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Russia Gains Long-Sought Approval To WTO

After nearly two decades, the country will be able to trade more easily with the EU, and could help stave off the credit crisis.

GENEVA (AP) — After nearly two decades of trying, Russia gained approval Friday to join the World Trade Organization, a move likely to boost its economy and that of its biggest trading partner, the European Union, at a time of global financial turmoil.

The vote by international trade ministers also provides a measure of victory for Russian Prime Minister Vladimir Putin, who faces popular discontent after allegations of fraud in recent parliamentary elections.

Russia, the sixth largest economy in the world with a population of 143 million, has been the only member of the Group of 20 leading world economies still outside the 153-nation WTO. Once it formally joins — presumably early next year after ratification from the Russian Duma — Moscow will be subject to the Geneva-based body's rules for global trade and settling disputes, a change likely to give more confidence to investors outside the country.

The 27-nation EU is Russia's biggest trading partner for agriculture, fuels, mining and manufacturing. The EU buys 52 percent of Russia's exports, including the fossil fuels that keep Europe running. Russia, in turn, is third-biggest customer for EU exports, after the U.S. and China.

Russia's WTO membership is expected to quickly increase EU exports by some €4 billion ($5.2 billion) a year, EU trade officials say. Under the agreement, Russians will be able to buy European-made goods at far lower prices and to sell their oil and gas more efficiently.

Nigeria's finance minister Olusegun Aganga chaired the WTO conference, where international representatives agreed by consensus to accept Russia's bid. He noted that Russia was the last of the so-called BRICS emerging countries — Brazil, Russia, India, China and South Africa — to join the trade body.

"That tells you how important the WTO is," he told The Associated Press.

Elvira Nabiullina, Russia's minister of economic development, hailed the deal and said Russia is ready to help counter the risks of the global economic slowdown. "We are ready to counter these risks actively," she told WTO trade ministers.

U.S. Trade Representative Ron Kirk said the development "represents a great cause for celebration."

A parade of political and economic challenges have delayed Russia's membership for 18 years.

It first had to reach bilateral agreements with more than a third of WTO's members. Moscow agreed to provide annual reports to other members on its continuing privatization, for example, and to gradually lower its average tariff ceiling to 7.8 percent from its current 10 percent.

When oil and gas prices shot up, Russia, as a commodity exporter, seemed to lose incentive to join. Russia also had bilateral disputes, such as a timber dispute with Finland, and difficult talks with the U.S. and EU on issues such as banking and insurance.

A final hurdle to joining was Russia's brief war with Georgia in 2008. A Swiss-mediated deal that Russia signed with Georgia this year allows a neutral company to monitor all trade between the two nations.

Russia's membership takes effect 30 days after it notifies WTO that the Russian Duma has ratified the move.

But Russia's WTO membership won't automatically apply to the U.S. A 1974 law requires the U.S. Congress to first approve of permanent normal trade relations with Russia. The Cold War-era law was intended to pressure the Soviet Union to allow emigration, primarily of Jews.

Kirk told the AP that the U.S. recognizes there's a potential "damaging impact to U.S. exporters" if Congress doesn't agree. "We'll be working with Congress to find a way to resolve it, hopefully before Russia completes their ratification," he said.

The vote Friday gives Putin a victory to point to at a time when protesters are demanding a rerun of a disputed parliamentary poll on Dec. 4 that enabled Putin's United Russia party to retain a slim majority of seats. But it's unlikely that WTO membership will end Russian dissidents' grievances with Putin and his party, which has long been accused of corruption.

In the longer run, experts say, WTO membership would provide a boost for Russia's heavily state-managed economy by giving outside investors more confidence because the nation would be subject to international trade rules.

"The EU has high expectations of Russia as a responsible partner able to respect rules," EU trade chief Karel De Gucht told the WTO.

International Chamber of Commerce secretary-general Jean-Guy Carrier said WTO membership will change the way the world does business with Russia.

"First of all, (by) making sure that there is a clear set of rules for investors in Russia, for companies operating in Russia, and for Russian companies also that want to export to the rest of the world," he said.

"I expect it will have effects similar to the opening of China 10 years ago, where there was a tremendous amount of new economic activity into China itself in terms of investment."


Frank Jordans contributed to this report.

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