After Two U-Turns, Has Russia’s Accession to the WTO Come Full Circle?

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

The history of Russia’s application for World Trade Organization (WTO) membership was already long and complicated when, in June this year, Russia announced it would withdraw from WTO negotiations and focus on first forming a Customs Union with Belarus and Kazakhstan. However, after five weeks in which Russia sought to convince the international community that they had no intention of joining the WTO independently, the leadership seems to have reversed course again. In President Dmitry Medvedev’s words, joining the WTO as a Customs Union would be “nice, but rather problematic.”

So why the 180-degree turn so soon after the first reversal? It seems that U.S. and EU officials – intentionally or otherwise – called their bluff. The Russians stated that once the Customs Union was in place, expected to happen by January 1, 2010, they would immediately begin WTO negotiations to enter as a union. Previous WTO negotiation agreements would, they claimed, stand for the Customs Union as a whole. U.S. and EU officials, however, pointed out that joining the WTO as a Customs Union would not be nearly as easy as the Russians thought it would be. U.S. Commerce Secretary Gary Locke stated that the joint bid would be “unworkable, unprecedented and would only delay matters.” Pascal Lamy, head of the WTO, suggested that the Customs Union may not have the “competence to negotiate these issues.”

Russia recognizes that joining the WTO would be beneficial to its economy in the long run: membership would help to diversify the economy, open up new markets and provide a forum for resolving trade disputes. The economic crisis has, however, taken a toll and, like many countries today, short-term protectionist measures are being considered to help industries worst hit by the crisis, particularly the agriculture sector and auto industry. There has been speculation that during the G8 talks and President Barack Obama’s visit to Moscow, Russia won some concessions from US and Europe, enabling Russia to keep short-term protectionist measures in place while still moving towards WTO accession.

So, what to make of all this? It appears that Russia is still intent on creating a Customs Union, but has decided that its best chances for getting into the WTO in the near future lie with an individual application. Could there be another reversal? Perhaps, but the plan for now seems to be to move ahead, simultaneously, both with WTO accession and the creation of the Customs Union.

Possibly related posts:

1. Having it Both Ways - Russia is Saying Yes to Both the WTO and the Customs Union
2. What a Difference a Day Makes: Russia’s WTO Accession Hits Surprise New Hurdle
3. Pigs Are Still a Problem, But Russia’s WTO Accession Chances Are Looking Up
4. The Customs Union Officially Exists
5. Customs Union Update: Russia’s Average Tariff Burden Could Fall Under New Union