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. Last Updated: 07/27/2016

U.S. Applauds Energy Pricing Reforms

A top U.S. trade official said Friday he is "encouraged" by Russia's plans to reform its domestic energy pricing system, which the United States says gives Russian producers an unfair advantage by providing them power at prices far below what their foreign competitors pay.

But the official, Assistant Commerce Secretary Faryar Shirzad, said it remains to be seen how effectively the ambitious reforms -- part of President Vladimir Putin's efforts to bring Russia's economy in line with the West -- will be implemented.

"Clearly the direction the Russian government wants to go is a very positive one, but it's a matter of seeing what the details are and ... how fully they are able to implement those details," said Shirzad, who is in charge of the U.S. import administration.

As Russia pushes to join the World Trade Organization, the United States and Europe have been pressuring Putin's government to reform the domestic energy pricing system. Russia will begin drafting reforms of its natural gas industry this year, Prime Minister Mikhail Kasyanov said Thursday.

The current pricing system, left over from the centrally controlled economy of the Soviet era, gives Russian producers access to energy at rates that are "far below market prices," Shirzad said.

He said the issue has come up in discussions and disputes between the United States and Russia over trade in fertilizer and steel, two of Russia's major exports.

Russia does not agree with the U.S. and European view that its low domestic energy prices distort trade with other countries, he said.

However, he added, "I think there's agreement from both sides that market reforms are needed in this sector, and the Russian government by all accounts is planning a very ambitious set of reforms designed to bring more market discipline on energy prices."

Shirzad spoke before leaving Russia after four days of talks whose purpose was to follow up matters discussed by Commerce Secretary Donald Evans, who came to Russia with President George W. Bush for a summit in May.

Relations between Washington and Moscow have improved dramatically since Putin offered support for the U.S. anti-terror campaign after the Sept. 11 attacks, and the Bush administration has said it wants to sharply increase trade with Russia.

"Clearly there is a commitment that our two presidents have made to strengthen and deepen the relationship between our two countries, particularly with regard to economic issues," Shirzad said.

A handful of trade disputes have clouded improving relations, including clashes over Russian imports of American poultry and new U.S. steel tariffs.

Shirzad said he had hoped his trip would bring agreement on a deal to raise the limits on Russian exports of steel slab, but that no deal was signed because the Russian side was still discussing the proposal. He said he hoped the agreement would be sealed early next month.