China and Russia are on the verge of completing an agreement for Russia's entry to the World Trade Organization, according to bilateral trade officials.

But China showed its concern about irregular trade between the two countries and called for the launching of a panel on the issue in the near future, said Bo Xilai, Chinese minister of commerce.

The WTO is a major issue between Bo and the Russian Economic Development and Trade Minister German Gref in their meeting in Moscow before the seventh session of the Chinese-Russian subcommittee on trade and economic development.

Bo and Gref touched on details of major problems for the China-Russia agreement and reached consensus on several important issues. Bo said Russia and China are currently holding "active, fruitful negotiations" on Russia's joining the WTO.

"We are making progress in the agreement after rounds of talks and we feel we are very close in some opinions," Bo said.

"China supports Russia's WTO accession and we are expected to sign an agreement soon," Bo said.

He told a press conference that the bilateral agreement could be ready for formal signature during next month's expected visit to Russia by Chinese Premier Wen Jiabao.

Gref said Russia and China have mutual understanding on practically the entire spectrum of issues relating to the negotiating process on Russia's admission to the WTO.

"We outlined approaches to resolving key issues about the WTO and agreed on how we will reach final agreements," Gref said.

In the session, Bo asked Gref to co-operate with China to standardize irregular trade activities between the two countries.

"We should launch a joint working group as soon as possible and pull this kind of trade back to the normal track," Bo said.

Irregular trade has been a big concern to China and Russia and has led to many disputes.

The Russian side claims there are huge illegal imports from China. Chinese imports to Russia totalled US$3.4 billion last year, according to Russian statistics, while Chinese data show the amount was US$6 billion. Russia believes the extra US$2.6 billion trade entered Russia without being taxed.

The irregular trading was born because Russia allowed so-called "customs clearance" companies to carry out import transactions and provide "one stop" services which combined transportation and customs clearance.

These companies, which usually have close relations with the Russian Customs, offer favourable tariff policies and do not supply customs clearance manifests.

The Russian customs houses have confiscated goods from China and increased tariffs unilaterally on Chinese goods.

Last September, Premier Wen Jiabao discussed the issue with his Russian counterpart Mikhai Kasyanov in Beijing. That meeting resulted in a joint communique that noted that the two countries should co-operate in standardizing irregular trade and launch a joint work team for regulating Sino-Russian trade order as soon as possible.

The Chinese side formed a panel led by Ministry of Commerce staff to discuss the issue, but the Russian side was not so well prepared.

Bo said he believes the bilateral trade between China and Russia this year would exceed US$20 billion, noting that trade turnover between the two countries annually increases by no less than 20 per cent.

Gref said the Russian Government views China as one of its priority strategic partners. He proposed to Bo that the two countries should set up a working panel to discuss specific plans for expanding Sino-Russian trade.

Bo said China was studying the possibility of building a large pulp mill in Russia's Far East and that it intended to invest about 300 million yuan (US$36.14 million) in the project. It is also planned to build Chinese business centres and Chinatowns in Moscow and St. Petersburg.

(China Daily August 6, 2004)