engage in wholesale and retail trade, franchise sectors and express courier services.<sup>13</sup> The European Union has negotiated intensely for the rights of companies other than Gazprom to construct a gas pipeline; but no success in this area has been reported.

In banking, opposition galvanized around the branch banking issue. Russia was willing to allow subsidiaries of international banks. Subsidiaries must be registered as Russian entities, and the capital requirements would be based on capital in the Russian entity. Branches, however, do not have a separate legal status or capital requirement apart from their foreign parent bank. So branches are potentially very powerful competitors. The U.S. Treasury has been attempting to ensure branch banking is permitted in all countries admitted to the WTO. The Russian central bank maintained that it could not regulate or supervise branches adequately and that depositors would therefore be at risk. Banking interests in Russia succeeded in getting then President Putin himself to say that branch banking was a deal breaker for Russian WTO accession. Russia succeeded in avoiding a commitment on branch banking, becoming the only non-LDC acceding country to avoid such a commitment.<sup>14</sup> Nonetheless, multinational banks, operating as subsidiaries, have greater market access and national treatment rights under the bilateral U.S.-Russia agreement and Russia should benefit from greater involvement of multinational banks in Russia over time.

Estimates of the ad valorem equivalence of these and other barriers to FDI in services are key to the results. Consequently, we commissioned several surveys from Russian research institutes that specialize in these sectors and econometric estimates of these barriers based on these surveys. These questionnaires provided us with data, descriptions and assessments of the regulatory environment in these sectors.<sup>15</sup> Using this information and interviews with specialist staff in Russia, as well as supplementary information, Kimura, Ando and Fujii (2004a, 2004b, 2004c) then estimated the ad valorem equivalence of barriers to foreign direct investment in several Russian sectors, namely in telecommunications; banking, insurance and securities; and maritime and air transportation services. The process involved converting the answers and data of the questionnaires into an index of restrictiveness in each industry. Kimura _et al_ . then applied methodology explained in the volume by C. Findlay and T. Warren (2000), notably papers by Warren (2000), McGuire and Schulele (2000) and Kang (2000).

> 13 See Tarr (2007) for details.

> 14 Russia agrees to reopen discussions on this issue upon consideration of membership in the OECD. 15  This information was provided by the following Russian companies or research institutes: Central Science Institute of Telecommunications Research (ZNIIS) in the case of telecommunications, Expert RA for banking, insurance and securities; Central Marine Research and Design Institute (CNIIMF) for maritime transportation services and Infomost for air transportation services. We thank Vladimir Klimushin of ZNIIS; Dmitri Grishankov and Irina Shuvalova of  ExpertRA; Boris Rybak and Dmitry Manakov of InfoMost; and Tamara Novikova, Juri Ivanov and  Vladimir Vasiliev of CNIIMF. The questionnaires are available at www.worldbank.org/trade/russia-wto. The same sources provided the data on share of expatriate labor discussed below.

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