UACA Friends Society

By

Russia's accession to the World Trade Organization is closer to being

accomplished than at any time in the turbulent 17 years it has been trying to

join, yet there are still barriers to overcome.

WTO member countries do not want to give Russia a free pass, rather they

want to force Moscow to finally honor commitments it made many years ago

to improve economic cooperation as a market economy. And Russia would

benefit from a more flexible system involving trade of services and foreign

direct investment as a member of the WTO.

In what may be the best news yet, President Barack Obama offered the

Russian Federation his full support and advice in the accession process

during recent talks in Washington, D.C.

Russia agreed to accelerate the adoption of measures that would bring

Russia into conformity with the rules and norms of the WTO. Russia's

finance minister, Aleksei Kudrin, revealed at a news conference in Yalta that

his country had resolved longstanding trade disagreements with the United

States that had been holding up Russian membership. He reiterated that a

formal bid to join the trade body would be ready in two to four months so that

Russia could join the WTO in six months to a year after that period of time.

However, Russia's membership in the WTO is still not guaranteed due to

Russia's tumultuous trade disputes, failure to grant United States access to

poultry and pork and the lack of protection for intellectual property, including

protections for patented pharmaceuticals.

Once Russia joins the WTO, the United States will be required to repeal a

trade restriction (Jackson-Vanik) that was implemented during the Cold War

to urge the Soviet Union to allow emigration of Jews, and has in recent years

proved to be a diplomatic thorn. Even though emigration controls were

eliminated after the collapse of the Soviet Union, the United States has

continued to keep the law on the books to leverage disputes.

American diplomats have gone on record saying that the law will be

repealed, which would give Russia permanent favored trade status, effective

upon Russia's entry into the WTO. However, Congressional repeal is not

assured because of the makeup of the next Congress. These new members

of Congress tend to be staunchly conservative on tax and trade policy and

represent communities in the Midwest and the South, where many jobs have

been lost due to increased global competitiveness and outsourcing.

According to the Council on Foreign Relations, Russia now recognizes the

strong economic role that China plays in the world community and does not

want to be overshadowed by such a global behemoth. Unlike China,

Russia's agricultural subsidies are already low, and Russia has agreed to

open its insurance and banking markets. The Economic Policy Institute

indicated that in 2006 alone, the trade gap with China resulted in the loss of

366,000 jobs in America; those individuals who retained their jobs had their

earnings decreased by roughly $1,400.

Moscow has repeatedly complained that it is being held to a higher standard

by the WTO regarding agriculture and the enforcement of intellectual property

rights compared to other countries, including China.

However, the real obstacle to Russian accession into the WTO is the lack of

mutual trust between Russia and the United States. Russian trade

negotiators fear that Americans will raise new concerns after all previous

outstanding issues have been resolved. Given the tone and the mindset of

some of the new members of Congress, who hail from areas with high

unemployment, such a belief is not without merit.

In 2009, American negotiators were surprised by Putin's assertion that

Russia's customs union with Belarus and Kazakhstan had priority over its

WTO obligations. However, President Dmitry Medvedev has now made it

clear that Russia's entry into the WTO is the top priority. Russia's accession

will be decided politically by its leaders and any technicalities should be

addressed in the coming months.

Ralph E. Winnie, Jr., is the Vice-President of US Asian Cultural Academy (UACA)

and director of the Eurasian Business Coalition's

China Program.