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30.07.07
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A New WTO Roadblock
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By Dmitry Babich
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Will Ukraine’s Membership Complicate Russia’s Entry?
Russia’s 14-year quest for WTO membership may be in for another long detour. According to the WTO rules, in order to join, a country must obtain the agreement of all member states, which join a working group on the new candidate’s WTO accession. As Russia is getting closer and closer to ironing out the differences with all the 67 members of its working group, a prospective new member – Ukraine -- may create yet more problems.
Progress in Russia’s WTO negotiations is being compromised by the fact that the United States continues to drag its feet on a formal approval, despite officially supporting Russia’s WTO membership in principle. An element of uncertainty is also introduced by Georgia’s withdrawing its agreement to Russia’s WTO accession following a series of recent economic sanctions from Russia, which included a ban on Georgian wines and mineral water. The Georgian side is also demanding that Russia stop using border crossings to Georgia’s own separatist regions of Abkhazia and South Ossetia for unauthorized trade with these regions.
“If we don’t manage to wrap up negotiations by January 2008, another round of consultations may be postponed until 2009. That would mean that we wouldn’t get into WTO until 2010,” said Andrei Kushnirenko, deputy chairman of the department of trade negotiations in Russia’s Ministry of Economic Development and Trade. In the editorial opinion of the Vremya Novostei daily newspaper, the looming issue of presidential succession could be a reason for the possible delay until 2009. The presidential elections, scheduled for March 2008, may absorb all of the energy of Russia’s ruling elite, leaving no room for continued WTO accession efforts.
Meanwhile, Ukraine seems to be progressing much better in its negotiations on WTO accession. Chilean WTO representative Marko Matus, who heads the WTO’s working group on Ukraine, said in mid-July that the group’s meeting in October 2007 may conclude the talks. “We are entering the final stages,” said Ukraine’s First Deputy Economy Minister Valery Pyatnitsky, who heads the country’s WTO delegation.
If Ukraine becomes a WTO member before Russia, it can join the organization’s working group on Russia and set its own conditions for Russia’s accession.
Ukraine, the second largest former Soviet republic with a population of 48 million people, is one of Russia’s four most important trading partners, alongside the EU, China and Belarus, but it is by far the most controversial of them all. The frequent economic tensions between Russia and the Ukraine often have political consequences. Ukraine tends to take a tough negotiating stand, refusing to compromise with its neighbor solely because of ethnic kinship or shared post-Soviet legacy.
In the last three years, Russia has also turned into a more unwieldy partner for Ukraine, declining to write off Ukrainian gas debts or to supply fuel to the Ukraine at a discount price, as it did in the 1990s. All of this may lead to a scenario whereby Russia will have to pay a much higher price for its WTO membership than expected, or just to drop the idea of joining altogether.
“The United States wants to coddle Ukraine and punish Moscow by denying Russia WTO membership, which, they know, is a major goal of Putin’s second term in office,” said Demetrius Floudas, the team leader of the EU-funded TACIS project working to help facilitate Russia’s joining of the World Trade Organization.
However, if the idea is to weaken Putin politically, the United States could be making a serious miscalculation. “The attitude toward WTO membership sways from neutral to mildly negative in Russia,” Floudas said. “It is easy to shift that attitude towards total negativity with a media campaign, which can be easily organized by pro-Putin media outlets. So, weakening Putin politically by denying Russia WTO membership is problematic. But the West does not seem to understand this.”
Before the current Ukrainian President Viktor Yushchenko came to power in 2005, Ukraine and Russia had been promising each other to “synchronize” their WTO accession in order to prevent a possible showdown in case one of the two big “Slavic brothers” gets in first. However, the recently appointed Ukrainian Foreign Minister Arseny Yatsenyuk said his government did not have this “synchronization” in its plans. When answering a question about whether Ukraine could use its future WTO membership in order to strengthen its negotiating positions vis-?-vis Russia, Yatsenyuk declined a definite answer, stressing that Russia was still Ukraine’s largest trading partner and needed to be handled with caution.
As Russia’s new election cycle beginning with the Duma elections in December is fast approaching, Russian officials keep their hopes pinned on joining the WTO this year. This can explain the upbeat tone of Alexei Likhachyov, one of Russia’s negotiators and deputy chairman of the committee on economic policy in the Duma. “Although there may be difficulties, Ukraine won’t stop the process,” Likhachyov said. |
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