Three letters

Will laughed very loudly. He cackled so loudly that he scared the Chinese. “Say it again!” he asked me chokingly. “Just a joke: you are eager to join the WTO, although they are pushing you out of the door!” They say it right: you Russians are very strange. Now you are free, but you stubbornly want to drive yourself into a yoke.” Twenty-year-old Will Murray arrived in Hong Kong for the Sixth Ministerial Conference of the World Trade Organization (WTO) from Australia. In general, he is a student, but the main thing in his life is the fight for justice. “I’m not just some kind of anti-globalist,” Will demanded that I feel the difference.

A thin, tall, curly, bespectacled man stands out like a mile among his short Chinese comrades. Together with them, he carried a red poster with hieroglyphs to the Hong Kong Exhibition Center, where the conference was being held. An hour later, Murray was not laughing, but crying: near the fence of the exhibition center, one of the law enforcement officers sprayed pepper solution in his face. “This spray of theirs is crap, just like the WTO itself,” Murray summed up the conference on its opening day.

Will Murray is right about one thing - we can't deny persistence. In terms of this quality, only the Chinese are ahead of us so far. Russia has been joining the WTO for 12 years. China's record is 15. But China has already been a member of the WTO for 4 years, and we are still waiting at the door. Every year it seems that the goal is getting closer and closer and we are about to finally receive an official invitation to join the 150 member countries of the organization. It is impossible to maintain composure, as the Chinese did, if only because Ukraine, one of our main trading partners and main rival, is moving on a parallel course. There is a danger that if our neighbors join the WTO earlier, they will then torture us with their demands. Both Moscow and Kyiv really hoped to resolve all issues in Hong Kong. But the WTO members were not interested in our circumstances with Ukraine—there is a cold trade war going on in the world.

Of the 58 countries that have put forward their conditions for Russia's accession to the WTO, negotiations have not been completed with only seven - the USA, Canada, Australia (hello Murray), Switzerland, Uruguay, Costa Rica and Colombia. The main victory was achieved in 2003—we signed a bilateral agreement with the European Union, and Russia managed to fight off the Europeans’ demand to equalize domestic Russian energy prices with world prices. After this it seemed that joining was just a stone's throw away. Economic Development Minister German Gref said back in August that Russia’s accession to the WTO would be announced in December, right at the ministerial conference in Hong Kong. Last week, the ministers actually announced the admission of two countries to the organization—Saudi Arabia and Tongo, which became the 149th and 150th members of the not very friendly WTO family.

There were no agreements with some countries because of mere trifles. For example, Costa Rica requires us to eliminate duties on yoghurt. And this despite the fact that not a drop of yogurt from Costa Rica has ever been imported into Russia. Or Switzerland wants to export watches made of precious metals without a mark from the Assay Office. This bureaucratic red tape makes trading watches difficult, the Swiss complain. “The problem is that the ingenuity of our entrepreneurs has no limits,” explains our chief negotiator with the WTO, Maxim Medvedkov. “If we allow the import of watches made of precious metals without the Assay Office, then we will have dials painted on the ingots and brought them under the guise of alarm clocks without payment of excise taxes and high duties."

But one really serious obstacle remains—the lack of permission from Washington. US trade negotiator Robert Portman continues to say the same thing: “a number of issues have not been resolved.” Most of the complaints are related to intellectual property issues. The Americans are indignant: “Not only are you churning out pirated discs at home, you are also flooding the whole of Europe with them.” And besides, the United States, together with Australia, insists that we open the financial market to foreign banks—now they are forced to open Russian subsidiaries, and this is inconvenient. But last week Vladimir Putin once again said that the activities of branches of foreign banks in Russia should be “essentially prohibited.”

On Friday, Gref spoke with Portman for two hours. “We discussed the four remaining issues,” says the upset minister. “The level of support for agriculture, duties on civil aircraft, issues of intellectual property protection and access to the financial services market.” No progress. Gref is now forced to draw up new accession schedules. According to the optimistic forecast, we will get into the WTO next spring, according to the optimal forecast, in the summer, and according to the pessimistic forecast, only in 2007. But by then Ukraine may well overtake us.

Kyiv prepared for the Hong Kong conference very seriously. A Newsweek source, who wished to remain anonymous, says that several times representatives of the Ukrainian government tried to negotiate with the Hong Kong government to hold an “orange holiday” in the city dedicated to Ukraine’s accession to the WTO. Musical numbers, orange scarves—right on the Maidan on the shores of the South China Sea. Nothing happened—no celebration, no introduction. A small delegation arrived, headed by the Minister of Economy, 31-year-old Arseniy Yatsenyuk.

Ukraine began negotiations on joining the WTO 5 years ago, and Yatsenyuk became a minister only at the end of September, after Yulia Tymoshenko left the Cabinet of Ministers, so he is not familiar with the intricacies of the negotiations. “We are waiting for signals,” his deputy Valery Pyatnitsky hoped for a miracle until the last moment, but, it seems, he did not receive it. Europe should have given the signal: President Viktor Yushchenko, at the recent Ukraine-EU summit, agreed that the European Union in Hong Kong would issue a special declaration of support for Ukraine. The signal was never received. On the third day of the conference, the minister made a speech in which he did not even try to hide his offense. On the fifth, two days before the end, the delegation left completely. “Progress has gone in a negative direction,” Yatsenyuk finally explained confusedly.

