Global News
This is a re-posted op-ed piece.
After 18 years of stop-and-go negotiations, it is good news that Russia, the world’s 11th largest economy, finally sealed a deal on Thursday to enter the World Trade Organization and subject its unruly form of capitalism to the strictures of international law.
Russia overcame the last obstacle to entry last week when Georgia, which like any W.T.O. member has a veto over new membership decisions, accepted a deal brokered by Switzerland for monitoring trade with Russia across disputed portions of their border. The deal commits Russia to submit to W.T.O. rules. It must lower tariffs across a range of agricultural and manufactured goods. It can no longer subsidize its exports or import substitutes, and it can no longer use phony health and safety arguments to block food imports or wantonly impose import restrictions like quotas.
It accepted the W.T.O.’s rules to protect intellectual property. And it promised that its natural gas companies would operate as firms pursuing the profit motive — not as political tools to subdue neighbor countries by denying them an energy supply in the winter.
Since Russia mostly exports oil and gas, which are not subject to tariffs and do not fall under the purview of the W.T.O., the Russian government has been ambivalent about the merits of joining a group that would limit its policy choices. Joining the group would put some of Russia’s most inefficient enterprises at risk, like farming and pharmaceutical companies, which will be subjected to stiff international competition.
But membership is an important step for Russia as it tries to evolve out of its role as supplier of raw materials and develop more manufacturing and services exports. Membership will confer the imprimatur of legality Russia needs to draw the foreign investment that has shied away from its unruly markets, fearing Moscow’s autocratic and capricious policies. And allowing in more high-quality imports is likely to spur Russian firms to improve and innovate. A World Bank study estimated that W.T.O. membership would increase Russian gross domestic product by 11 percent over a decade.
The United States will benefit too. American exports to Russia are only about $6 billion a year, and imports are $8 billion. But American farmers and firms, from telecommunications to computing, see huge opportunities in an open and transparent Russian market. Moreover, a prosperous Russia, playing by the same rules, would benefit the world economy.
The agreement reached Thursday is widely expected to be approved at a meeting of the W.T.O.’s entire membership in Geneva next month. But for the United States to enjoy normal trade relations with Russia after it joins the trade organization, Congress must exempt Russia from the 1974 Jackson-Vanik amendment, which limits trade with countries that restrict emigration. President Obama has said that he would work with Congress to end the application of that law to Russia.
Some lawmakers remain skeptical. On Thursday, some members of Congress sent a letter to Ron Kirk, the United States trade representative, expressing “significant concerns” about whether Russia would respect American intellectual property rights. In supporting the Russian deal, Mr. Obama will have to convince lawmakers that American interests — including its intellectual property rights — will be better protected with Russia inside the W.T.O. than if it remains outside.
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Source: The International Herald Tribune, Editorial, Nov. 12, 2011
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