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UNCLAS SECTION 01 OF 06 PARIS 000026 
 
SENSITIVE 
 
SIPDIS 
 
SENT FROM USOECD 
 
12958:  N/A 
TAGS: ECON ETRD EFIN PREL OECD XG XH
SUBJECT: Russia's Accession to the OECD - Chronology and Standards 
of Review 
 
PARIS 00000026  001.2 OF 006 
 
 
REFTEL: PARIS 22 
 
¶1. (U) Summary: This cable is part two of a two-part series. Part I 
(Reftel) outlined the broader challenges that Russia faces during 
the accession process to the Organization for Economic Cooperation 
and Development.  This cable provides details on the chronology and 
the status of the accession examination to date.  End Summary 
 
Standards of Review for Accession 
--------------------------------- 
 
¶2. (U) "The Roadmap for the Accession of the Russian Federation to 
the OECD Convention" (OECD Document C(2007)103/FINAL) outlines the 
criteria by which the OECD Council will eventually asses Russia's 
willingness and ability to assume the obligations of OECD 
membership.  The Roadmap includes acceptance of the established body 
of OECD instruments, standards and benchmarks, coherence with OECD 
policy recommendations and a commitment to fundamental values.  The 
Roadmap also stipulates that World Trade Organization (WTO) 
membership is considered essential for becoming an OECD member. 
 
¶3. (U) Fundamental Values:  Candidate countries are expected to 
share a core set of fundamental values held by current OECD members. 
 The Roadmap delineates these as:  "a commitment to pluralist 
democracy based on the rule of law and the respect for human rights, 
adherence to open and transparent market economy principle and a 
shared goal of sustainable development" which form the foundation of 
OECD membership and when taken together show "like-mindedness" with 
other OECD members.  Fundamental values include a commitment to 
improving policies in both the national and international context. 
During the accession process OECD members may review a candidate 
country's progress towards these fundamental values at any time, but 
there is no specific committee or time frame stipulated for such a 
review. 
 
¶4. (U) Willingness and Ability: In addition to meeting the 
like-mindedness criteria, Russia must "position itself" vis a vis 
all OECD instruments in force at the time of accession.  There are 
more than 200 current instruments, including Conventions (e.g. 
Anti-Bribery), Decisions (e.g. PCBs), Recommendations (e.g. 
Broadband development), Guidelines (e.g. Multi-National Enterprises, 
Consumer Protection), Principles (Corporate Governance), rules, 
standards and benchmarks (e.g. positions on major multilateral 
environmental agreements).  If any new instruments are added prior 
to Accession, then Russia must position itself vis a vis these as 
well.  Russia may refuse certain Acts, make declarations about, 
and/or take reservations to OECD legal instruments and/or policies. 
However, the Roadmap stipulates that such decisions by candidate 
countries should only occur "sparingly."  Committees and ultimately 
Council will examine the Russian position vis a vis these 
instruments to determine whether Russia's position is consistent 
with the obligations of OECD membership. 
 
¶5. (U) Coherence: Russian domestic policy will also be examined for 
its "degree of coherence" with certain common OECD policies by the 
"sectoral" committees (Health, Statistics, Trade, Public Governance, 
etc).  These Committees cover areas for which there are generally no 
OECD legal instruments, but for which there are accepted standards. 
For example, the Public Governance Committee has a set of "Building 
Blocks and Guiding elements for Public Governance" which are used as 
a framework and benchmark tool to examine budget practices and 
procedures, human resource management, integrity in the public 
sector, transparency and accountability, etc. 
 
