If all goes well, the European Union and the United States expect Russia will be able to join the World Trade Organization in January 2012. Washington has put the chances at 95%, while European Commission President Manuel Barroso said he had attended 13 EU-Russia summits on this issue and hopes that the thirteenth was the last.
After 17 years of talks, missed opportunities and more talks, Russia finally has a foot in the door of the WTO. But crossing the threshold may prove more painful than expected.
Pressing the U.S. Congress
Washington has promised to see the accession process through for umpteenth time since 2006. But Barack Obama has been more active in this respect than George W. Bush, so 2012 could be the year.
U.S. Trade Representative Ronald Kirk, who spoke before Congress on February 9 about the administration's key trade initiatives for 2011, said that the U.S. "efforts to bring Russia into the World Trade Organization will include working with you this year to grant Russia Permanent Normal Trade Relations, so that U.S. firms and workers fully benefit from Russia's accession to the WTO."
But this cannot be done without repealing the 1974 Jackson-Vanik Amendment, which ties trade privileges to the freedom of emigration from the Soviet Union (a non-issue in today's Russia).
Congress (whose lower house is currently controlled by the Republicans) is usually unenthusiastic about any White House's initiatives that would limit its leverage over the executive branch. The Jackson-Vanik Amendment has clearly outlived its purpose, but Congress holds onto it as a bargaining chip. Currently, Congress has to renew Russia's exemption from the amendment every six months, and Congress uses this fact to force concessions from the administration.
WTO accession: pros and cons
Russia is already a member in all the major international associations, such as the G8 and the G20, but not the WTO. In fact, it is the only large economy in the world (ranked 10th or 11th) outside of the 153-member WTO. It's like being the only member of the country club without a platinum credit card.
The World Trade Organization is like the Olympics of trade. It has very strict code of conduct and conditions for participating in its "games," including testing for doping. Member countries are not allowed to approve protectionist taxes and laws for their economies that put other players at a disadvantage.
Russia will sure to be admitted to the WTO, and the truth is this will benefit the organization more than Russia.
WTO membership comes with the promise of more investment, new technology and other benefits crucial for economic modernization. But it will not change anything about oil and gas exports, because they are not regulated by the WTO.
Russian agriculture and manufacturing will be hardest hit in the initial stage following entry in the WTO. These sectors will have to work hard to survive the fierce competition from their foreign competitors.
Among the unresolved problems standing in the way of Russian membership are copyright infringement (pirated goods abound in the Russian economy), meat and poultry imports to Russia, trade in electronics and other products with an encryption function, Russia's inadequate financial legislation, transparency and investment protection.
Russia has made great strides on these issues but there is more work to be done. The U.S. and EU see largely eye to eye on these unresolved problems in the Russian economy.
Hollywood villain
One of the strongest lobbies against Russia's membership in the WTO is Hollywood. Executives of the largest companies in the entertainment industry are outraged by Russia's flagrant disregard for copyright laws.
Russia is a lucrative market for Hollywood, because Russian films account for barely 30% of distribution profits, according to the Motion Picture Association of America. And yet film and DVD profits are growing at a snail's pace in Russia due to rampant piracy.
Hollywood wants the U.S. government to force Russia to make firm commitments on this point and to introduce something resembling U.S. copyright laws. A good start would be enforcing Russian laws on copyright piracy, banning free download websites and imposing harsher punishments for violators.
The United States is no longer satisfied with mere promises. When China was admitted to the WTO in 2001, it promised to crackdown on piracy, but the entertainment black market still thrives there. Hollywood does not want to make the same mistake in Russia.
The EU and the United States also want Russia to review its strict - and, they claim, excessive - sanitary regulations for livestock and plant imports. Washington says Moscow must introduce science-based sanitary regulations for agricultural imports. Russia will likely accept this so as not to hinder its progress on modernization and nanotechnology.
Theoretically, each of the 153 WTO members must approve Russia's entry. The only country that has so far withheld its approval is Georgia, which fought a short war with Russia over South Ossetia in 2008. But the United States and France are confident they can persuade President Mikheil Saakashvili to change his tune.
The views expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
