A win-win situation

After 18 years, negotiators at the World Trade Organization (WTO) said on Thursday that they had approved the package of reforms which Russia has proposed so that it can join the body. That means Russia can now expect to join the WTO by the end of this year. Membership can't come soon enough, according to some experts in Germany.

It's not just a matter of political prestige, said Susan Stewart of the German Institute for International and Security Affairs, but also about economic benefits.

"It would be another step for Russia toward integration into the global economy and a step away from possible marginalization," she said. "There is a real threat of marginalization because Russia has not modernized [its economy] enough."

For Rolf Langhammer from the Kiel Institute for the World Economy, the key to modernization for Russia is foreign cash, something he said WTO membership would make it a lot easier to get.

"WTO membership gives foreign investors a signal that they can depend on legal certainty and the protection of intellectual property rights," he told Deutsche Welle.

New pressure to compete

Entry into the WTO could also promote innovation in Russia. Companies, and even entire industries, like manufacturing, would have to increase their competitiveness, explained Stewart. It's exactly that anticipated competitive pressure, however, that has Russian critics reluctant to open up their economy to the world.

The economist Langhammer doesn't think they should be worried. "It's not that Russia has to open its economy completely," he said. "The WTO is not a free trade-fest. The WTO is simply a tool for non-discrimination. Not just non-discrimination between members, but also between domestic and foreign manufacturers."

According to Langhammer, the WTO would protect Russia against individual pressure from other members. "The idea is to get away from bilateral agreements and get to a higher level of legal certainty. That's what the multilateral agreements do," he said.

Stewart agrees. Access to the WTO dispute settlement mechanism would be a bonus for Russia, she said, adding that she would expect fewer anti-dumping actions if Russia were to join the WTO.

"Another advantage is that Russia would be there at the negotiating table when future rules are worked out. When you're a member, then you get to have your say too," she said. "Alliances for certain positions are formed and you can influence the direction these rules go in."

Stewart also argues that if Russia were to join the WTO it would speed up work on a new partnership and cooperation agreement with the European Union. "This is important for the EU because for years now it has been negotiating a new agreement that is meant to define its relationship with Russia. The EU side has been negotiating based on the assumption that Russia will be a WTO member," she said.

Clearing hurdles

Russia's bid to join the WTO began to look a lot more likely to succeed after a compromise was reached with Georgia last week. Georgia, which has been a member since 2000, had threatened to block Russia's accession as long the status of the breakaway regions of Abkhazia and South Ossetia remained under dispute.

Russia recognized both regions as independent countries after the 2008 Russian-Georgian war. Tbilisi still regards both as part of its territory. Under a Swiss-mediated deal, the two countries' cross-border trade will be placed under international supervision and Georgia will drop its reservations.

Ukrainian reservations, however, could still trip up Russia's WTO membership plans. Ukraine joined in 2008. Ukraine's Deputy Prime Minister Andriy Klyuyev has said his country will only agree to Russia's membership if Moscow reduces gas prices. Russia and Ukraine are currently negotiating a new gas agreement to replace the contested 2009 gas treaty agreed to by then-Prime Minister Yulia Tymoshenko.

Author: Andrej Gurkov, Markian Ostaptschuk / hf
Editor: Michael Lawton