President Issues Memo on Russian State-Owned Enterprises & WTO Bid
The President has issued a Memorandum for the U.S. Trade Representative regarding state-owned enterprises (SOEs) and Russia’s expected accession to the World Trade Organization. The Memorandum involves required determinations and provisions under 19 USC 2905 whenever a state-trade regime accedes to the World Trade Organization.
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(On December 16, 2011, WTO members extended a formal invitation for Russia to join the WTO. Russia will have to ratify the deal within the next 220 days (by approximately July 22, 2012) and would become a full-fledged WTO member 30 days after it notifies the ratification to the WTO. (See ITT’s Online Archives 11121625 and 11121654 for summaries.)
President Determines Russia’s Agreed Measures on State-Owned Enterprises Sufficient
Pursuant to 19 USC 2905(a), the President determines that state trading enterprises account for a significant share of Russia’s exports and goods that compete with imports into Russia. He further determines that such state trading enterprises unduly burden and restrict, or adversely affect, the foreign trade of the U.S. or of the U.S. economy, or are likely to result in such a burden, restriction, or effect.
However, as Russia has committed to various obligations1 regarding its state-owned enterprises in its WTO Protocol of Accession, the President determines that the requirements of 19 USC 2905(b)(2)(A) are met, and it is not necessary to invoke the non-application provisions of the WTO Agreement for this issue.
(Note that other issues such as the U.S. “Jackson-Vanik” amendment for Russia still impede the ability of U.S. firms to take full advantage of Russia's eventual WTO membership. See future issues of ITT for summary.)
1The terms and conditions for Russia's accession to the WTO include Russia's commitments that it will ensure that state-owned and state-controlled enterprises, when engaged in commercial activity, will make purchases, which are not intended for governmental use, and sales in international trade in a manner consistent with applicable provisions of the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement). In addition, Russia's state trading enterprises will make purchases and sales based solely on commercial considerations, e.g., price, quality, marketability, and availability, and that U.S. business firms will have an adequate opportunity to compete for sales to and purchases from these enterprises on non-discriminatory terms and conditions.