Russia on verge of WTO membership

MOSCOW — Eighteen years after it first asked to join the World Trade Organization, a still ambivalent Russia is on the verge of membership, with negotiators expected to sign off on the final terms at a meeting in Geneva beginning Thursday.

A derailment or delay at this late hour would not be shocking, given the zigs and zags of Moscow’s path to membership, but it would be surprising, analysts say.

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Even if it gets cold feet, “it will be difficult for Russia to find other issues” that would enable it to put off accession, said Fyodor Lukyanov, editor-in-chief of the journal Russia in Global Affairs.

WTO membership — which would become official in mid-December if things go smoothly in Geneva — is one of the benefits that Russia was seeking in the “reset” of relations with the United States. If it happens, that would leave as Moscow’s one remaining major goal a repeal of the Jackson-Vanick amendment, a Soviet-era law that ties trade to Russia’s treatment of religious minorities.

Jackson-Vanick is a significant, if symbolic, irritant to the Russians. The chances of its repeal seem to be fading.

Joining the trade group would clearly create winners and losers in the Russian economy. Auto manufacturers and food producers, which have been protected by tariffs and other government restrictions, would almost certainly be hard hit, though it would probably be some years before all the barriers were lowered.

Russian businesses in general are burdened by widespread corruption, which will make it more difficult for them to compete with foreign firms in an open market.

Steel producers would benefit, however, because it would become easier for them to compete abroad.

More significantly, Russian leaders expect that membership in the WTO will make their country more attractive to foreign investors, scared away at present by Russia’s reputation for capricious and murky dealings.

At the Group of 20 meeting last week, the RIA Novosti news agency reported, President Dmitry Medvedev said he thought the group’s members should do all they could to expedite the liberalization of trade and investment, and added: “I’m sure that Russia’s long-overdue admission to the WTO could become a good contribution to a common cause.”

Prime Minister Vladimir Putin has been less enthusiastic. At a recent conference, he said the benefits and costs of membership are evenly balanced, and that all in all, Russia would probably be better off joining. He expressed considerable irritation with the West, nonetheless, and suggested that helping domestic manufacturers was more important than joining the global organization.

Until five years ago, Putin was the “main driver” for joining, Lukyanov says. But he concluded that the West was trying to take unfair advantage of Russia in negotiations and grew disenchanted. Then the economic crisis of 2008, which revealed the scope of Russia’s ties to the global economy, started to change his mind again. Talks continued, and, Lukyanov contends, Russia has obtained better terms now than it could have in previous years.

The last real stumbling block was Georgia, which as a WTO member could have vetoed Russian accession. Georgia and Russia fought a war in 2008 over the breakaway regions of Abkhazia and South Ossetia, and considerable hostility lingers. After intensive negotiations and mediation by the Swiss, Georgia agreed Oct. 28 to Russian membership as long as trade between Russia and the two rebel regions is monitored by third-country inspectors.

“I think we have exhausted our creativity,” Georgia’s chief negotiator, Sergi Kapanadze, said afterward. But during the standoff with Georgia, Russia didn’t seem particularly outraged or impatient. Joining the WTO will, to some degree, change business as usual, and Russia has been in no hurry to take the final step.

 
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