Russia and the United States agreed in principle on Friday on Moscow's bid to join the World Trade Organisation, marking a major breakthrough after 13 years of tortuous negotiations. The deal paves the way for presidents Vladimir Putin and George W. Bush to sign a bilateral accord when they meet at an economic summit in Vietnam next week.
That would enable Russia to advance to the final stage of entry talks with the WTO's 149 members on a comprehensive deal to bring its $1 trillion economy - the largest outside the trade club - on board. "Delegations from both sides have reached agreement on all the principles of this agreement," Russia's Economy Ministry said in a statement on its Web site.
"Both sides aim to complete the process of bringing Russia into the WTO and are ready to take more active measures to reach that goal." The news was well flagged after officials and business leaders in Moscow told Reuters earlier there had been a breakthrough.
News overnight that Bush plans a stopover in Moscow on his way to Hanoi for the Asia-Pacific Economic Co-operation (APEC) summit, which starts on November 18, also increased expectations that a WTO deal had been clinched.
"We have an agreement in principle and are finalising the details. We are also holding consultations with the Congress and our cleared advisers," US Trade Representative Susan Schwab said in a statement issued in Washington. "This agreement will mark an important step in Russia attaining membership in the WTO."
Russia had hoped to announce a WTO deal with the United States at the summit of the G8 group of leading industrialised nations in St Petersburg in July but was unable to overcome the negotiating hurdles in time.
Talks between the US and Russia hit trouble on the home stretch over Moscow's unwillingness to grant access to US meat imports and Washington's concerns about Internet and video piracy in Russia. Keith Rockwell, a spokesman for the WTO in Geneva, welcomed news of the breakthrough but cautioned that Russia may not make it into the club as quickly as many expect. China, he said, took 20 months to get in after completing its bilaterals.
"Don't forget that accession is a two stage process," Rockwell told Reuters. "Even after Russia completes all its bilaterals, it must still gain consensus from the multilateral Working Party, where much work remains to be done and where some complications have arisen." Arkady Dvorkovich, head of the Kremlin's economic staff, was more optimistic and forecast that Russia could wrap up a final entry deal within months.
"It's mutually beneficial - it's in the interests of Russia because we receive the opportunity to operate in foreign markets, and introduce foreign countries to the Russian market on the basis of established rules," he told Reuters.
"Our foreign partners ... will be able to work in the Russian market on the basis of better known, more defined rules. We are already used to tough competition, so our companies have nothing to fear."
Accession would stimulate Russian service industries such as telecoms, banking and insurance, and "lead to a step-up in reforms by Russian companies to keep pace with the competition," said Peter Westin, chief economist at MDM-Bank in Moscow.
But the impact on trade may be more muted than was the case when China joined the WTO in 2001. Chinese manufacturers are enjoying an unprecedented export boom, while Russia is already reaping a big windfall from its oil and gas exports.