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. Last Updated: 07/27/2016

Kirkorov Waits for Laws on Piracy

Editor’s note: This is the second of two stories about Russia’s bid to join the World Trade Organization.

Filipp Kirkorov may be the king of Russian pop, but he sure doesn’t like the royal treatment he’s getting at home.

Even though the velvet-voiced pop idol has sold tens of millions of albums, he says that thanks to widespread piracy he has nary a kopek to show for the sales.

"It’s like somebody is reaching into your pocket and taking out your money. It’s robbery," Kirkorov said in an interview.

But Kirkorov — and many other musicians — have not given up hope. They are counting on a governmental pledge to protect music and other intellectual property rights.

"I think that in the near future our new president will without a doubt protect the rights of performers and implement a law doing away with piracy," Kirkorov said.

Rospatent, the state agency in charge of intellectual property, plans to send to the parliament this spring a raft of bills fulfilling Russia’s obligations to TRIPS. The Trade-Related Aspects of Intellectual Property Rights pact is a major barrier Russia must plow through to win entry into the World Trade Organization.

Musicians, companies and other holders of intellectual property are estimated to lose more than $1 billion a year from infringements.

In drawing up the bills, Rospatent is working closely with WTO working groups, the U.S. and EU governments and intellectual property rights advocates such as the International Federation of the Phonographic Industry and the Coalition for Intellectual Property Rights.

"As concerns IP [intellectual property] protection enforcement, this is the best opportunity presented in a decade to get the laws consistent or better than the TRIPS WTO standards," said Peter Necarsulmer, president of the Coalition for Intellectual Property Rights.

"They are not going to get WTO accession unless they pass this legislation," he said. "There are many other things they have to deal with, but IP is a very critical piece."

In all, Russia has to adopt and amend an estimated 30 to 40 laws before its -legislation will be aligned with that of other WTO member states.

The WTO has spelled out some of its main requirements: cuts to protectionist tariffs, liberalization of services like banking and insurance and enforceable protection of intellectual property rights. The WTO also wants laws on agriculture to be brought in line with its norms, which could well mean that Russia will be told to cut the $16 billion in annual subsidies it wants to give farmers.

For its part, Russia wants to keep the highest possible level of tariffs on imports to protect domestic consumer goods. It also is facing strong pressure from banks and insurance companies that want the market closed to foreign competition.

But the mood in the government and corporate Russia appears to be that the overall benefits of joining WTO far outweigh any short-term negative consequences. Most importantly, Russia would no longer be seen as a second-tier player on the global economic stage. The business climate would stabilize, in part because the state would not be able to make abrupt — or drastic — changes in regulations like tariffs.

"Accession of the Russian Federation to the WTO remains the priority of the government," Deputy Economic Development and Trade Minister Maxim Medvedkov told a WTO working group in Geneva in December.

"We believe that accession to the WTO will make an effective contribution to the internal economic reform process and facilitate the consolidation of its results," said Medvedkov, who is Russia’s top negotiator with the WTO.

The State Customs Committee is cobbling together a new Customs Code with the assistance of the Economic Development and Trade Ministry. The ministry said last week that it has approved broad proposals on agriculture, commodities and services that will be presented to the WTO this month.

To speed up its acceptance, Russia is pushing the WTO to accept a broad agreement outlining the issues and let more complex issues be hammered out after membership is granted.

The government hopes to win entry into the WTO by 2002 at the latest.

However, no time limit is imposed on negotiations, and fresh issues may come up that will send Russia back to the drawing board.

Chances of winning quick entry are unclear, but that is not dampening enthusiasm in some circles.

"We believe businesses are underestimating the possibility that Russia will get in quickly," said Max Gutbrod, managing partner at the law firm Baker & McKenzie, which is holding a briefing next week about what WTO entry means to businesses. "I do think that if everyone concentrated their efforts, it would be possible."

However, other observers point out that Russia has already been lobbying for seven years. Since no time limits are imposed on negotiations, haggling by both sides could go on for years.

"There is no chance this year and some chance next year [of Russia entering]," said Yaroslav Lissovolik, economist at Renaissance Capital.

"The enormity of what still has to be done has to be appreciated," he said. "We have to overhaul the whole foreign trade regime, and that takes time."

As Russia gets its books in order and prepares for fresh negotiations, musicians like Kirkorov are waiting to turn a dollar on album sales.

Kirkorov is luckier than most — he has a contract with a foreign record label and can command concerts at the prestigious Kremlin Palace, where he gave five performances last week.

But other singers have to work overtime.

Pop star Boris Moiseyev, who has half a dozen albums under his belt, says piracy forces him to stay on the concert circuit most of the year. This month alone he is giving concerts in 21 cities in Russia and the Baltics.

"It’s upsetting. You invest, say, more than $100,000 in releasing an album and only get back $2,000, $3,000 or $5,000," Moiseyev said.

"Unfortunately, to earn a living I need to perform 40 to 50 concerts a quarter. It’s an enormous task, both physically and emotionally," he said. "Then when I earn that money, I have to give it all away to the performers, costume designers, makeup artists and the people who organize the shows, not to mention funding new albums and video clips.

"It’s a no-win situation."

Another singer, Marina Khlebnikova, would already be a millionaire several times over — if she was living in the West. She said her bestselling album, "Chashka Kofe," sold 3 million copies in 1997. But only 15 percent of those sales were for licensed albums so, like Moiseyev, she has to tour.

"Show business is built in such a way that the money I get from my concerts is actually the only money that goes into my pocket," she said over a cup of tea. "I can’t earn any money from my albums."

The grueling schedule of being on the road is leading Khlebnikova to seriously consider calling its quits or opening up a business on the side.

"I don’t know how to run a business but I have to learn," she said. "I’m not joking. I am seriously thinking about it, and when I am able to set aside enough money I will launch a business.

"With a name like Khlebnikova maybe I could open up a bakery, or maybe a cafe called, let’s say, Chashka Kofe Na Dvoikh," she added with a mischievous grin.