Sunday, December 2, 2012

How will Russia engage with the multilateral system?

Strong opposition to trade policies and measures not only get expressed by filing of trade disputes at the dispute settlement mechanism of the WTO. The Councils at the WTO also provide important platforms for countries to express their reservations against measures they see as discriminatory or incompatible with the WTO. How much of this leads to a resolution of the dispute is debatable, but the Councils do act as platforms where all members can align and realign their positions.

The recently held   Council on Trade in Goods saw such an expression of opposition to Russia's measures after it entered the WTO. I had earlier blogged about Russia's recycling fee as a possible violation of WTO rules here and here. Several members including Japan, EU and the US raised concern on the recycling fee as unfairly impacting imported vehicles while not impacting locally made automobiles.
"The EU expressed concern over what it described as a surge of protectionist measures taken recently by the Russian Federation. It criticized two measures in particular: the ban on importation of live animals, especially slaughtered pigs; and the recycling fee for automobiles, which imposes fees on imported cars but gives a choice of non-payment to domestic cars. The EU said it is consulting with Russia on these measures. 
Japan also expressed concern that the recycling fee discriminates against foreign car companies. The US shared the concern about the recycling fee. In addition, it urged Russia to take the final step to join the WTO’s Information Technology Agreement (ITA), and to notify its Customs Union to the WTO. Norway expressed concern over Russia’s system of permits subject to veterinary control. 
Russia requested all comments in writing so it could respond in writing."
Russia's entry into the WTO will expose it to various kinds of challenges which it must be prepared for. WHile it was not a WTO member such domestic measures were hardly questioned. Now they become the centre of every trading country which has an interest. How will Russia respond?  How will it equip itself with the legal and technical capacity to fight these cases? It will need multidisciplinary teams of trade policy analysts, legal experts, lawyers, economists and domain specialists to take on a slew of dispute settlement cases. It will have to take on the might of the USTR and EU Trade Commissioner. How Russia will fare will become increasingly clear in the coming days as disputes will be filed against it at the dispute settlement mechanism. Russia would have to recognize that it is part and parcel of being a multilateral member rather than an "assault" on its sovereignty. Will it have to carefully and creatively engage the multilateral system like, perhaps, China did? Early times for Russia still.

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