What a Difference a Day Makes: Russia’s WTO Accession Hits Surprise New Hurdle

By Amanda Lahan, Account Manager, The PBN Company, Washington, DC

Since our post yesterday on the apparent progress made in Russia’s WTO accession process, a wrench has been thrown into the works.  Prime Minister Putin announced on June 9 that Russia would withdraw its WTO application and instead reapply as a part of a trade bloc with Kazakhstan and Belarus.  In a joint statement by all three countries Putin said, “Our priority remains WTO entry, we confirm this, but already as a customs union and not as separate countries.”  Reapplication would require starting all WTO negotiations from scratch, meaning it could be years before the Customs Union entered the WTO.

The news came as a surprise to US and EU officials, who had just been speaking with Russian officials about their WTO bid several days ago.

Legally, the Customs Union could enter the WTO as a bloc, but it does not yet formally exist, which means that there is a fairly long timeline on its accession.  According to Russian Finance Minister Alexei Kudrin, formal negotiations on the WTO accession of the three-country union will begin after January 1, 2010. This would give Russia, Belarus and Kazakhstan the rest of 2009 to hash out the details on forming the Customs Union.

There is much speculation that Russia’s announcement is only a tough negotiating tactic - actually meant to speed up the negotiation process for its own WTO accession.  But at present the US and EU have more to lose if Russia doesn’t join the WTO.  When it formally joins, Russia would have to drop its import tariffs significantly, and other WTO members would have the right to sue it for unfair trade barriers.  So given the stakes, there is a chance that if it is only a tactic, it might work - with the US and EU agreeing to a quick accession to avoid starting from square one in 2010.

Possibly related posts:

1. Having it Both Ways - Russia is Saying Yes to Both the WTO and the Customs Union
2. After Two U-Turns, Has Russia’s Accession to the WTO Come Full Circle?
3. Policy Matters: The New Tripartite Customs Union and the Implications for Trade and Geopolitics
4. Customs Union Update: Russia’s Average Tariff Burden Could Fall Under New Union
5. The Customs Union Officially Exists