Catch me up if you can
On 27 June 2007, the Kingdom of Tonga became the 151st and newest member of the World Trade Organisation (WTO). Russia falls behind; the next round of WTO negotiations in Geneva has not failed but ended without particular results. Russia argues about agriculture subventions; and it can turn out that it won’t have time to enter the WTO during Putin’s presidency. Besides that one must not exclude that soon it will have to arrange about WTO membership also with Ukraine.
Tonga, a 170-island archipelago about halfway between Australia and Tahiti, has an economy dependent on pumpkin and vanilla exports, fishing. The impoverished South Pacific kingdom agreed on accession terms with the WTO in December 2005, but deferred formal ratification until last month to give itself time to improve its tariff system.
Russia is far behind Tonga. On Wednesday in Geneva Chief Russian WTO negotiator Maxim Medvedkov stated that “all talks can be finished by the end of the year”. This statement didn’t clarify the situation. In other words, the process can be finished or can be not?
As long as main contradictions are agriculture subsidies, but not Abkhazia (Georgia blocked Russia’s entry in the WTO until it set up functioning customs controls on its border with the Georgian separatist regions of Abkhazia and South Ossetia), the conversation is difficult and sticky.
For the countries of the EU it’s quite a sensitive issue, since among members of the Union there are several with predominantly agriculture economy; and struggle for subsidies and tariffs for farming is one of the main European points. $9 billion per year are too much, consider Russia’s partners. As a result, Russia is to face at least one more round of talks. There are too many unsolved problems.
Bilateral negotiations are to be finished soon. In two weeks Russia will recommence talks with Saudi Arabia. According to Russian Economic Development and Trade Ministry, Saudi Arabia will become the last member of the WTO Russia will have to held bilateral talks with. The protocol has not been signed with Cambodia yet, but it’s just a formality, since all agreements have been reached.
Russia has been trying to enter the WTO since 1993, at the moment it is the only country with large economy that still remains outside the WTO. In the last year the main Russia’s opponent was the USA, but during bilateral negotiations Russia managed to persuade it.
It was not however quite easy. The agreement with the USA was supposed to be reached in July 2006 during the G8 Summit in Saint-Petersburg but it did not happen. Veterinary control of imported meat turned out to be the key stumbling block. America demanded that Russian authorities issued certificates for American meat imports without prior safety checks. The Economic Development and Trade Minister German Gref answered that according to the law Russia has the right to check the quality of imported production.
In November 2006 Russia overcame almost the main difficulty; the bilateral agreement with the USA was signed during the Asia-Pacific Economic Cooperation (APEC) summit in the city of Hanoi. Some observers reckon that America has given its consent in order to enlist Russia’s support of the tough resolution about North Korea.
“The next stage is multilateral negotiations that will last 6-8 months,” claimed Gref having signed the agreement eith the USA. Russia is to held talks with the workgroup of representatives of 57 countries-members of the WTO. According to Gref these talks are the last stage of the process of Russia’s entry in the WTO and they are to be finished by the middle of 2007. But to all appearances these plans were not to come true.
There is one more curious moment. Ukrainian authorities promised the Ukrainian more than once that they would enter the WTO till the end of the year. If their promises are more reliable than Russia’s ones (and that is highly probably), Russia will have to face difficult bilateral talks also with Ukraine, that can get with Russia for quotas on pipelines, petroleum crisis in 2005 and many other things. And for German Gref it can become an arduous trial, since it’s still unknown if he will be included in the next Cabinet of Ministers.
German Gref keeps telling that Russia’s accession to the WTO can provide a surplus of 2% to GDP and one of 10% to investments. The Minister claimed that conditions of Russia’s entry in the WTO were extremely more comfortable that ones for many other countries and that could be a powerful incentive for Russia’s economy. For example the agriculture sector will gain access to export markets but it’s still a question, if it will be profitable without subsidies. But the very accession of Russia in the WTO is still a question, just as conditions of it.