16 October 2009
World Trade Body Membership Tops U.S. Trade Agenda for Russia
Russian membership in WTO faces new obstacles
Washington — Seeing Russia join the World Trade Organization tops the U.S. trade agenda for Russia, says a senior U.S. official.
By early summer, hopes were high that a common understanding had been reached as to what Russia needed to do to become a member of the WTO. But everything changed on June 9, when Russia’s prime minister, Vladimir Putin, announced that Russia, Belarus and Kazakhstan would withdraw their individual applications to join the trade organization and make a joint bid for membership, said Betsy Hafner, director for Russia and Eurasia at the Office of the U.S. Trade Representative.
The announcement “took nearly everyone by surprise,” Hafner said, and will delay Russia’s bid for membership.
Russia began to negotiate terms for entering the WTO in 1993. Belarus also began WTO negotiations in 1993, and Kazakhstan started negotiating with the rules-based trade body in 1996.
In September, hope was revived when Russian Deputy Prime Minister Igor Shuvalov met with U.S. Trade Representative Ron Kirk in Washington and confirmed Russia’s aspirations to join the WTO, Hafner said. Kirk told Shuvalov that the United States continues to support Russia’s individual accession and looks forward to working with Russia toward that goal.
Negotiators from Russia, Kazakhstan and Belarus met informally with WTO representatives in Geneva on October 15 about their plans for pursuing membership, most importantly announcing that they will pursue WTO accession as three independent states. But there are no specific plans for a meeting between U.S. and Russian WTO teams, Hafner added.
Hafner said the June 9 statement created a credibility gap, and Russia’s negotiators will have to convince WTO members that they are serious about their country’s accession. “The pace of Russia’s accession is in Russia’s hands.”
WTO membership would help the diversification of Russia’s economy by lowering tariffs on imports, including inputs for further processing in Russia, opening the market to foreign services, and ensuring that other countries do not discriminate against Russia’s exports.
The United States also wants Russia to fully implement a series of bilateral trade agreements signed in November 2006.
Fully implemented, the 2006 agreements would lower tariffs and remove non-tariff trade barriers for a range of U.S. agricultural products and equipment, improve protection and enforcement of intellectual property rights in Russia, and create a more open regime for importing products with encryption technology such as cell phones and computer operating systems.
But Russia has failed to pass all of the legislation necessary to implement these agreements, and in some cases has directly undermined them, Hafner said.
Also of concern to the United States are food safety measures Russia has recently issued that do not comply with internationally accepted standards to protect humans, animals and plants from disease, pests and contaminants, she added.
Russia recently refused to accept exports from about half of the U.S. facilities that had been approved to export pork to Russia. It has raised tariffs on a wide variety of agricultural and industrial products, from harvesting and construction equipment to butter and rice. These actions have significantly cut into U.S. exports to Russia, Hafner said.
Russia is the United States’ 23rd largest goods trading partner, with $36.1 billion in two-way goods trade in 2008. It is the largest export market for U.S. poultry and the fourth largest market for U.S. pork. In 2008, Russia imported a total of $1.3 billion in U.S. agricultural products.
That amount could grow if Russia followed through with previous agreements to lower barriers, Hafner said.
In July, U.S. President Barack Obama and Russian President Dmitry Medvedev met in Moscow and announced a bilateral presidential commission to deepen U.S.-Russian communication in a variety of areas, including business development and economic relations, agriculture, energy and environment. The commission formed more than 15 working groups, many of which are co-chaired by a U.S. Cabinet secretary and a Russian minister. The commission, however, does not cover negotiations on Russia’s accession to the WTO.
