With the December 8 Working Party recommendation of Russia’s admission to the World Trade Organization (WTO) and the WTO Ministerial Conference’s approval on December 16, there is finally a light at the end of this seventeen-year long tunnel. Russia’s WTO accession process has progressed rapidly in the past few months. The EU and Russia announced on October 21 that they had settled all outstanding bilateral differences hindering accession.
October 24 saw Russia’s last-minute acceptance of the Information Technology Agreement (ITA) in which the country agreed to eliminate tariffs on high-tech goods covered by the ITA. This was a relief to many U.S. high-tech companies who were concerned that import tariffs would not be eliminated. In addition, on November 8, the U.S. Trade Representative (USTR) finalized a substantive agreement with Russia regarding sanitary and phytosanitary standards. Russia and Georgia signed an agreement on November 10 for a third party to monitor trade through the disputed Abkhazia and South Ossetia regions, jumping a final and rather high hurdle to accession. Finally, on November 11, the Working Party approved the Working Party report in Geneva, as well as the goods and services schedules. The accession package was then referred to the Ministerial for final approval.
Now that Russia has been formally invited to join the WTO, it has six months to complete its domestic ratification procedures, which in Russia’s case will take the form of a Duma vote, and officially notify the Geneva Secretariat of its acceptance.
Effects on U.S. Russia Trade
The business community nearly unanimously agrees that Congress must graduate Russia from the USSR-era Jackson-Vanik amendment and grant Permanent Normalized Trade Relations (PNTR) status to Russia. While some pundits, such as the former assistant secretary of defense for international security policy Richard Perle, believe President Obama should simply declare, by executive order or even public pronouncement, that Jackson-Vanik does not apply because Russia is both a market economy and allows emigration, Jackson-Vanik will ultimately be debated in Congress, which has expressed reluctance to grant PNTR to Russia, largely for political reasons.
The United States’ top exports to Russia include spacecraft, airplane parts, machinery, chemicals and transportation equipment, and all will benefit from WTO entry. Russia has the world’s ninth largest market and according to the Peterson Institute, bilateral trade has the potential to triple from the current level. Because both countries are underperforming in terms of their potential, WTO accession is good for both parties and for business in general.
Intellectual property right enforcement is still a major factor in U.S.-Russia trade relations, and the U.S. Trade Representative has been working to ensure Russia’s enforcement will continue through accession. A roadmap on enforcement is being developed with the USTR’s IP office to engage the Russian Ministry of Economic Development and the Duma, especially regarding internet service provider liability.
Overall, Russia’s WTO entry will be positive for many sectors and will solve some of Russia’s problematic foreign trade issues. The prices of foreign goods will decrease, fees on Aeroflot flights over the EU will be eliminated, and import tariffs on a variety of trade goods will disappear. Russia’s entry into the WTO will benefit both producers and consumers and should help business in the United States and in the East.
Possibly related posts:
- WTO Update: One Step Closer
- Biden’s “Building on the Reset” Tour
- Russia Continues to Protect its Auto Industry
- Car Tariffs a Threat to Russia’s WTO Accession?
- WTO: Georgia and Russia Dispute Continues
Intellectual Property · Jackson-Vanik · Russia · U.S.-Russia · WTO
