U.S. Agrees to Russia WTO Membership After Accord with Georgia, Obama Says

President Barack Obama said the U.S. is among countries agreeing to allow Russia to join the World Trade Organization after Russia resolved a disagreement with Georgia.

The agreement will probably be approved at a WTO conference in Geneva next month, Obama said in a statement. Russia’s government would then need to approve the accord.

“Russia’s membership in the WTO will lower tariffs, improve international access to Russia’s services markets, hold the Russian government accountable to a system of rules governing trade behavior, and provide the means to enforce those rules,” Obama said.

Obama said he will work with Congress to eliminate the Jackson-Vanik amendment, a 1974 law limiting trade with Russia, “to ensure that American firms and American exporters will enjoy the same benefits of Russian WTO membership as their international competitors.”

Under the terms set today, Russia would gradually cut its average tariff ceiling for manufactured goods to 7.3 percent from 9.5 percent now, and duties on farm products would drop to 10.8 percent from 13.2 percent. On average, the final tariff cap on Russian goods would fall to 7.8 percent from 10 percent now.

Foreign beef, pork and poultry entering Russia’s market would face lower tariffs while higher duties would be applied to products exceeding quotas. The longest period for implementation is eight years for poultry, followed by seven years for cars, helicopters and civil aircraft.

Job Growth

Russia’s membership will generate more U.S. exports, boosting job growth among manufacturers and farmers, Obama said.

“This agreement opens the door to Russia’s entry into the global rules-based trading system on commercially strong terms,” Myron Brilliant, the U.S. Chamber of Commerce’s senior vice president for international affairs, said in a statement.

Georgia agreed to Russia’s entry this month after Russia accepted a compromise on international monitoring at the borders.

The two former Soviet states fought a five-day war in 2008, and ties had soured further after Russia recognized the breakaway Georgian regions of South Ossetia and Abkhazia as independent states.

Lawmakers’ Letter

U.S. lawmakers sent a letter yesterday to U.S. Trade Representative Ron Kirk seeking assurance Russia will respect U.S. intellectual-property rights. The leaders of the judiciary committees of the House and Senate have “significant concerns,” according to the letter signed by senators Patrick Leahy, a Democrat from Vermont, and Chuck Grassley, a Republican from Iowa; as well as representatives Lamar Smith, a Texas Republican, and John Conyers, a Michigan Democrat.

“The government of Russia must demonstrate via transparent, substantive and prompt actions its commitment to adhere fully to the obligations it will assume as a future member of the WTO,” the letter said. “Not only is the credibility of the rules-based system of international trade at stake, but should Russia fail to conform to its obligations in a thorough and timely manner, the adverse consequences for U.S. innovators and their workers will continue to be significant.”

Russian Lawmakers

Russian lawmakers will probably approve membership in early 2012, following next month’s parliamentary elections, Maxim Medvedkov, the country’s chief WTO negotiator, said in Geneva.

“More than one-third of our GDP is made abroad,” Medvedkov said. “We are seventh in the world in terms of exports. We need a stable, predictable instrument to develop this trade.”

Russia exported more than $400 billion in goods last year, mainly to the European Union, Ukraine, Turkey, China and Belarus, according to the WTO. Imports were valued at almost $249 billion. Trade in services such as transportation and travel amounted to $114 billion.

To contact the reporters on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net; William McQuillen in Washington at bmcquillen@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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