THE PROCESS 
------------ 
 
¶6. (U) In June 2009 Russia submitted its 249 page Initial Memorandum 
which laid out in preliminary terms its position vis a vis over 200 
OECD instruments.  In the Memorandum, Russia either took a 
reservation to, requested an unspecified transition period or 
refused to adopt a certain number of OECD legal instruments in areas 
such as anti-bribery, liberalization of capital markets, 
co-production of films, control of trans-border movement of waste, 
environment and tourism, tax, fisheries, governance of 
multi-national enterprises, national treatment on access to local 
bank credit and shipbuilding.  Following the Initial Memorandum, the 
 
PARIS 00000026  002.2 OF 006 
 
 
Secretariat drew up a calendar for review by each of OECD's twenty 
two committees.  Each committee has sent Russia a detailed 
questionnaire which supplements the information provided in the 
initial memorandum.  Committee review requires extensive Secretariat 
resources, including travel by staff to Russia, and extensive legal 
review before dissemination to member states.  Committees were 
instructed not to go beyond either "preliminary" or "first round" 
discussion with a view to providing information for the Secretary 
General's report on Russia Accession at the Ministerial Council 
Meeting, May 27-28, 2010. 
 
COMMITTEE REVIEWS 
----------------- 
 
¶7. (SBU) Following is a status report on the preliminary or first 
round discussions in OECD Committees. 
 
--Committee for Agriculture: (Coherence) In its initial Memorandum, 
Russia declared that it shares the principles and objectives of the 
Committee and agreed to abide by its principles.  The Committee has 
not scheduled a review for Russian Accession (which indicates that 
the information requested from Russia was not received, or was 
incomplete.) 
 
--Working Group on Bribery: (Willingness and Ability) In its Initial 
Memorandum, Russia expressed its commitment to abide by the 
principles of the Working Group, but requested an unspecified 
transition period for implementation.  Russian First Deputy Minister 
of Justice Aleksander Fedorov led a delegation to the OECD in 
December 2009 and informed OECD officials that Russia was interested 
to begin the process of joining the Convention on Anti-Bribery. 
Officials from the OECD office of the Legal Advisor flew to Russia 
the following week, of December 14, 2009, to do an initial 
assessment of Russia's legal structure.  The OECD Legal Advisor 
reports that Russians thought their laws met the requirements of the 
OECD Anti-Bribery Convention, but that this was not the case.  In 
particular, the Legal Adviser notes Russia would need to pass a law 
criminalizing bribes to foreign officials.  While OECD staff have 
praised the transfer of responsibility for anti-bribery to the 
Justice Ministry and view Fedorov as a serious interlocutor, they 
note Russia has not made progress as quickly as they had hoped.  In 
October, the Secretariat had delivered an extremely negative report 
on Russia's progress, explaining that the Russian response to the 
accession questionnaire was incomplete and sloppy.  As a result, the 
Russian accession preliminary review was moved back from December to 
March 2010.  Despite the interest expressed, the Secretariat has 
informed USDel that the Russian Ministry of Justice is unlikely to 
have completed the necessary work for the March 2010 review, which 
will thereby result in further delays.  A delegation of OECD staff 
(led by Deputy Secretary General Richard Boucher) will travel to 
Russia in February, to discuss this and other accession issues. 
 
--Chemicals Committee: (Willingness and Ability) In its Initial 
Memorandum, Russia declared it shared the principles and aims of the 
Committee but requested a unspecified transition period for 
implementation.  The Committee will hold its First Round of 
discussions in February 2010. One of the issues likely to be 
discussed is the need to provide a specific time frame for the 
transition period. 
-- Competition Committee:  (Willingness and Ability) Russia has been 
an active member of the Competition Committee for more than ten 
years.  In its Initial Memorandum Russia  agreed to abide by the 
Committee's principles with a reservation with regard to invisible 
transactions, liberalization of capital movement, and the OECD's 
Declaration on Multinational Companies.  At its meeting in October, 
the Competition Committee (CC) held its First Round of discussions 
and the Russian delegation gave a well received presentation.  The 
CC had additional questions regarding Russia's experience with the 
2009 amendments to the anti-monopoly law; the "cartel" cases that 
are being brought under the anticompetitive agreements provisions 
(the concern is that many are not truly cartels); special state 
entities that have been created in recent years and seem immune from 
the competition law (the concern is that many are "national 
champions" - large state-owned companies that could act as 
monopolist forces with impunity; and Russia's position on the new 
Council Recommendation on Competition Assessment. These need to be 
answered by Russia before the Competition Committee's scheduled 
 
PARIS 00000026  003.2 OF 006 
 
 
interim discussions in February 2010. 
-- Consumer Policy Committee: (Willingness and Ability) In its 
Initial Memorandum, Russia agreed to abide by the Committee's 
policies and declarations.  The Committee is scheduled to hold its 
First Round of discussions in April 2010. 
 
