Russia Goes Cold On WTO Membership Bid

by Tatiana Smolenska, Tax-News.com, Moscow

09 October 2009

According to recent remarks made by the Director General of the World Trade Organisation, Pascal Lamy, Russia now seems less keen on pushing for membership of the organisation.

Russian President Medvedev made clear before his September meetings with Obama and the G20 that, for him, WTO membership for Russia was an important agenda item. However the issue failed to make its mark.

Discussions on Russian membership of the World Trade Organisation (WTO) commenced in 1993, but Russia remains the largest country still outside the WTO. Why, at this time of economic crisis, Russia should become more insistent on this issue is strange, since its main exports, oil and gas, are unimpeded and not even subject to WTO regulation, whilst among G20 countries, Russia is one of the worst offenders in introducing protectionist measures contrary to its G20 commitments. In the longer term, however, Medvedev's vision for Russia would see the country becoming less dependent on exporting commodities and more a leading activist in the global economy in all value added sectors. To this end Russia would need to be an influential member of the WTO.

When it comes to the nitty gritty of membership negotiation, Iana Dreyer, a trade analyst with the European Centre for International Political Economy describes the Russian attitude as 'sensitive for its national sovereignty' and the WTO bureaucrats' probing is regarded as 'undue meddling into domestic affairs'. The WTO secretariat scrutinizes Russia's domestic regulations with a view to reconciling these with WTO standards.

Russia is not used to such a methodical approach and still thinks that membership can be handled with a 'top down' decision between the USA and Russia in the old World style. In fact any existing WTO member would have the right to veto Russian membership, and this would be all the more likely if the WTO did not stick to its methodology.

Prime minister Putin's announcement in June this year, that Russia, Belarus and Kazakhstan should join the WTO as a trade block demonstrates that Russia is in denial of the 'due process'. In an interview quoted by the New York Times, Pascal Lamy, head of the WTO, said: “It will make the application of Russia much more complex; it will run even longer. The fundamental reality is that there is no energy in Moscow to join any more". As the European trade commissioner five years ago, Lamy negotiated Europe's bilateral trade agreement with Moscow; no one understands the nuances of Russian negotiators better.

Following Medvedev's meetings with Obama and the G20 in late September, the Russian press appeared to confirm that Russia is not ready to go through due process with the necessary positive attitude. According to Vedomosti's analysts, 'Moscow is not interested in joining the WTO in the near future because the WTO regulations prohibit protectionist measures now being actively implemented by the Russian government'.

Dmitry Shusternyak, an analyst quoted by Vedomosti, said all negotiators realized that Russia did not need the WTO today, but Moscow could not afford to reject the idea publicly. "Considering the establishment of the Customs Union (Russia, Belarus and Kazakhstan), we should join the WTO together. This would de facto slow down WTO accession talks and delay Russia's membership, but it does not mean a direct refusal," Shusternyak told the paper.

The WTO has proven to be effective in holding in check 'beggar my neighbour' trade policies of the powerful - even the US. Its methods allow the weak to show up these policies in the World arena thanks to its strong rules-based system backed by a successful dispute settlement body. Given Russia's willingness to tear up the rulebook, when it comes to protectionist measures, at the same time that it presses for WTO membership, it does not suggest that Russia's membership will be conducive to further strengthening of the WTO ethos.

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