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Russia will strangle its banks if it opens doors wide to overseas capital with no limits at all as it joins the WTO
Russia will strangle its banks if it opens doors wide to overseas capital with no limits at all as it joins the World Trade Organization, warns Maxim Medvedkov. Chief Russian negotiator with the WTO, he leads the commercial negotiation department at the Ministry of Economic Development and Trade. Many of Russia's partners are sternly demanding unlimited openness of its financial service market, in particular, complete freedom for overseas banks and corporate insurers to start Russian-based branches. Russia, on its part, insists it cannot afford to have overseas banks establishing branches in its territory -- they ought to start affiliated companies as independent juridical persons. "If we fully open our market, the Russian banking network will entirely perish quite soon." As Medvedkov explained the point, Russian bankers are in no position to compete with their overseas rivals -- Russian lump banking capital currently makes a mere half of, let say, Citigroup's alone. A ban on establishing branches is essential for prudential surveillance, the expert added. On the other hand, there are no obstacles at all to overseas banking and insurance activities in Russia. Close on a hundred banks with overseas participation are active even now, including 15 US-based banks, which together account for roughly 6 per cent of the Russian market, with prospects to take hold of 40 per cent or even a half. The situation is quite similar in the Russian insurance market, of which overseas companies currently possess 7 to 8 per cent, with vast elbowroom to expand participation. Many countries are insistently demanding of Russia to protect intellectual property, Medvedkov went on. Russia has by now amended its legislation to meet those demands, though administering the law is still a burning problem. It will take several years to get going smooth and efficient patterns keeping off counterfeit products. Other countries share the problem with Russia - fake items make 25-30 per cent of entire market offers in certain European Union countries, he said. The amount of farm subsidies is another unsettled issue. Certain partners want Russia to fix in its obligations the present-day ceiling for government allocations -- $3.5 billion a year. The expert sees it as miserably less than necessary. Russian annual farming allocations made roughly ten billion dollars in the mid-1990s, and current US and EU allocations exceed Russian several-fold. "We are to take stock of the amount of support Russian agriculture actually needs -- but our partners are loath to do so," he stressed. Negotiations are going on also concerning aircraft and automobile import duties. Russia insists on preserving its prohibitive duties for the next seven years, to gradually reduce them later on, Medvedkov said
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