-- Development Assistance Committee: (Coherence) In its Initial 
Memorandum, Russia committed to abide by the principles of this 
Committee, but requested an unspecified transition period to come 
into compliance.  The Committee does not currently have a schedule 
for Russia Accession review. 
 
--Education: (Coherence) In its Initial Memorandum, Russia refused 
to accept the Committee's Guidelines for Quality Provision in 
Cross-Border higher Education. The Committee does not currently have 
a schedule for Russia Accession review. 
 
--Employment, Labor and Social Affairs Committee:  (Coherence) In 
its Initial Memorandum, Russia agreed to abide by the Committee's 
principles.  The Committee is scheduled to hold its First Round of 
discussions in April, 2010. 
 
--Environment:  (Willingness and Ability) In its Initial Memorandum, 
Russia declared it shared the principles and aims of the Committee 
but requested a unspecified transition period for implementation. 
The Committee plans to have the First Discussions on Russia at its 
meeting in April, 2010 pending Russia's provision of its "Brief Note 
on Russia's Environmental Policy and Institutional Framework" - a 
background document for discussion.  The Russians have also promised 
to make a presentation on the same topic at the meeting.  The First 
Review is planned for the Committee meeting in 2011 (delayed from 
June 2010) and will focus on reviewing Russia's positions with 
regard to OECD legal instruments related to environment.  The 
Russian Federation will officially begin its Accession-related 
presentations for the Committee's Working Group on Waste Prevention 
and Recycling at the next meeting in October 2010. 
 
The Committee has asked Russia to revise its Initial Memorandum to 
indicate more clearly how many years they may need in order to 
comply with the OECD requirements and also to identify the actions 
that they plan to carry out during that period.  OECD Secretariat 
staff report that Russia's institutional framework on environment 
and chemicals is very complex and there is very little coordination 
between the different ministries and agencies.  During an OECD 
mission to Russia by Environmental Directorate staff in early 
December, it was reported that the Ministry of Natural Resources and 
Environment finally showed some commitment and interest in the 
accession process. 
 
--Committee on Financial Markets: (Willingness and Ability) In its 
Initial Memorandum, Russia expressed a readiness to follow the 
Committee's principles.  However, Russia took a reservation to the 
Council Recommendation on Disclosure Requirements and Procedures 
applicable to public securities, with regard to consultation with 
foreign individuals.  Russia also took a reservation to the Code on 
capital market liberalization and the Code on current invisible 
operations liberalization.  The Committee is scheduled to meet in 
April.  If Russian responses are received in time, an initial review 
could be added to the agenda. 
 
--Fiscal Affairs: (Willingness and Ability) In its Initial 
Memorandum, Russia took a considerable number of reservations and 
requested unspecified transition periods to bring its system into 
compliance with the Committee.  The Committee's Working Parties 1, 
8, and 6, 9, and 2, and its Forum on Harmful Tax Practices held 
their preliminary discussion in September, October, and November 
respectively. In Working Party 1, Russia indicated that it would 
drop the reservation it signaled in its Initial Memorandum to retain 
the right to include payments for technical services in a separate 
article as no other OECD nation had a similar reservation.  Working 
Party 8's preliminary review raised concerns about Russia's tax 
codes, in particular aspects concerning foreign currency 
transactions.  The U.S. delegation expressed concern regarding the 
lack of confidentiality for tax information (tax id numbers, 
violations of tax rules, and investigative information).  Working 
Parties 1, and 8 and 9 will hold their First Rounds in February and 
April 2010 respectively. 
 
PARIS 00000026  004.2 OF 006 
 
 
 
--Fisheries Committee: (Coherence) In it is Initial Memorandum, the 
Russian Federation declined to accept the Committee's Guidelines for 
the Design and Implementation of Decommissioning Schemes in the 
Fishing Sector.  The Committee has not schedule accession 
discussions. 
 
