Bloomberg News

Russia Isn’t Meeting WTO Pledges, May Face EU Complaints

December 05, 2012

Russia is failing to fulfill its obligations as a World Trade Organization member months after joining the global trade body and may face legal action as a result, European Union Trade Commissioner Karel De Gucht said.

“Three months have now passed and I must say the picture is, if anything, less promising than it was then,” De Gucht said in a speech in Brussels today, according to an e-mailed copy of his remarks. Recent actions by Russia’s government “present a less encouraging outlook. In these areas, far from using its new membership of the WTO as a tool for broader reform, Russia is not even meeting its commitments.”

Russia became the 156th member of the WTO in August after almost two decades of negotiations, bolstering President Vladimir Putin’s efforts to gain greater influence in global affairs. The country had been the largest economy outside the Geneva-based trade arbiter.

“We’re aware of the EU’s concerns,” Maxim Medvedkov, director of the trade negotiations department in Russia’s Economy Ministry, said by telephone.

“It’s not up to the European Commission to decide if measures comply with WTO rules or not,” he said. “We also have complaints about the EU that we’ve been talking about for years, and the EU’s position on these hasn’t changed since Russia’s accession to the WTO. We hope that all of the issues in dispute will be resolved.”

The 27-nation EU is “looking closely” at some Russian policies that may violate global trade rules and is prepared to haul the government before a WTO dispute panel, De Gucht said.

‘Particular Concern’

“We would prefer to negotiate our way to a solution,” he said. “That is the quickest and most cost-effective way to resolve things. However, if that does not prove possible, we are most certainly prepared to use all the legal avenues at our disposal. And since Russia’s accession, that includes dispute settlement at the WTO.”

De Gucht identified four areas that are “of particular concern.” These include a decree on fees for recycling cars that he said discriminates against European producers and an import ban on live animals from Europe that is a “clear-cut breach” of WTO rules, according to De Gucht.

Russia’s decision to raise the level of tariffs it applies to hundreds of imported products also may violate global trade rules, he said.

Finally, referring to the EU’s agreement with Russia on wood exports that was central to the country’s accession deal, De Gucht said the procedure to export lumber at lower duties is “very burdensome -- much more burdensome than procedures for selling wood on the domestic market. This created incentives for producers to discriminate against sales to exporters,” he said.

Debt Crisis

Putin says Russia’s $1.9 trillion economy must expand at least 6 percent annually to become one of the world’s five largest economies in terms of purchasing power. He is championing a bigger role for Russia and other leading emerging- market nations in navigating the global economy, saying richer countries failed to contain the debt crisis.

Russia’s entry into the WTO, which marked the biggest step in global trade liberalization since China joined in 2001, was expected to add $162 billion each year to economic output in the long term by improving market access and attracting foreign investment, the World Bank said in March. WTO members carry out 97 percent of global trade, according to the Washington-based lender.

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


Too Cool for Crisis Management
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus