News and Analysis • Volume 12 • Number 4 • August 2008

WTO News - Russia’s Accession: A war Casualty?

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Prompted by threats from some WTO Members, Russia announced in late August that it would withdraw certain commitments it had agreed to in the course its 15-year quest for WTO membership.

The decision was made amidst deepening tensions over the Caucasian crisis, although Russian officials did not evoke the situation among the reasons for changing their negotiating position. Instead, Prime Minister Vladimir Putin said that certain, so far unspecified, agreements already reached now conflicted with Russia’s interests, and that trading partners would be informed accordingly.

Mr Putin noted that his government no longer saw ‘any advantages’ from WTO membership, stressing instead the ‘heavy burden’ it would inflict on the country’s agricultural and manufacturing sectors. Prime Minister Putin nevertheless left the door open for future negotiations. “This doesn’t mean we should renounce our strategic course towards the WTO but there should be some clarifications on this question…. Elementary fairness should prevail,” he said. However, Deputy Prime Minister Igor Shuvalov predicted that there now was little chance of concluding the accession negotiations within this year.

Irritation over Trade Threats
At least part of Russia’ change of tack with regard to the WTO can probably be put down to irritation over US Commerce Secretary Carlos Gutierrez’s warning that US support for Russia’s G-8 membership, as well as its WTO accession, were ‘at risk’ as a result of its military action in the Caucasus. International tension aggravated further after Russia acknowledged the independence of the breakaway Georgian regions Abkhazia and South Ossetia on 26 August.

The EU has not withdrawn its support for Russia’s WTO membership, although it has suspended negotiations on the renewal of its strategic partnership agreement with Russia until the latter withdraws its troops to the positions they held prior to 7 August 2008.

Stalling Accession Might Not Hurt Russia Most
Whatever the motivations, the Russian decision is unquestionably a setback for the multilateral trading system, as most Members see a tremendous advantage in having the world’s tenth largest economy bound by WTO disciplines. Many also consider that Russia’s joining the organisation would strengthen its integration into international governance structures more generally.

Under WTO accession procedures, a candidacy must be approved by the entire membership. In addition, bilateral market access agreements must be reached with all countries seeking them. While Russia has already concluded such agreements with most WTO Members, including the EU and the US, multilateral negotiations have so far failed to settle questions related to Russia’s future agricultural subsidies, intellectual property protection, state-trading enterprises such as Gazprom and export taxes on unprocessed timber (see page 21).

Russia has expressed exasperation about demands made by trading partners in its accession marathon before. In September 2006, it threatened to pull out of the negotiations and to end compliance with WTO obligations it had taken on unilaterally. That time, the threat was not carried out. Although Georgia blocked formal WTO negotiations on Russia’s accession in 2006, informal talks took place regularly until mid-July 2008.

Wider Implications
Some analysts see the move as part of broader Russian determination to distance itself from the West. Reacting to criticism over its actions in the Caucasus, the missile defence shield agreements signed between the US, the Czech Republic and Poland, and NATO’s eastward expansion, Russia has suspended all military co-operation with the Western defence alliance. Russian Foreign Minister, Sergei Lavrov, has suggested that NATO needs Moscow more than Moscow needs NATO. That could turn out to be true for Russia’s WTO membership quest as well.