Russia close to joining WTO - Russian Deputy PM

CHICAGO Tue Oct 4, 2011 11:13pm IST

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CHICAGO (Reuters) - Russia hopes to complete its entry into the World Trade Organization this year with the help of a concerted U.S. lobbying effort, Russian First Deputy Prime Minister Igor Shuvalov said on Tuesday.

Russia's $1.2 trillion economy is by far the largest still outside the 153-member WTO. Joining the trade body after 18 years of negotiations is expected to boost the country's gross domestic product by as much as 11 percent in the long term.

"We are trying to complete the deal by the end of December and, I am pleased to say, thanks to the leadership in the United States, we are closer to that goal," Shuvalov told a Russia-U.S. business group.

Shuvalov said he held "fruitful" discussions on Monday with U.S. Vice President Joseph Biden and other leaders in Washington about Russia's entry.

He was hopeful the United States would subsequently abolish the Cold War-era Jackson-Vanik amendment that imposes trade restrictions on Russia and other countries based on human rights.

He said U.S. trade negotiators lobbied other WTO members around the clock in Geneva to help Russia achieve its goal.

But before Russia can join the WTO, Georgia and Russia must resolve their differences because Georgia, like any WTO member, has effective veto power over the entry of new members. Georgia and Russia fought a five-day war in 2008 over two breakaway Georgian regions.

A trade ministers' conference in December is widely seen as a deadline for Russia to gain approval.

Shuvalov said there were "a few minor things" that are hurdles to WTO membership, and mentioned a "third party I don't want to discuss publicly," appearing to refer to Georgia.

OUTSIDE COMPETITION

But the attractions of Russia joining the WTO are less evident than they would be for some other countries, at least in the short term, since Russia's energy exports aren't at risk of trade sanctions. Its own economy may suddenly undergo a level of outside competition unseen since the fall of communism.

Overall, Russia's economy badly needed reforms to diversify from its dependence on oil and gas, Shuvalov said.

Commenting on last week's announcement that Prime Minister Vladimir Putin and President Dmitry Medvedev would switch roles, Shuvalov said he expected most Russians to vote for Putin when he runs for a six-year presidential term in March 2012 elections. Putin then would appoint Medvedev prime minister.

"Let me assure you that the majority of Russians support the agenda I just described," Shuvalov said.

But there will be real competition from other political parties, Shuvalov said. "This time it's going to be a real fight between left and right and this time we have to provide a real agenda of reform," he said.

Medvedev demanded long-serving Finance Minister Alexei Kudrin quit after the fiscal conservative said he would not work under Medvedev. Kudrin's abrupt departure alarmed investors, who saw him as a guarantor of financial stability.

Shuvalov and Anton Siluanov were appointed to split Kudrin's duties, with Siluanov named interim finance minister.

Shuvalov sought to allay concerns that Russia's leadership was in danger of stagnation, while simultaneously assuring investors of Russia's economic stability.

"I can insure you that everything will be staying the same," Shuvalov said of Kudrin's departure. "We are very sorry that he left us but everything related to fiscal discipline will be staying the same."

(Editing by Eric Beech)

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