After 18 years Russia is on the verge of joining the World Trade Organisation
There was disbelief this week when Arkady Dvorkovich, adviser to President Dmitry Medvedev, told journalists that Russia was close to joining the World Trade Organisation (WTO). Russia has been “close” for ages, but the timing has always slipped. Yet after 18 years of talks, it seems that membership now beckons.
Both America and the European Union have long agreed, as have all the other 153 WTO members bar Georgia, a small former Soviet republic which fought a brief war with Russia in August 2008 and is still partly occupied. Georgia had insisted, quite reasonably, on placing international observers to monitor the movement of goods at its sovereign border, which includes the territories of Abkhazia and South Ossetia.
Russia, which has recognised the independence of Abkhazia and South Ossetia, said this compromised their status. Swiss mediators have found a deal that does not mention their status, refers to the border as a corridor and provides for monitoring not by a government agency but by a private foreign company accountable to the Swiss government. Now Georgia has said “yes”, clearing the way for Russia’s entry.
After a few days, Russia also accepted the deal. There is no doubt that Mr Medvedev would like to go down in history not just as somebody who tinkered with Russian time zones but as the man who took his country into the WTO. The final decision still lies with Vladimir Putin, Russia’s prime minister and likely future president, though he is unlikely to block it now.
As Vedomosti, Russia’s business daily, points out, Mr Putin has always been the real obstacle to Russia’s entry into the WTO. In 2009, when talks between Russia and America were going full steam, Mr Putin unexpectedly thwarted them by saying that Russia would join only with Belarus and Kazakhstan, with which it has a customs union. Mr Putin, initially eager for Russia to be in the big international clubs, has come to see some WTO demands as a politically motivated nuisance.
The benefits of WTO membership are debatable. Some estimate that Russia could gain at least $50 billion a year. Others argue that Russia would do better to stimulate exports before joining. As it is, two-thirds of exports are oil and gas, not covered by WTO rules. Apart from extractive industries and metal, few Russian goods are competitive. A World Bank report notes that Russian exporters have trouble not just entering foreign markets but surviving in them.
The real problem, however, is not trade barriers to Russia’s goods, but the country’s own inefficiency, institutionalised corruption and stifled competition. None of these problems can be solved by WTO membership. But Sergei Guriev, head of the New Economic School in Moscow, says that it would at least expose corruption and increase competition, deeply alien to Russia’s ruling bureaucracy. Indeed, the main benefit of WTO membership may be political. “It will be a sign that Russia is moving towards the civilised world,” says Mr Guriev, “not away from it.”
Showing posts with label WTO. Show all posts
Showing posts with label WTO. Show all posts
Friday, 4 November 2011
Russia and world trade: In at last?
The Economist discusses pronouncements this week that hint at the impending arrival of the Russian Federation at its long-awaited WTO destination:
Tuesday, 4 October 2011
Putin's grand vision: a new Eurasian bloc with old Soviet neighbours
The Guardian, alongside many other media outlets, brings news of Vladimir Putin's expressed ambitions to (re)create a new power bloc within Eurasia:
Russian prime minister proposes 'ambitious' union across republics based on economic interests
One week after announcing that he will return to the presidency next year Vladimir Putin has laid out a grand vision to bring Russia's former Soviet neighbours back into the fold.
Putin proposes the formation of a "Eurasian union", a bloc that could boost Russia's influence on the global stage. The proposal – from the man who once dubbed the Soviet Union's collapse "the greatest geopolitical catastrophe of the 20th century" – raises the spectre of the Russian prime minister's imperial designs.
The Eurasian union would be based on a customs union with Belarus and Kazakhstan, Putin suggests in an article published in Izvestiya newspaper on Tuesday.
"We are not going to stop there, and are setting an ambitious goal before ourselves – to get to the next, even higher, level of integration – to a Eurasian union," he has written. Tajikistan and Kyrgyzstan are also expected to join, he says.
Expecting critics to say he is trying to re-form the Soviet Union, Putin says: "We are not talking about recreating the USSR in one form or another. It would be naive to try to restore or copy that which remains in the past, but close integration based on new values and a political and economic foundation is imperative."
He adds: "We received a big legacy from the Soviet Union – infrastructure, current industrial specialisation, and a common linguistic, scientific and cultural space. To use this resource together for our development is in our common interest."
Putin has formed countless Moscow-led groupings aiming to maintain the power that Russia lost with the collapse of the Soviet Union. In recent years he has focused on economic integration and has pushed for former Soviet states to adopt the rouble as a regional currency.
In 2009 Russia formed a customs union with Belarus and Kazakhstan which is due to become a "unified economic zone" next year, bringing down barriers to the movement of labour and capital.
The Eurasian union would take that one step further, Putin says.
"We propose a model of powerful, supranational union, capable of becoming one of the poles of the modern world," he writes in the article.
It will be an uphill battle. The combined GDP of the EU stood at $16 trillion last year, while the Commonwealth of Independent States, an informal grouping of former Soviet states minus the Baltics, was just $1.9tn, according to the International Monetary Fund. Putin has been at pains to describe the union as an open project into which no one would be "pushed or rushed".
He has issued, however, a thinly veiled criticism aimed at Ukraine, which has continued to seek integration with the EU rather than renew ties with Russia.
"Some of our neighbours explain their reluctance to participate in advanced integration projects in the post-Soviet space by saying it allegedly contradicts their European choice," Putin writes.
"This is a false divide. The Eurasian union will be built on universal principles of integration as an integral part of greater Europe, united by common values of freedom, democracy and market laws."
The other two members of the customs union, on which the Eurasian union would be based, have been criticised for their lack of democracy, with Belarus dubbed "the last dictatorship in Europe".
The article is Putin's first foreign policy pronouncement since he announced he would return to the presidency next year, potentially getting another 12 years in power.
Fyodor Lukyanov, editor of Russia in Global Affairs, said: "It's quite remarkable Putin would start with this.
"The logic behind it is primarily economic, and in this sense it is different from previous attempts, which were political or just decorative, to show Russian leadership."
The move could also be a sign of frustration with Russia's 18-year-long effort to join the World Trade Organisation, Lukyanov said. "The customs union was to a certain extent Putin's response to years and years of fruitless negotiations on the WTO – if global integration is not available let's turn to a regional one."
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