Russia on Track to WTO Membership

Sources: Russia and US reach deal on WTO - FT.com; Moscow closes in on major trade goal - IHT.com

After thirteen years of negotiations since the fall of the Soviet Union, the U.S. and Russia announced an agreement “in principle” that would pave the way for Russia’s ascension to the WTO. Russia is presently the largest economy in the world outside of the WTO.

Prior to the agreement, a number of sticking points had stalled negotiations, including meat exports to Russia, duties on U.S. manufactured goods, protection of the Russian financial services industry, and enforcement of intellectual property rights (IPR). IPRs were the primary concern for the U.S. because of Russia’s extraordinarily lax prosecution of counterfeiting and piracy operations. Importantly, Russia has taken steps recently to improve in this area, closing a large counterfeit pharmaceutical operation and preparing a new law on intellectual property rights.

Unlike China, which benefited from reduced trade barriers for its consumer exports as a result of its WTO membership, Russia’s primary export, energy, is in such demand that few trade barriers exist. Instead, Russia stands to benefit because WTO membership will encourage more foreign investment and competition in Russian business, and it will give Russia an opportunity to participate in world trade talks.

WTO membership must be approved by each member country, and the U.S. was the last major hold-out nation. Russia must still reach or confirm agreements with Costa Rica, Moldova, and Georgia before it can join the WTO. Georgia previously approved Russia’s membership, but rescinded approval after a political fallout with Russia this past summer.

Questions

1. After thirteen years of delay, is now the right time for the U.S. to accept Russian admission to the WTO?

2. Should Russia’s WTO membership be conditioned on IPR enforcement? If so, has Russia done enough to enforce IPRs?