WTO and Russia: If Hollywood Agrees, the U.S. Will Help

Recent trends on the horizon of Russian membership in the World Trade Organisation are as follows: We can join the WTO in January 2012. This is the thought among the European Union; the possibility is not excluded in Washington. This is if everything goes well. Nobody can give a 100 percent guarantee. The American side reckons everything is already 95 percent certain. Jose Barroso, the current president of the European Commission, said that he had already participated in 13 EU-Russia summits where this issue was discussed, and he hopes that there is no further need for discussions. After the 17 years of our “trading odyssey,” today we are not just standing by the doors of the organization but at its threshold with the door half open. Not to join would be an embarrassing thing to do, though the joining could be more painful than expected.

We need to push the Congress forward

The White House has promised, too, to assist with the WTO membership. This has been promised regularly since 2006, but Mr. Obama appears to be more engaged in doing so than Bush Jr. It may work out.

The head “trade-rep” of America, U.S. Trade Representative Ron Kirk, spoke to Congress on February 9 and set out the basics of the U.S. administration’s international policies and trade priorities for the year 2011. The support of Russia in joining the WTO is one of them, he said.

The WTO is an international non-commercial organization that regulates international trade between the member countries. The organization is a successor to the General Agreement on Tariff and Trade (GATT) that commenced in 1947.

The U.S. administration will try to press the U.S. Congress this year, Kirk said, to provide Russia with a normal trade relations regime (formerly called “Most Favoured Nation”). In order to do that, the U.S. Congress has to repeal the Jackson-Vanik Amendment that denied trade privilege and restricted the freedom of immigration from the former USSR.

The Congressmen (the majority in the lower chamber belongs to the Republicans) usually are not very enthusiastic about ideas of executive authorities that can deprive them (the Congressmen) of serious instruments of pressure on the White House. The Jackson-Vanik Amendment, of course, represents a political tool, a means of blackmail. But Congress has to make “exceptions” from the Amendment to the Trade Law application for Russia (the USSR successor) twice a year. Congress always used it to deprive the administration of making exclusions in other areas.

WTO is “an Olympic movement” in trade

Russia already has a membership in the most of the world clubs (G8 or G20, for instance), but doesn’t have a membership card at the WTO. We are the only large and significant economy in the world (10th or 11th place) that does not participate in the trade club of 153 states. Not having the WTO card today, in the circuits of advocates of Moscow joining the organization, is considered to be the same thing as not having, in a decent (elite) society, a platinum credit card with all the bonuses included, or something similar.

The WTO today resembles the Olympic movement, but in trade. There is a tough set of rules of behaviour and participation in “games,” including their own “anti-doping norms,” against larding the economy (industry, trade, finance, laws) of your own country with protective tariffs, laws and taxes that could “change quickly” the body of a recipient but not to doom all the rest to failure.

There is no doubt that Russia will become a WTO member. It is absolutely clear today that from “that side” of the club there are more reasons to take Moscow in than for that side to join. The WTO membership for us is an open hatch for new investment, technologies, etc. Any modernization or nanotechnologies development of the economy are not really possible without them.

The WTO is something neutral for Russian oil and gas exports; if we join it is good, if we do not it is not bad either. Neither oil nor gas exports are regulated by the WTO.

A discussion about the fate of a chicken won’t prevent Russia from joining the WTO, said Medvedev.

The rest is under the hood. At the beginning, the agrarians and other processing and producing industries of all Russian brands will be affected in the worst way. It will be hard on them to survive the competition.

Among the issues of argument (5 percent that left in the U.S. opinion) are intellectual property rights protection (Russian piracy), access to the Russian meat and poultry market, selling of the codified electric goods, unification of the financial legislation, openness and investments’ protection. A lot has been done in this area, but there is still a lot to be done. American and European matters of argument coincide.

Closing in “Gorbushka”

Generally, the most interesting thing is that Hollywood is still against a quick membership of Moscow — not the Hollywood that is ordered to deliver at the Russian oligarch private parties, but corporate Hollywood.

Managers of the biggest Hollywood companies (rent, DVD production, show rights and related products) cannot accept the impudent behaviour toward property rights for production in Russia. Russia is a very desirable market for Hollywood. Herewith, according to the data provided by the Motion Pictures Association of America, the share of Russian films in the return pie yields to 30 percent, something which is worth putting one’s hands on.

What puts the Americans off is that the return from selling DVDs is hardly growing. And the answer here is simple: continued piracy.

Following the meeting in Washington, Dmitry Medevedev and Barack Obama have agreed on a time frame to complete negotiations over Russia’s joining the World Trade Organization.

Hollywood wants the U.S. government to insist on specifying Russia’s obligations and introduction of American or similar laws protecting intellectual property rights in this domain. The most important thing is that our government has begun to observe their own laws protecting against intellectual piracy and has shut down the websites giving free access to Hollywood films or music, and toughened penalties for those not abiding the law. Simple promises are no longer sufficient. When China joined the WTO in 2001, they also promised a lot but have not eradicated the piracy issue yet. Watching “the Chinese movie” again in Hollywood? Russia does not watch them.

The U.S. and the EU are also inclined to alter far too strict and unjustified import health standards of livestock and agricultural products. The Americans think that Moscow has to introduce more scientifically justified norms of sanitary and phytosanitary control. It stinks, of course, of the Western personal vendetta against Onishchenko (Chief Sanitary Inspector of Russia) and “the Gorbushka” (translator’s note: a shopping centre in Moscow) case. But nobody and nothing should slow down the progress of modernization and nanotechnologies!

A theoretical agreement of one country or another to join the WTO is given after the consensus of all 153 member-states is achieved. So far, the only state that has refused to agree is Georgia. Here, in Tbilisi, Saakashvili may seriously ruin the “celebration” for Russia. But it is just a theory. The U.S. and France are ready to “reason” with Georgia. And now, only 5 percent of “matters of argument” remain to be solved.