Russia's WTO hopes on
borderline By Kaveh L
Afrasiabi and Natalia Gold
Russia's quest
to join the World Trade Organization received a
nominal boost at the weekend from President George
W Bush, who in his talks with President Vladimir
Putin in the Russian resort of Sochi reaffirmed
the US commitment to help Russia accelerate the
accession process - which began 15 years ago.
Yet growing signs of new complications on
several fronts, including the US, Europe, and some
of Russia's immediate neighbors, may slow or even
thwart Russia's accession to the trade body,
irrespective of the gains already made during
long-drawn out bilateral and multilateral
negotiations and extensive changes in Russia's
trade regime in preparation for the country's
membership of the WTO.
First, Russia has
unexpectedly increased the tariff on its timber
exports, raising the ire
of European Union, which has threatened to scuttle
Moscow's WTO membership bid. Unless the Russia-EU
negotiations succeed in resolving this dispute, a
new "chill" in Russia's path to WTO will be
unavoidable.
Europe accounts for 22% of
Russian timber exports. China, accounting for some
60% of those exports, also has a stake in these
negotiations and may retaliate if they reach an
impasse - which they may well do given the gap
between the parties over what is the optimum
timber tariff and Russia's stated intention to
enhance its domestic paper manufacturing industry
by increasing investment in the timber milling
manufacturing. Such investment has already
increased to 47 billion rubles (US$2 billion) in
2007 from 37 billion rubles in 2006.
Despite Europe's complaint of Russia's
"WTO-inconsistent" move on timber exports, Russia
is unlikely to scale back to the tariff level
deemed agreeable by the EU. The choice is
therefore with the EU to decide if this particular
issue should be allowed to torpedo Russia's WTO
bid.
The timing of this dispute plays into
the hands of Moscow officials, who seek a
"balanced approach" between the WTO objectives of
liberalized trade and Russia's (sector by sector)
national economic interests.
Second,
Ukraine, which beat Russia in the race to join the
WTO, has threatened to exercise its right to join
the WTO working group and thus to put pressure on
Russia on energy issues, and "non-economic" issues
such as cooperation with NATO and deployment of
the Russian Black Sea Fleet in Crimea.
Third, although Russia has concluded most
of its WTO-based bilateral trade negotiations, it
faces an uphill battle with Georgia, whose
president, Mikhail Saakashvili, has explicitly
tied in the on-going Russia-Georgia WTO talks to
vexing territorial issues. In a strong response to
Saakashvili's comments to the Russian daily
Kommersant, the Russian Foreign Ministry has
issued a communique that reads in part:
Separately we have to dwell on the
assertions of Mikhail Saakashvili on the
question of the Russian-Georgian WTO
consultations. In the course of these
consultations the Russian side has from the
outset been unambiguously stressing that
practical realization of any mechanisms of
customs control at the Gantiadi-Adler and Nizhny
Zaramag-Roki checkpoints depends completely on
progress in the settlement of the
Georgian-Abkhaz and Georgian-Ossetian conflicts
and on the consent of Sukhumi [capital of
Abkhazia], and Tskhinvali [capital of South
Ossetia].
Fourth, both Ukraine and
Georgia are seeking to join NATO, much to the
chagrin of Russia which, in the words of President
Putin at the recent NATO summit in Bucharest,
regards NATO's eastward expansion as a "threat".
The two seemingly discrete issues of NATO's
expansion and Russia's WTO membership have now
increasingly intersected, raising the prospect of
more, rather than less, geopolitical
considerations acting as breaks on Russia's
process of accession.
With the US acting
as a WTO "gatekeeper", much depends on the climate
of Russia-US relations, which remain conflictual
in light of the conviction held by the Russian
leadership that they have seen an absolute
disregard of Rusian interests by the White House,
to paraphrase Konstantin Kosechyov, the chairman
of the State Duma Foreign Affairs Committee. With
a host of divisive issues between them, ranging
from Kosovo's independence to the US's plan to
install a missile defense shield in Eastern Europe
to the crisis around the CFE Treaty (on reducing
conventional forces in Europe), to NATO's
expansion, the US and Russia are apt to resort to
any available leverage with respect to each other,
be it concerning security, economic issues, or
trade, in their current games of strategy towards
each other. A trade-off whereby Russia would
concede on its neighbors' induction to NATO in
exchange for US backing for Russia's WTO
membership, is not very likely given Moscow's
security priorities.
Narrowing gaps
between security and economic considerations,
reflecting an unprecedented willingness of
countries such as Ukraine and Georgia to link
extra-economic issues with WTO issues, count as a
minus as far as Russia is concerned. In turn,
these developments set a tougher test of
leadership for the Russian President-elect, Dmitry
Medvedev, who in his campaign speeches had
expressed a desire to accelerate Russia's bid to
join the WTO.
Medvedev may already have
discovered that the complexities of Russia's
foreign affairs preclude a neat
compartmentalization of economic and security
issues; the two are interrelated and though the
route to Russia's WTO membership is grounded on
legal and economic issues, the combined trade,
political and geostrategic factors are now
threatening that process.
With deft
diplomacy, Moscow may still wrap up WTO
deal-making this year, as hoped for by the
country's trade negotiators. Both the US and EU
will make important economic gains from Russia's
membership through improved access to the
country's markets. New investment opportunities in
Russia will also be created, which in today's
global recession-threatened economy will
undoubtedly be welcomed by not only in the West
but also worldwide.
Kaveh L
Afrasiabi teaches international relations at
Bentley College. Natalia Gold teaches
business at Bentley College, Massachusetts.
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