Obama Rushes Russia to the WTO

U.S. President Barack Obama called Russia to resolve all the issues preventing it from joining World Trade Organization (WTO) by the end of this year. Observers attribute this rush to the possible victory in the next presidential election of Vladimir Putin, who is believed to hold a considerably tougher position regarding WTO accession.

The conversation between the two presidents happened because Dmitry Medvedev wanted to congratulate his American colleague on his 50th birthday, but Obama shifted the talk to business matters. The American leader emphasized that Russia needs to cooperate actively with other WTO members in order to finish negotiations for its accession to the organization by the end of the year. During the conversation, they also noted that significant progress has been made in this direction in recent weeks.

Supposedly, Obama and Medvedev talked about the infamous Jackson-Vanik amendment, which prevents normal trade relations between RF (the Russian Federation) and the USA. It was adopted in 1974 to pressure the USSR to allow free emigration. The amendment prohibited granting most favored nation status in trade, government loans and loan guarantees [to communist and former communist countries that restrict emigration and other human rights]. It also allowed the use of discriminatory custom tariffs and fees.

Despite the end of the Cold War, the amendment remains in effect. Moscow has already warned that it can deprive American companies of privileges given to them in connection to Russia’s pending accession to the WTO. It can also prevent her from joining the organization.

According to Reuters, American administration officials would like Congress to approve normalization of trade relations with RF before it becomes a WTO member; but no changes have happened yet.

Meanwhile, the prospect of WTO accession now seems really close, according to Pascal Lamy, WTO’s Director General. “I now believe that Russian accession to the WTO is in sight. I even would say it can be done by the end of this year when we have the WTO ministerial,” he said. But even if Russian accession is agreed on by December, it will not immediately become a member because certain documents must still be ratified by the state’s parliament.

There were many obstacles during all these years that have impeded Russia’s determination to join the WTO, including the conflict with Georgia, which can veto Russia’s accession. Georgia’s WTO representative announced recently, at the meeting dedicated to Russia’s WTO accession, that there was no significant progress during the negotiations. Another serious headache is complaints from Western automakers who are not happy with RF’s requirements regarding localization of production.

According to Mr. Lamy, these questions can be solved through negotiations. The most important thing is to agree upon the duration and basic parameters of the transitional period during which Russia will adjust to WTO requirements. These are the main subjects of discussion now.

Against this background, foreign observers indicate that Russia has gotten unusual leverage to pressure WTO and the West. According to AFP, Dmitry Medvedev’s administration made it clear that if RF does not join the WTO this year, this process is at risk of stretching over an indefinite period of time. This can happen as a result of Putin’s victory at the 2012 presidential election, as he holds a position by far tougher than Medvedev’s, and he thinks that Russia should join the WTO on her own conditions.

It’s good to note that during the conversation, Obama not only accepted Medvedev’s congratulations but also addressed his colleague with warm words, in particular, regarding his patriotism. Foreign observers generally think that this implies support of the Russian president’s political line, including regarding Russia joining the WTO.

Economists say that joining the WTO in the short-term will have unhealthy consequences for Russian producers, who will face more severe competition from foreigners; but in the long-term, Russia can win, particularly if exports increase.