit, Congress will need to repeal a
key measure dating back to the Cold War.
"Russia's accession is good for the United States, good for
Russia, and good for the WTO," U.S. Trade Representative Ron
Kirk said in Geneva.
The Jackson-Vanik amendment, a 1974 provision linking trade
to emigration rights for Soviet Jews, would have to be revoked
for Washington to be able to apply so-called "permanent normal
trade relations" to Russia.
Failure to do so would allow Russia to deny the United
States preferential access to its markets in what would amount
to an own-goal for U.S. businesses such as Pepsico or
Alcoa that have already invested billions of dollars in
With Washington and Moscow exchanging reproaches over the
conduct of Russia's parliamentary vote, repealing Jackson-Vanik
will be a challenge as Republicans, who control the House, gird
for next year's U.S. presidential election.
"Russia's membership in the WTO marks an important milestone
in its history, but there is hard work yet to be done on the
American side," said Edward Verona, head of the U.S.-Russia
Business Council, a business lobby that backs Russian WTO entry.
"If Jackson-Vanik still applies to Russia once it accedes,
then U.S. companies and farmers will be at a disadvantage to
their global competitors and will not have access to the
preferential trade regime negotiated over the last 18 years."