GENEVA, Switzerland, July 16 (UPI) -- The United States this week upped the stakes in World Trade Organization talks, held in Geneva, where members examined Russia's bid to join the World Trade Organization. The United States urged Moscow to come up with better market-opening offers for goods and services, and also asked Moscow to take swift action to stem proliferating intellectual-property rights abuses, senior trade diplomats said.
According to senior diplomatic sources close to the talks, in June President George W. Bush raised the IPR problem with his Russian counterpart, Vladimir Putin, during the G8 summit held in the U.S. state of Georgia. Bush indicated intellectual-property protection was one crucial area where Moscow had to act in order to secure the political support it was seeking to finish the talks.
Russia's intellectual property protection is a "huge problem," a senior U.S. official told United Press International, and described the enforcement regime in place now as "pitiful."
Both U.S. and European officials have come under heavy pressure from their respective industries to take Moscow to task over its lax approach to counterfeiting of films, software, music, distilled spirits and pharmaceuticals, trade diplomats said.
According to industry estimates -- cited in a recent U.S. government report -- losses to U.S. copyright industries in 2003 exceeded $1 billion.
About 80 percent of DVD films and 66 percent of music sold on the Russian market are counterfeit, while pirated software accounted for about 88 percent of software sales, the report said. It also observed that while a government task force was established back in 2002 to combat piracy, few steps have been taken to address the problem.
Russia remains a major source, destination and trans-shipment point for pirated products, it said.
Moreover, both Washington and Brussels have expressed their dismay that Russian authorities currently sell confiscated counterfeiting machinery instead of destroying them, as is the practice in most countries, diplomats said.
The U.S. official, who spoke on condition of non-attribution, also stressed that Russia's proposed reforms in its quest to join the WTO, a 147-member body which oversees most global trade in goods and services, still fall short of the mark in agriculture, industrial goods such as aircraft, and banking and insurance services. Russia has been trying to join the organization for about 10 years.
Maxim Medvedkov, Russia's deputy minister of trade and chief negotiator, in an interview said Moscow has increased the maximum stake foreign investors can have in the country's banking sector from 12 percent to 30 percent, and have also increased the maximum share foreigners can have in the country's life and non-life insurance sector to 25 percent, up from the earlier offer of 15 percent.
Under the Russian regime, foreign investors can own up to 100 percent of an individual bank, but overall foreigners can only own a specified share of the total business in the sector.
The Russian official indicated, however, "We're prepared to move further," but noted the Kremlin is offering no banking and insurance branching rights for foreign investors.
"We're prepared to satisfy the requests of the U.S. to the extent possible," Medvedkov said.
The senior U.S. official questioned the Russian stance, asking "Why should there be any caps," and added that Washington is "absolutely" determined to secure branch rights in both banking and insurance.
Securing the elimination of all duties on trade in civil aircraft is another priority, the U.S. official noted.
Asked about aircraft tariffs, Medvedkov said the answer to demands by trading partners to remove all duties was a flat "No."
Russia still views aircraft manufacturing as a strategic sector that needs to be nurtured, and in the WTO talks has offered to lower import duties on aircraft from the current levels of 20 percent down to 12.5 percent.
International aircraft manufacturers including Seattle-based Boeing, Europe's Airbus, Canada's Bombardier and Brazil's Embrayer are eager to tap the Russian market.
In 2003, U.S. exports of goods to Russia totaled $2.4 billion, according to U.S. estimates.
With regards to tariffs on automobiles, an area of particular interest to the United States, Japan, and other exporters, Russia has offered to have them lowered to 15 percent from the current high of 25 percent.
Overall, in the market access talks Russia has offered to lower its average tariffs down to 7.6 percent for industrial goods, down from the present level of around 10.1 percent, and to lower tariffs on agricultural products down near 14 percent from the current level of 18 percent.
Medvedkov also said that in recent bilateral talks with the United States, Moscow had been "generous" with its market-opening offer on telecommunications, but declined to elaborate.
The Russian official also indicated "we're very close" to the elimination of all tariffs on information technology products -- such as computers, semiconductors, software, and telecom equipment -- but emphasized there would be no removal of all duties for beverages and spirits or for furniture.
In regard to criticisms that vital legislation on a new WTO-compatible customs code was meandering slowly through the Russian Duma, or Parliament, Mr. A. Likhachev, a deputy of the state Duma, and a member of the 37-strong Russian delegation, told UPI that a special session will be held at the end of July or early August to expedite the process. The Duma is currently in recess until September.
Western negotiators remain skeptical, however, given Russia's poor record on this front to date.
Medvedkov said Russia has already completed bilateral-entry talks with 11 WTO members, including the EU in May, is close to finishing talks with another five, and was aiming to finalize talks with all the remaining major trading powers by the end of 2004.
But the assessment of some Western negotiators is that Russia will probably be in a position to complete its talks around the middle of next year, and enter the global agency as a fully-fledged member by 2006.
