Russia surprised the U.S. and Europe with its decision to withdraw from WTO accession on Thursday to form a three county customs bloc with Belarus and Kazakhstan. Just last week at the St. Petersburg Economic Forum, E.U. and Russian leaders were commenting that WTO accession could be possible by the end of the year. Currently Russia is the only major economy outside the 153-member WTO.
This turnaround is being characterized by some as a “ploy” or negotiating tactic, as the Government of Russia has been “frustrated” by the slow process. Sixteen years is a long time. There are key stumbling blocks, namely multilateral issues such as Siberian over-flight fees and gas prices. Also current members, Ukraine and Georgia, have not given their support. President Medvedev, quoted in an article in Forbes, said: ‘there are simply too many jacks in the box in the WTO negotiations’. This does suggest that the Russian government is looking for a quicker process.
Many in the business community, who have advocated for Russia’s inclusion in WTO, are surprised and concerned; they do not see any advantages for Russia to withdraw their application. Some speculate that this move is a result of the impact WTO might have on the Russian economy; that during a difficult economic period, jobs would be at stake. When asked at the St. Petersburg Economic Forum whether or not WTO would hurt Russian businesses, Anatoly Chubais, Rusnano Chairman, was quoted as saying that “80 percent of Russian companies would welcome the accession.” Not all at the forum agreed.
Regardless, most agree that this is complicated and will take time to sort through the implications. Russia, Belarus and Kazakhstan will hold talks next week in Geneva, so more is to unfold.
