Global Policy Forum

EU Seeks Commitment from Putin on Joining WTO

Russian delegates, led by Prime Minister Vladimir Putin, are holding talks with EU officials intended to pave the way for Russian ascension into the World Trade Organization. The Russians have been lobbying for almost two decades for entry but have encountered a number of obstacles including tariffs on EU logging firms. The EU has also voiced concerns over Russia's human rights record, which they criticize for its failure to uphold free speech and its efforts to quell dissent by striking down government opponents. Nevertheless, stronger trade and investment ties have bolstered EU-Russian relationship and will likely prompt Russian admission to the WTO.

By Gabriele Steinhauser

February 23, 2011

The European Union will look Thursday for a clear sign from Prime Minister Vladimir Putin that Russia will adopt the economic reforms necessary to join the World Trade Organization this year, ending almost two decades of negotiations.

Russia is the last major economy that isn't a member of the WTO, the international free-trade body, and accession to it is crucial to a broader partnership agreement the European Union wants to establish with Russia.

Officials from both Russia and WTO member states have said that 2011 is the year the country will finally sign up - after having started talks in 1993.

"The only person who hasn't said it yet is Putin," said Anka Schild, an adviser on international relations at the lobby group BusinessEurope.

At a meeting last fall, the EU and Russia cleared up some of the main obstacles to Russia's WTO membership. They include Russia's high export duties on wood, which have pummeled Nordic paper makers in recent years, and royalties airlines have to pay when they fly over Siberia. The United States also made similar progress bilaterally.

"Now it needs to be multilateralized," said Schild, because all 153 WTO members need to sign off on a newcomer.

One of the demands from foreign countries and companies is that Russia start changing its trade laws and rules on intellectual property now, rather than after it has secured entry into the WTO. Until then, businesses will remain skeptical of Russian promises.

"We've heard this story before," Schild said of Russia's request for quick entry to the WTO.

But Russia has some demands, as well, and Putin comes to Brussels with 12 of his cabinet ministers - including those in charge of foreign affairs, investment and energy - who will push their points of view in meetings with their counterparts in the EU's executive Commission.

"This will not be a meeting of the mutual admiration society," said Vladimir Chizov, Russia's ambassador to the EU. "I wouldn't exclude that on some issues, some discussions will not be very smooth."

EU Commission President Jose Manuel Barroso will bring up the bloc's concerns about human rights, the rule of law and democracy in Russia when he meets with Putin, a Commission spokesman said Wednesday.

At the heart of those concerns is Russia's reluctance to investigate the killings of several journalists and lawyers who had been critical of the government as well as its support for Belarus, which the EU sees as the last authoritarian state on the continent.

The Russian government, meanwhile, complains the EU is not protecting the rights of ethnic Russians in the Baltic states.

"The expectation of the EU is that as soon as a country joins it is immediately exempt from criticism. Unfortunately, double standards and biased approaches are quite often visible," Chizov said.

Beyond politics, the EU is Russia's largest trading partner, accounting for about half of its foreign trade. The 27-country bloc is also the biggest investor in the Russian economy.

Russia wants better access to the EU for its companies. In the agricultural sector, for instance, only 14 Russian companies are certified to do business in the EU, while about 4,000 European firms work in Russia's agricultural sector, Chizov said.

Central to Russian fears about being squeezed out of the European market is its gas monopoly OAO Gazprom. Earlier this week, Gazprom's CEO, Alexei Miller, asked the EU to clarify rules in its new energy strategy, also known as the Third Energy Package, which aims to separate gas production from pipeline management to prevent one company from controlling the entire supply chain in a country.

Europe is Russia's most important market for gas, but Russia has been concerned about the European Union's plans to diversify its sources of supplies. Many EU countries, including all Baltic states, Slovakia and Finland, get all their gas from Russia, which in the past has cut off supplies amid disputes over pricing.



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