Bridges Weekly Trade News Digest • Volume 14 • Number 19 • 26th May 2010

After Delay, Russian Accession Talks to Resume in June

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After a year-long suspension of negotiations with WTO members, Maxim Medvekov, lead negotiator in Russia’s WTO accession process, announced this week that talks would resume on 17 June.

The announcement comes almost immediately following Russian Prime Minister Vladimir Putin’s statement that Moscow’s planned customs union with neighbouring Belarus and Kazakhstan would not take effect on July 1, as previously believed.

Taken together, the statements have caused speculation that Russia might attempt to join the WTO on its own, abandoning an earlier attempt to join the global trade body as a bloc along with its two neighbours.

The failure of the recent customs union talks between Russia and Belarus has largely been blamed on arguments over duties on oil.

Even if Russia does set aside the plan to join the WTO as part of a customs union, Moscow will still need to modify several of its policies before it can expect its application to be approved by existing WTO members.

One of the major policy areas causing contention is whether Russia will agree to the WTO’s rules on agricultural subsidies. WTO rules prevent acceding countries from imposing subsidies higher than their average for the previous three years. However, Russia’s recent bailout package for its agricultural sector, which had been on the verge of bankruptcy, included heavy increases in subsidies.

Other obstacles include Russia’s high export duties on timber, and some WTO members’ insistence that Russia, as part of its accession commitments, require state companies trading in services to abide by commercial criteria.

Russia’s interest in joining the WTO stems largely from a desire to diversify its energy and commodity-focused economy towards trade in faster-growing markets, specifically in new technologies.

The upcoming EU-Russia summit has been heralded as an opportunity for the EU to help Russia modernise its economy. Given Russia’s apparent desire to join the WTO sooner rather than later, this summit could help resolve some irritants in the accession process prior to the resumption of negotiations at the WTO.

While European scepticism persists over Russia’s commitment to free trade, Medvekov has expressed optimism about the renewed negotiations, according to the Financial Times. Medvekov claimed that it “is technically possible to complete the negotiations in eight-nine months. As long as there is the will.”

“Russia’s WTO bid tests US relationship,” ASIA TIMES, 19 May 2010; “Europe to help Russia modernize economy,” BUSINESS WEEK, 18 May 2010; “Russia eyes deep end of world trade,” FINANCIAL TIMES, 18 May 2010; “Russia to resume WTO negotiations in June - official,” THE GUARDIAN; “Russia’s Putin says customs union delayed,” REUTERS, 22 May 2010