Russia and the WTO Membership Term Paper

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Lissovilik and Lissovilik find that Russian membership in the WTO would have a major impact on the structure and possibly the level of trade may be quite significant and could be much higher than current estimates. They find that on average, Russia's exports to WTO countries underperformed its exports to other countries in 1995-2002, all the more surprising given "Russia's trade reorientation toward the more advanced developed and developing countries, all of which are or have recently become WTO members" (para. 3).

The value of membership is noted by Mike Moore when he writes, "Joining the WTO sends a clear message to the world community about a nation's commitment to the rule of law, property rights and good governance" (Moore 30).

In 2004, it was noted that Russia still had to sign agreements with several WTO countries, including Japan, South Korea, and the United States. It had already signed an agreement with the European Union, and in October 2004, China officially endorsed Russia's WTO membership. The United States was not ready to agree based on concerns over Russian music piracy and displeasure with President Vladimir Putin's crackdown on government opposition. In the past, the U.S. has tried to use favorable trade policies as a reward for stable governance ("Russia Summary" para. 2).

Before the agreement with the EU, a key issue for the EU was the dual pricing of energy products:

The cost of energy in Russia is artificially low. Natural gas costs as little as one-sixth of the world price.

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The net effect of low prices is an annual subsidy of around $5 million for Russian industry. Manufacturers are able to export goods at prices that are unfairly low. The issue is too important for the EU to ignore. (Lamy para. 10)

Lamy notes that bringing prices into line with world levels could not be achieved overnight and that Russia should continue to be able to subsidize energy used by households, schools, or hospitals even as Russian manufacturers would have to pay a fair price. The later agreement by the EU shows that this issue was resolved.

In 2006, Australia agreed to Russia's membership in the WTO. The United Sttes was still resisting based on disagreement over rules governing access for foreign financial services firms and Russia's enforcement of intellectual property rights, as well as tariff levels on Russian farm imports. Negotiations have continued, but these remain the central stumbling blocks to an agreement with the United States.. As one report notes,

While Washington's support would effectively close negotiations over farm support and Russia's financial services market, issues such as anti-piracy rules and other trade barriers would still need to be negotiated with the larger WTO membership. ("Russia Gains Australian Support for WTO" para 10)

Russia needs WTO membership to improve her trade relations and to increase economic change and growth in the new Russia. An agreement with the United States is the final obstacle to achieve this goal.

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