Will Member Advantages Outweigh Hurdles in Russia's WTO Bid?
Russia has been trying to join the World Trade Organization since 1993; To become a member, a country has to accept whole series of agreements
Last updated on: July 13, 2010 8:00 PM
Russia has been trying to join the World Trade Organization since 1993. Moscow faces hurdles in its bid, but the country will have advantages once it joins the international organization.
The Geneva-based, 153-member World Trade Organization - or WTO - is the agency overseeing the rules of international trade. It was founded in 1995, replacing an organization known as the General Agreement on Tariffs and Trade - or GATT.
Experts say to become a WTO member, a country has to accept a whole series of agreements. They include a ceiling on tariff levels governments can impose on various imported goods and the protection of intellectual property. In addition to accepting all the WTO rules, a country then has to settle bilateral trade agreements with all the countries that so desire.
David Christy, trade expert with the law firm of DLA Piper, says that is why the negotiating process - as is the case with Russia - is lengthy.
"It is an immensely complex process. This is not the same as an invitation to join the G6, G7, G8 or G20," he said. "This is a process wherein, for many of the nations that end up joining, they have to domestically, basically, withdraw and then develop and pass completely new legal regimes in all of the areas affected by the WTO, to bring their laws and regulations into compliance with the various WTO obligations. Russia has been doing this."
Anders Aslund, with the Peterson Institute for International Economics, says in addition to providing the legal framework for the conduct of almost all world trade, the WTO has an effective mechanism to deal with disputes.
"If you violate your commitments to the WTO, then another country can take you to an arbitration court in the WTO and you can be forced to pay big penalties or you can be forced to accept protectionist measures by another country," he said.
Aslund says Russia's WTO bid comes at a time when the country's economy is faltering .
"The realization now is that Russia did live a lot on oil, more than the leadership realized," he said. "And that the economy is not at all as vibrant and strong as they thought. It was a big shock that Russia's GDP fell by eight percent last year, more than any other G20 economy. And there is also a sense that growth rates in the future will be low."
Russian President Dmitri Medvedev has made modernizing his country's economy a top priority of his administration.
Robert Legvold of Columbia University says WTO membership will help that goal by - among other things - opening up markets worldwide.
"But I think the real advantage - and it explains part of the domestic opposition on the Russian side - is that it will create a competitive environment that will be good for Russia in its efforts to modernize its economy," he said. "But that also explains some of the domestic opposition because those sectors that are going to be harmed by the competition - parts of agriculture, part of the chemical industry and so on - have fought it [WTO accession] all along the line, precisely for that reason. So I think the country and the economy as a whole will benefit from that exposure."
David Christy agrees.
"The main thing from my perspective as a professional in the area is that the WTO will provide a framework for it [Russia] to diversify its economy beyond energy," he said. "In addition, I'm a big supporter of transparency and predictability - and compliance with the WTO agreements will assist in that area. The key here is going to be should Russia get in or when it gets in - because I think it's a question of when, not should - then will it respect the obligations to which it agreed: how will it conduct itself as a member of the WTO?"
During a recent Washington summit meeting with President Barack Obama, Russian President Dmitri Medvedev expressed hope that outstanding issues pertaining to Moscow's WTO bid would be solved by the end of September. But some experts believe it may take longer.