The resentment is understandable—it would seem that the Ukrainians did everything to get ahead of Russia: they agreed to almost all the demands. “They were ripped off,” says a source in the Russian delegation sympathetically. “If they join on these conditions, it will be very difficult for Ukraine. It’s even more difficult than for the Moldovans and Kyrgyz.” Arseniy Yatsenyuk admits that his predecessors often agreed to unfavorable conditions: “I don’t even know how many ministers there were before me—probably about 10 people. That’s the whole problem.” And, with a sigh, he adds: “And now it’s too late to drink Borzhom.”

Russian negotiators, on the contrary, showed themselves to be very stubborn - they almost did not give up their positions. The same Saudi Arabia, when joining the WTO, created an unpleasant precedent - it agreed to equalize internal and external prices for oil and gas (what the European Union unsuccessfully demanded of us). It’s scary to imagine what will happen if Ukraine persistently demands the same from us—then our proposal to sell gas to it at the “world price” will come back to haunt us.

Both the Ukrainian and Russian delegations officially deny that they are racing to the trade body. Yatsenyuk said with an indifferent look: “I don’t care at all when Russia joins the WTO,” and if Ukraine manages to do it earlier, then “in no case will it put a spoke in Russia’s wheels.” “We are not living in some kind of Middle Ages,” the Ukrainian minister reassured. “We will not be enemies, even if we buy expensive gas from you.” The head of the Russian delegation at the negotiations, Medvedkov, also assured that he would not be upset if Ukraine joins the WTO earlier: “In this case, it will [finally] adhere to the rules of international trade, and this will only make us happy.”

However, this indifference is clearly feigned. In informal conversations, our negotiators admit: it’s scary. Ukraine is too unpredictable a neighbor. If anything, the requirements can be anything—for example, to reset all import tariffs. WTO rules do not prohibit this; negotiations can be delayed indefinitely in this way, and in the meantime, imports, primarily agricultural, will unhindered flow into Russia through Ukrainian territory. “So far we have almost no zero tariffs,” says Maxim Medvedkov. “Well, if only for tropical fruits.” You can, of course, completely quarrel with your neighbor and close the market, but where do we need another war now? However, the American Robert Portman, on whom the timing of the entry of the two countries mainly depends, killed the intrigue of the competition in the bud. He diplomatically “suggested” that Russia and Ukraine would join the WTO at the same time.

The main rule of negotiations is not to rush. The CIS countries, which agreed to almost all the requirements in order to get into the WTO early, are now suffering. Kyrgyzstan was the first to join the WTO back in 1998. “Now we understand that it is not enough to get into the organization,” a member of the Kyrgyz delegation, who asked not to be named, told Newsweek. “We must be able to defend our rights. And small countries like ours do this poorly.”

Thus, Kyrgyz, Moldovans, Armenians and Georgians were united by a common misfortune. These four countries even created a grouping within the WTO called the “Group of Newly Accessed Small Low-Income Transition Economies.” Their problem is that, according to formal criteria, they do not belong to developing countries, which are treated leniently in the WTO and are not forced to open markets to all winds. It turns out that the demand from the post-Soviet four is the same as from the USA or Switzerland.

However, the four recently disintegrated—Georgia left it. The head of the foreign trade relations department of the Georgian Foreign Ministry, Valerian Katamadze, with whom the Newsweek correspondent was flying on the same plane, sang Georgian songs all the way. “We feel good and comfortable at the WTO, so we are in a great mood,” Katamadze smiled.

Georgian Economy Minister Irakli Chogovadze is a year older than his colleague from Ukraine—he is a full 32. According to him, “Georgia is opening itself to the world, it should become a country in which there will be no customs duties at all.” For the transit economy that Tbilisi dreams of, trade restrictions are useless. Until Georgia has become a free economy, it has stated that it does not agree to Russia's accession to the WTO until Moscow does something about the customs posts on the border of Abkhazia and South Ossetia. Tbilisi considers these territories its own and demands that Moscow stop trading with the separatists.

But the rest of the WTO member countries have no time for us at all. Relations within the WTO were spoiled mainly by the agrarian issue. Some developed countries, which with the help of subsidies are saving their agriculture from certain death under the pressure of cheap imported products, have clashed with those who do not provide financial support to farmers. In the first camp are the EU countries, they are supported by the United States. Their opponents are a team of developing countries, as well as Australia, New Zealand and other quite rich countries. The Europeans and Americans are making concessions, but more slowly than others would like, and the negotiations eventually reached a dead end. Perhaps the dialogue will resume next year—there is nothing to talk about yet, explain the apparatchiks in the WTO office.

And yet, even for anti-globalists, the World Trade Club brings tangible benefits. WTO fighters Sarah and William met last week in Hong Kong under a portrait of Che Guevara, liked each other immediately, and they “quite possibly will have a long romance.” “If it weren’t for the WTO, we wouldn’t have met,” William laughs. Members of the organization, by the way, also call each other partners and do not mean anything bad by this. But they are still very far from love.