MOSCOW. (RIA Novosti economic commentator Vasily Zubkov) - German Gref, Russia's Minister of Economic Development and Trade, said that negotiations with the United States on Russia's accession to the World Trade Organization (WTO) would be completed by the end of October.
His assertion, however, raises doubts, not only because such a promise has been made many times before, but because Washington is constantly placing more demands on Russia. The European Union, which in May 2004 negotiated with Russia all the terms and conditions of its accession to the WTO with relative ease, is now watching the United States' arm-twisting of Moscow, which has become unyielding of late.
It might seem paradoxical, but the greater the resistance, the firmer Russian negotiators' stand. Moreover, public surveys show that the clearer and more principled Russia's positions at the negotiations are (for instance, on a higher level of tariff protection against imports), the greater the number of people in this country favoring its entry into the organization. Note that import tariffs on industrial goods will be cut from 10.2% to 6.9%, and they will not be reduced at all in the first year of Russia's membership in the WTO. Import tariffs on agricultural products are to be cut from 21.5% to18.9%, but no cuts will be made for any farm produce that is grown or produced in Russia in quantities sufficient for the saturation of the domestic market.
The meat issue is a sore point with Russians. The present tariff quotas will be in force until 2009. "Tariff quotas" are reduced customs-duty rates for a specified volume of imports of certain types of goods. Why will duty relief on meat last so long? This is an attempt by the government to insure itself against risks.
The national project now under way for developing the agricultural sector is just beginning to pay off. In the near future, the Russian leadership hopes to reduce meat imports as much as possible by increasing domestic production. Thus, by 2015, pork production is to be increased by 1.5 million metric tons, constituting about half of the total projected growth in meat output in Russia. This will increase the annual sufficient minimum per capita consumption of meat of all types to 75 kg (from 51 kg in 2004), including raising pork consumption to 24 kg (from 15 kg in 2004). The authorities hope that the structure of the country's meat market will be optimized: beef will account for about 30% of the market (2.7 million metric tons), poultry for 24% (2.1 million metric tons), and pork for 39% (3.2 million metric tons).
Why has Russia increased the quota for meat supplies from the United States by 5%? I believe this is a sort of compromise in our talks with the Americans. However, even these minor concessions (totaling $15-20 million) led to severe criticism of German Gref in the Russian parliament. Sergei Lisovsky, deputy chairman for agricultural and food policy of the Federation Council (the Russian parliament's upper house), wonders why Russia should purchase meat abroad if Russian producers intend to increase pork production alone by 150,000 metric tons (nearly a third of Russia's total meat imports) next year.
Another question is subsidies to agricultural producers. Subsidies account for 40% of the value of the EU's agriculture. Meanwhile, Russia is called upon to abolish even the modest subsidies of $10.5 billion earmarked for future support of the agro-industrial sector (the present subsidies are one-third of this amount). It is highly unlikely that Russian negotiators will be persuaded to abolish subsidies, because the difference between government support given to farmers in leading WTO countries and in Russia is too great. Food price dumping will destroy the Russian agricultural sector. No doubt, the Russian negotiators' position was supported by millions of people, especially Russian farmers.
During President Vladimir Putin's term in office, Russia has come under sharp criticism in Europe, first on the issue of human rights and Chechnya, and in recent years, on the "nationalism of Russian business" that "oppresses everything that is foreign through reliance on state support." The authorities, they claim, "erect barriers to foreign goods and give preferences to domestic producers." If there is a grain of truth in these claims, one can only congratulate the Russians, who have been ignored for such a long time. President Vladimir Putin, focusing on the economy, has been actively promoting the interests of Russian business during his trips abroad.
The Kremlin's position at talks on Russia's accession to the WTO meets with understanding among local businessmen. Most of the business world reacted neutrally to the tough statement made in September by Russian presidential aide Igor Shuvalov on the prospect of suspending the process of Russia's accession to the WTO if the United States continues its obstructionist policy at the negotiating table. Russian business circles trust the government, which in turn relies on them.
One does not have to be an oracle to foresee that if the Russian position prevails during its entry to the WTO, Western, and especially European, agribusiness will have to change its strategy. Losses are also inevitable. "The authorities in the United States and Europe should get ready for the closure of many companies in their countries," the Russian economics minister said. At present, there are about 130 effective discriminatory measures against Russian producers in the United States and Europe, though Russian goods are quite competitive and sometimes of a higher quality than similar foreign goods.
The conclusion is obvious: WTO accession on our own terms will allow Russian agriculture to fill its niche on the world market. Even now, Russia is proposing that Western agribusiness should change its strategy and start investing in Russian provinces, begin production there, build farms, produce feed, and do selection work. There is enough work and land for everyone in this country.
