The end is in sight, but the finish line keeps moving further away.

Russia has promoted a series of trade policies lately that violate some of the World Trade Organization’s (WTO) conditions for accession. After a bid to join the WTO that has been in the pipeline for seventeen years and finally seemed to be drawing to a close in the past year and a half, is the Russian leadership souring on membership in the trade club?

Russia’s bid for WTO membership has been complicated by a number of factors: poor relations with its embittered Caucasian neighbor and WTO member Georgia, and the level of import taxes and subsidies in the country. Despite the difficulties in the accession process it seemed that Moscow truly desired WTO membership and built support abroad for its accession. In January, the Director of the Department of Trade Negotiations, Maxim Medvedkov, highlighted that 99% of all questions had been addressed and Russia’s accession was imminent. Nearly every meeting with U.S. officials addressed the Americans’ desire for Russia to win WTO membership and the process needed to repeal the Jackson-Vanik Amendment, paving the way for Russia to be granted “most favored nation” trading status with the U.S.

In June, Economic Development Minister Elvira Nabiullina warned that obstacles still remained in reaching a deal for accession, but she was “an optimist” and wanted to see the issues resolved “by the end of July.” Recently, however, a number of actions and stances taken by Kremlin economic advisors regarding issues such tarriffs on poultry, car assembly quotas, and subsidies for the agricultural sector, indicate potentially waning enthusiasm.

On July 18, Nabiullina said there are still significant disagreements on meat imports between Russia and the WTO. New car assembly rules introduced this year put quotas on foreign automobile producers, requiring them to build at least 300,000 vehicles a year and to use 60% local components.  These rules were not welcomed by WTO members, but Putin is not backing down from the new regulations. “We are continuing a difficult dialogue with the European Commission and our American partners on accession to the WTO,” he said. “They are insisting that we should cancel our [new requirements].”

After the E.coli scare lead to a ban on vegetable imports from the EU, analysts started questioning Russian willingness to comply to WTO rules when they do not seem to immediately benefit the country. Despite demands that Russia follow the spirit of the WTO rules, Putin argued that the country need not follow rules for an organization to which it is still an outsider. This logic could be detrimental to ongoing negotiations in the final stretch. Trust must be built between the member states and the giant Russian economy.

As end of July approaches, prospects do not look promising. If officials do not follow WTO rules toward the end of a seventeen-year engagement period, can WTO members trust that they will change their ways after reaching the altar of accession? As RIA Novosti’s Washington Bureau Chief, Svetlana Babaeva wrote in an op-ed, “[s]uch an approach gives the impression that doing business with Russia is a privilege rather than a routine, and most of its economic deals are a gesture of national generosity rather than a common exchange.”

The prospect of bilateral and independent international deals, like Russia’s leadership role it has taken in the Customs Union and the prospect of extending a gas pipeline to Europe via talks with Germany, shows that the WTO may not seem to be as much in Russia’s interest as it once was.

Possibly related posts:

1. Russia’s WTO Accession: Update
2. Ukraine Continues to Resist Customs Union Overtures
3. Car Tariffs a Threat to Russia’s WTO Accession?
4. WTO: Georgia and Russia Dispute Continues
5. New Threat of Renewed Chicken War

Russia · U.S. · WTO

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