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. Last Updated: 07/27/2016

U.S. Is Nearing a Decision on Russia's Market Status

WASHINGTON -- After a decade of wrenching economic and social change in Russia, the Bush administration is nearing a decision on whether to officially reclassify the country as a market economy, a Commerce Department spokeswoman said.

Such a finding, which some expect before President George W. Bush's visit to Moscow in late May, would put a U.S. seal of approval on the reforms Russia has made since the collapse of the former Soviet Union and provide some momentum to Moscow's bid to join the World Trade Organization.

It would also be of real dollar-and-cents importance to Russia exporters because of U.S. trade laws that make it easier for the Commerce Department to impose steep anti-dumping and countervailing duties on "nonmarket economies."

Economic Development and Trade Minister German Gref was expected to ask about the issue in talks here this week with Bush administration officials.

Julie Cram, a spokeswoman for the department's International Trade Administration, said Monday that the administration was in the last stage of an investigation that began last year.

"I can't give you a final date, but we expect to reach our decision in the near future," she said.

Supporters of the change have been encouraged by the Commerce Department's recent decision to reclassify Kazakhstan as a market economy.

The Commerce Department has done the same for Hungary, the Czech Republic, the Slovak Republic, Poland and Latvia since the collapse of the former Soviet Union and is currently weighing requests from Ukraine and Moldova as well as Russia.

Blake Marshall, executive vice president of the U.S.-Russia Business Council, said Russia compares well to other former centrally planned economies that have been reclassified.

"Clearly the vast preponderance of evidence points strongly in the direction of revoking Russia's nonmarket economy status. That's a view supported by hundreds of American businesses we work with on a daily basis," Marshall said.

But U.S. steel and nitrogen producers have argued against the change, saying the Russian government remains heavily involved in its domestic economy.

Robert Liuzzi, president of CF Industries, a leading U.S. fertilizer producer, told a congressional panel last week that granting Russia market economy status would allow it "to dump nitrogen fertilizers into the United States with impunity."

SPI International, the maker of the popular Stolichnaya vodka, also wants Washington to deny Moscow's request. SPI International accuses the Russian government of trying to reverse the privatization of the vodka industry that occurred in the early 1990s. In a dispute over who owns the vodka trademark, the government has barred SPI from exporting some 150,000 cases of Stolichnaya.

Richard Edlin, a lawyer for SPI, said those tactics show Russia is regressing on economic issues. Giving Russia market economy status would be rewarding bad behavior, he said.