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Coming Russian attractions

April 20, 2006

ADMITTING RUSSIA INTO the World Trade Organization, a global club for card-carrying market economies, could be the most powerful symbol of change in the former socialist republic since Leningrad became St. Petersburg again. And numerous Russian leaders are eager to gain entry.

As Russia moves closer to that goal, however, Hollywood executives and their allies in Congress have stepped up their opposition. From their perspective, Russia is both a promising new market and a ruinous font of piracy. In short, it looks like China, which joined the WTO in 2001. Having seen how that movie ended, Hollywood is looking for a different result in the sequel. The studios are pressing the Bush administration to demand more action against piracy before agreeing to support Russia's WTO bid.

It's a familiar situation for entertainment conglomerates and others that rely on intellectual property. With increasing frequency, they've persuaded U.S. negotiators to demand that other nations adopt expansive U.S. copyright, patent and trademark laws in the name of fighting piracy.

In Russia's case, however, the studios are asking for something more basic: a respect for global norms regarding the rule of law and the value of creative works. And they're hardly alone in asking Russia to play by accepted commercial rules; the financial services industry, for example, wants to remove barriers to competition, and U.S. farm exporters want more scientific food- and plant-safety standards.

One reason the studios care so much about Russia is that its market for films is sizable and growing. According to the Motion Picture Assn. of America, Russian box office rose 30% in 2005 to $350 million. Russian-made films were the fastest-growing segment, capturing almost 30% of the ticket revenue. Sales of DVDs barely register, however, at least in part because of the profusion of bootlegs.

Russia's yearning to join the 149-member WTO gives the U.S. the most leverage it may ever have to force changes in Russian law and practice. On intellectual property, the U.S. is pushing President Vladimir V. Putin to close down illegal disc-manufacturing operations on government property, shutter websites that make unauthorized sales of music or movies and increase the penalties for those who violate Russian intellectual-property laws.

What these requests boil down to is a push for transparency and accountability, which are key to Russia's ability to attract investment and commerce. Unless the country puts a lid on official corruption, creates an open process for adopting new regulations and backs up its laws with meaningful enforcement, it's simply not ready to join the WTO. As much as Putin might crave a deal with the U.S. in time for the Group of 8 industrial nations' summit in St. Petersburg in July, it won't help anyone to move Russia into the WTO before it can act like it belongs there.

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