WTO Members Scrutinise Russia Trade Policies

15 May 2014

Russia came under heavy criticism on Monday at the WTO from several of its trading partners, who raised sharp questions over whether Moscow – one of the global trade body’s newest members – is indeed adhering to the international trade commitments that it took on less than two years ago.

The criticisms come as Moscow remains under fire for its handling of the Ukrainian crisis, with reports that more sanctions from its Western partners could be forthcoming depending on how Russia responds to the upcoming Ukrainian presidential elections, slated for later this month.

Some of the existing sanctions were also raised by Russia at the WTO on Monday, with Moscow’s representative similarly questioning whether these recent measures were indeed in line with global trade rules.

Sparring at General Council

At a meeting last week of the WTO’s General Council – the organisation’s highest decision-making body outside of its ministerial conferences – eleven members spoke out against what they said were potential Russian violations of international trade law.

Russia joined the global trade body in August 2012, following a nearly two-decade long negotiation process that was fraught with setbacks and disagreements. The decisions by the EU and the US in 2011 to back Russia’s entry was seen as key toward advancing Moscow’s bid in the final stages.

The accession of the US$2.1 trillion economy – which at the time was the largest economy still outside the WTO – was welcomed as a major victory for both the global trade body and for Russia.

“The United States worked hard to support Russia’s accession to the WTO, believing that having Russia as part of the rules-based global trading system would benefit all,” said US Ambassador Michael Punke on Monday. 

“But at this point we are very concerned, both with what appears to be a lack of seriousness on the part of Russia in implementing some of its WTO accession commitments and, in fact, a general rejection by Russia of one of the underlying goals of the WTO – the reduction of barriers to global trade, acutely demonstrated by recent trade actions aimed at members particularly reliant on trade with Russia,” the US official continued.

The EU, which had placed the issue of Russia’s trade restrictions on the meeting agenda, had similar qualms. Russia is the EU’s third largest trading partner, and the EU is Russia’s largest.

“We expect Russia to change gear so that its membership to WTO becomes an asset to the whole organisation, not just to Russia alone,” said EU Ambassador Angelos Pangratis, echoing earlier criticisms that he raised last month at a meeting of the organisation’s Council for Trade in Goods.

“This is an issue of systemic importance,” he continued. “A WTO member cannot serially fail to respect its obligations without undermining the rules-based multilateral system we all believe in.”

The EU and Russia are engaged in multiple disputes at the WTO, over topics ranging from the EU’s Third Energy Package to Russia’s ban on imported pork products from the 28-nation bloc. Japan has also filed its own complaint against Russia, on a recycling fee on imported vehicles that is also being challenged by the EU. (See Bridges Weekly, 8 May 2014 and 10 April 2014)

According to sources familiar with Monday’s meeting, the other members that raised concerns over Russian trade practices included Australia, Canada, Japan, Norway, Korea, Switzerland, Chinese Taipei, and Ukraine, among others.

Among the criticisms tabled on Monday, sources say, were Russia’s use of trade remedies; insufficient notifications to WTO bodies of its trade measures; alleged import restrictions and local content requirements; unexplained border delays; lack of implementation of sanitary and phytosanitary (SPS) and technical barriers to trade (TBT) commitments; and questions of whether Moscow is implementing some tariffs above their “bound” rates – in other words, above the ceilings it agreed to when joining the organisation.

While one of the eleven members that spoke reportedly did note the difficulties of newly-acceded WTO members to comply with new trade commitments, all did emphasise that Russia must do more to comply with international trade rules.

In turn, Russia’s representative at the meeting said it was open to constructive dialogue, while at the same time defending its dedication toward implementing its trade commitments.

Russia questions sanctions

At the same meeting, sources say that Russia also highlighted allegedly trade-restrictive measures being taken by some of its partners – such as the US and EU – against its own interests, namely some of the sanctions that have been imposed on Moscow in recent months in the Ukraine crisis fall-out.

The concerns raised on Monday reportedly echo those mentioned in separate committee meetings at the global trade body, and referred specifically to measures that Russia says is affecting its banking sector – such as travel bans and asset freezes – among other areas.

In turn, those countries said that they were taking their WTO obligations quite seriously, and that any measures taken are in line with international trade rules.

ICTSD reporting.

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