10. Joint Bid Still Baffles WTO Members

7 September 2009

Trading partners remain mystified about how Russia, Belarus and Kazakhstan intend to proceed on their joint accession WTO bid announced more than two months ago.

The three countries announced on 9 June that they were suspending their individual WTO accession requests and seek instead to join the global al trading body as a single customs union (see page 9 for background and analysis).

Much of the discussions at an informal working group session of Russia's accession held later in June centred on whether such an approach would be permissible under WTO rules. On the face of it, the new customs union, which is to enter into force as of January 2010, does not fulfil the criteria for accession. Countries, including ‘customs territories' such as Hong Kong or Taiwan, must have "full autonomy in the conduct of its external commercial relations", including all areas covered by WTO agreements. That means not just tariffs, but intellectual property rights, sanitary and technical standards, and a myriad other areas stretching from subsidies to import licencing procedures. The members of the planned customs union, however, will only share a common external tariff, while - presumably - remaining free to determine their own policies in other trade-related areas covered by WTO rules.

The meeting left delegates confused about how the three countries intended to move forward. Ultimately, it would be up to the membership to decide "if they consider the [joint bid] feasible under WTO rules or not," said Stefan Johannesson, who chairs Russia's accession negotiations. However, he cautioned that this was "obviously a complex legal issue. We still need to see what this means. The Members will have to approve a new working group. They have to appoint a new chairman. This obviously takes time."

Summing up the situation to Bloomberg Television, US Trade Secretary Gary Locke said that "to have Russia, along with these two other republics, join as a customs union for ascent to the WTO is unprecedented and, according to most other Members, is not workable and unacceptable."

Mixed Signals from Moscow

Meanwhile, Russia's Economic Development Minister Elvira Nabiullina insisted that the three countries were "joining together, that's the decision that's been made and that's what we're working toward." Russia's chief WTO negotiator Maxim Medvekov also confirmed that "Russia, Belarus and Kazakhstan continue working to join WTO as a customs union."

On the sidelines of the G-8 summit in L'Aquila, however, President Dmitry Medvekov seemed open to reconsidering the new approach. Without ruling it out, he admitted that Russia's trading partners had characterised the joint bid as ‘quite problematic'. Alternatively, the troika could "join in the other way - by agreeing a common position between the three members of the customs union but joining separately. This seems to me simpler and more realistic although of course it would be part of a common position," he said.

Something like Mr Medvedev's suggestion could be taking shape, although the precise meaning of official statements remains obscure. The three countries announced in August that they had formed a joint negotiating team to conduct the accession talks, and Russia's Deputy Prime Minister Igor Shuvalov said the ‘main thing' was that Russia, Belarus and Kazakhstan were "carrying out the June decision - that we are not holding the WTO accession talks separately." But Mr Shuvalov also left the door open to a hybrid solution: ""Legally we may enter separately... On certain issues we may enter with the customs union." He emphasised nevertheless that the three countries would insist on accession "on equal terms and at the same time."

This could mean considerable renegotiation of the terms of accession already agreed by each applicant with other WTO Members. For instance, Russia has insisted on a transition period before it will fully comply with the agreements on technical barriers to trade and sanitary and phytosanitary measures, while Kazakhstan has agreed to adhere to the rules upon accession.

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