--Health: (Coherence) In its Initial Memorandum, as there are no 
instruments in this field, the Russian Federation made no 
declarations about its position with respect to Health policy.  The 
Health Committee was unable to hold its preliminary discussion in 
July due to the unresponsiveness to its inquiries by the Russian 
Ministry of Health.  The Committee Chair wrote to the Russian 
Government in July to express the Committee's disappointment but 
affirmed the Health Committee's willingness to continue to cooperate 
with Russia.  When the Committee met in early December, the Director 
of the Employment, Labor and Social Affairs Directorate reported 
that the Committee still has not received any official reaction from 
Russia to the Committee's "Draft Review."  A representative of the 
Russian government was present during the Director's presentation. 
The Director anticipates that the Committee will not be able to send 
its final recommendation on Russian accession until late 2011 or 
early 2012, given the current pace of the review. 
 
--Committee for Information, Computer and Communications Policy: 
(Willingness and Ability) In its Initial Memorandum, Russia 
expressed its readiness to follow the Committee's principles, 
however it requested a transition period in the Electronic Commerce 
arena.  Preliminary Discussion scheduled for March, 2010. 
 
--Insurance and Private Pensions:  (Willingness and Ability) In its 
Initial Memorandum, Russia rejected the Council's recommendation on 
Common Classifications of the Classes of Insurance.  Additionally, 
the Russian Federation requested an unspecified transition period 
for other Committee policies.  At the Working Party on Insurance and 
Private Pensions meeting in November, the Committee held its 
preliminary discussions and heard a presentation from the Russian 
Government.  Work is progressing slowly as Russia's system of 
regulating insurance and private pensions is complex.  Russia also 
has inflation challenges, e.g., corporate and government bonds seem 
not to have kept up with inflation over the past half dozen years 
which may create liquidity problems in the future. US Delegates 
requested additional information about Russia's foreign equity cap 
rules, licensing processes, and Federal oversight of the sector. 
The First Round of discussions are tentatively scheduled for July 
¶2010. 
 
--Investment Committee: (Willingness and Ability)In it is Initial 
Memorandum, Russia agreed to recommend that multinational enterprise 
doing business in Russia would follow the Provisions of Attachment 1 
of the Guidelines on Multinational Enterprises.  Russia also 
requested a transition period to establish a National Contact Point, 
a requirement of the Guidelines.  Russia also agreed to abide in 
general by the Committees rules on National Treatment and agreed to 
take into account the Committees recommendation and attempt to 
eliminate or minimize conflicting requirements.  Russia requested an 
unspecified transition period to meet the OECD Benchmark Definition 
of Direct Foreign Investment's requirements.  The Committee has 
scheduled its First Round of discussions for March 2010. 
 
--Public Governance Committee/Regulatory Policy Committee: 
(Coherence) In its Initial Memorandum, Russia expressed a 
willingness to abide by the council recommendation for "Enhancing 
Integrity in Public Procurement" and the OECD "Guidelines for 
Managing Conflict of Interest in the Public Service" and other 
Committee policy principles.  The First Round is scheduled for April 
2010, with a more detailed assessment in the fall.  In its 
preparatory work for the April meetings, the Committees are 
struggling a bit with the Russian responses to its initial 
questionnaires which are incomplete and in some cases contradictory. 
 The Committees are also facing a further complication in that the 
questionnaire responses do not site the source within the Russian 
government-- making clarification extremely difficult. 
 
--Committee on Scientific Technological Policy: (Willingness and 
Ability) In it is Initial Memorandum, the Russian Federation agreed 
to abide by the Committee's principles.  The Committee is scheduled 
 
PARIS 00000026  005 OF 006 
 
 
to hold its First Round in March 2010. 
 
--Shipbuilding and Maritime Transport:  (Coherence) In its Initial 
Memorandum, the Russian Federation expressed a willingness to follow 
the Committee's principles, but took several exceptions and 
requested an unspecified transition period to adapt Russian 
legislation to certain principles. 
 
--Committee on Statistics: (Coherence) First round of discussions 
tentatively scheduled for June 2010. 
 
