Don’t Feed the Bear

In "Let Russia Join the WTO," Anders Aslund and C. Fred Bergsten have done a good job explaining the arguments in favor of Russian accession. As a member of the G-8 and the G-20, and as the largest economy outside the World Trade Organization (WTO), the case in favor of Russia joining the WTO practically makes itself. U.S. President Barack Obama, who met on June 24 with Russian President Dmitry Medvedev in Washington, said, "Russia belongs in the WTO" and confirmed that he would ask U.S. negotiators to speed up the pace of accession talks. He then set a Sept. 30 target date for accession, which plays right into Moscow’s strategy.

Everyone is focused on timing, but the issue is not whether or when Russia should join, but the terms. The fact of the matter is that Russia has yet to accept a set of commitments that justifies entry into the WTO. Terms that are too soft might have a negative impact on the WTO, Russia’s trading partners, and, in the long term, Russia itself. Aslund and Bergsten sidestep this issue.

Moreover, the authors’ description of the negotiation process has it backward. They correctly note that Russia’s accession has taken a long time — roughly 17 years, and counting. However, the facts do not suggest that WTO members are to blame for this drawn-out negotiation. Rather, the length is due in large part to Russia’s negotiating style — if not its strategy for achieving entry into the organization.

Aslund and Bergsten implicitly suggest that, due to a variety of weightier international concerns, WTO members should not subject Russia to the same level of rigor they applied to past applicants. But this would allow accession based on a modest set of commitments. Also, it would create larger problems down the road. The period before accession is generally members’ last chance to obtain significant commitments from soon-to-be-signatory states on a variety of issues — in Russia’s case, issues that have been on the table for years. But much of the leverage they now enjoy will disappear the moment Russia joins the organization.

WTO accession talks often drag on partly because, for reasons pertaining to domestic politics, the acceding country is not always fully engaged in the process. In complex, long-term accessions, such as those involving China and Saudi Arabia, progress comes in fits and starts. The vast majority occurs in the last few years, when the acceding country buckles down to focus fully on the process and forces the necessary domestic and international compromises. Moscow, however, appears hellbent on avoiding this stage of the process.

Russia has managed to turn WTO accession on its head by acting as a deal maker, not a deal taker. Year after year, Russian negotiators have signaled that they have made more progress than is in fact the case and have refused to budge on key issues. They are playing a waiting game, counting on a variety of extraneous issues to make its set of proposed commitments (which WTO members would have rejected out of hand had any other country made them) more attractive. Compared with the accessions of China and Saudi Arabia, the reforms Russia has offered and implemented are far less extensive.

Russia might benefit from the major international players’ preoccupation with other priorities, for which they require Moscow’s help. The U.S. negotiating position has fluctuated as part of a larger dance relating to its effort to isolate Iran. The European Union has yet to place pressure on Russia, presumably because of the reliance of many of its member states on Russian energy. And there are also powerful institutional factors affecting the negotiations: The WTO, put simply, needs a win. The Doha Development Round, meant to lower global trade barriers, is still going nowhere. Russian accession would put a smile on everyone’s face, at least for a while, and would help cement WTO Director-General Pascal Lamy’s legacy.

These factors tilt the balance toward WTO members’ acceptance of a very modest set of commitments for Russia’s entry. Should this happen, Moscow’s strategy will have succeeded brilliantly — and in spite of a substantial list of open concerns. Medvedev’s June 24 agreement to remove the ban on U.S. poultry imports is significant, but the open issues range from straightforward trade issues, such as high export duties on timber, to the Kremlin’s leveraging of its energy sector to achieve political goals, such as during its dispute with Ukraine in January 2009. In addition, the impact of the customs union between Russia, Belarus, and Kazakhstan on all three members’ accessions will be profound, but has yet to be fully assessed. One thing is certain: If the customs union requires changes to Russia’s trade regimes, WTO negotiations which had closed will be reopened.

These are all thorny issues, and they will only become more difficult to resolve if WTO members leave them until after accession. Different approaches to personal finances should be resolved prior to marriage, not after. Some states may hope to punt these problems to the WTO’s dispute settlement system. The system at present, however, is ill-equipped to mop up the messes members leave behind: It is already operating at capacity and was never meant to handle many of the complex outstanding issues between the parties, especially Russia’s political leveraging in the energy sector.

As Russia pushes for accession, time is on its side. Aslund and Bergsten’s article was well-timed for Russia’s charm offensive in Washington this week. But with each article like theirs, Russia’s negotiating position grows stronger.