--Steel Committee: (Coherence) First Round tentatively scheduled for 
May 2010. 
 
--Trade Committee:  (Coherence) In its Initial Memorandum, Russia 
requested a transition period to implement the recommendations on 
Common Approaches on the Environment and Officially supported Export 
Credits, Procedures for Labeling Pharmaceutical Specialties, and the 
Administrative and Technical Regulations which Hamper the Expansion 
of Trade.  At the December 2009, Trade Committee meeting, all 
members that spoke indicated support for Russia's accession to the 
OECD.  They, along with the OECD Legal Division, also noted the 
requirement for WTO accession as a pre-condition to OECD accession. 
The EU outlined a long list of areas where information in the review 
lacks sufficient detail.  Several members noted that Russia has 
recently implemented a number of protectionist measures in response 
to the economic crisis.  Others noted that implementation of legal 
frameworks is very important.  The U.S. noted that we were not yet 
in a position to comment on this draft review and were looking to 
see advances in Russia's accession to the WTO before we could 
provide comments. 
 
--Tourism Committee: (Coherence) In its Initial Memorandum, the 
Russian Federation took exceptions to the OECD recommendations on 
duty free entry and requested an unspecified transition period to 
implement the recommendation on Protection of Tourists who use Air 
Package Tours.  There is no information on when this Committee will 
conduct its Russia accession reviews. 
 
--Economic Development Review Committee: Russia's accession review 
is tentatively scheduled for April 11, 2010. 
 
--Steering Group on Corporate Governance: There is no information on 
when this Committee will conduct its Russia accession reviews. 
 
Accession Chronology 
-------------------- 
 
¶8. (SBU) In November 2007, the OECD Council adopted the Russia's 
Roadmap for Accession.  The initial assumption by the Secretariat 
was that Accession for all the invitees (Chile, Estonia, Israel, 
Russia and Slovenia) would be a two year processes concluding in 
late 2009 or early 2010. 
 
June 2009 - Russia transmitted its initial memorandum detailing its 
position on more than 200 OECD legal instruments, more than one year 
after the other candidate countries.  Additionally, the document was 
in Russian, not English or French as required, and it was 
incomplete.  This marked the formal starting point for the technical 
review's of Russia's adherence to the Roadmap's requirements for 
accession. 
 
July 2009 - The Secretary General led a mission to Russia.  The OECD 
team met with the Russian Ministry of Economic Development, 
(Russia's Accession Coordinating ministry), and answered questions 
on next steps.  The OECD also requested designated technical points 
of contact for each OECD Committee within the appropriate line 
ministries (Health, Environment, Finance, Education, etc). (Note: 
The Public Governance and Consumer Policy committees still do not 
have official POCs) Additionally, OECD staff met with the Russian 
ministries of investment, corporate governance, fiscal affairs, 
environment and anti-corruption. 
 
July-September 2009 - Committees began preparation of their Draft 
Initial Reviews and issued questionnaires to the Russian Government. 
 
 
 
PARIS 00000026  006.2 OF 006 
 
 
September 2009 - The Secretary General's office transmitted Russia's 
initial memorandum to member states 
 
October 2009 - The Secretary General sent a letter to the First 
Deputy Prime Minister, Igor Shuvalov, which drew attention to the 
difficulties being encountered by a number of committees to receive 
information from the Russian Government. 
 
October - December 2009 some committees received "initial" responses 
from the Russian Government; most were late and incomplete.   The 
Competition Committee held its First Round of discussions with the 
Russian Government. 
 
October - December 2009 - the Committee on Fiscal Affairs, Private 
Pensions and Insurance and Trade Committees held preliminary 
discussions on Russia to determine what additional information is 
required. 
 
January 2010 - May 2010 - The Secretariat had tentatively scheduled 
all remaining preliminary and subsequent First Round of reviews 
prior to the Ministerial Council Meeting (MCM) in May 2010.  As it 
is clear that the schedule will not hold, the Secretary General will 
bring the matter to the attention of members in the February Council 
session and propose a new time-table with consideration pushed out 
into 2011 and 2012 (reftel). 
 
Monroe