A GATS dispute after a long time

News of a WTO dispute concerning General Agreement on Trade in Services (GATS) after a very long time trickled in with Russia seeking consultation with EU on the "Third Energy Package".  More on that here.

"The measures concern the production, supply and transmission of natural gas or electricity, the alleged discriminatory certification requirements in relation to third countries in this sector and the requirement in respect of granting access to natural gas and electricity network capacity by transmission service operators. 

According to the Russian Federation, these measures are inconsistent with a number of obligations and specific commitments of the European Union and constitute an infringement of these obligations and commitments.

The inconsistencies alleged by Russia refer to the GATS (General Agreement on Trade in Services), the Agreement on Subsidies and Countervailing Measures and the Agreement Establishing the WTO."

Russia, being a new member of the WTO, seems to be initiating its forays into dispute settlement. The dispute being one relating to EU's commitments under GATS caught my attention. There are very few GATS disputes as compared to the other WTO Agreements.

Some chance of GATS jurisprudence evolving?

Now, that is a large team

Russia is one of the new members at the WTO. I have blogged about it here, here and here.

And now it has a large team at the WTO Mission - 32 members proposed for the Russian Mission, as highlighted in this piece in the Moscow Times.

"Having a mission on the ground in Geneva is considered essential for a member country to be able to defend its interests within the WTO. Since joining the organization in 2012, Russia has been embroiled in a number of trade disputes, for example over its attempts to shelter its domestic car industry by forcing foreign manufacturers to pay tariffs not applied to local firms."

Time to cope with the multilateral trade body's membership. As on date Russia was already a complainant in one case, respondent in 2 cases and third party in 8 cases at the dsipute settlement proceeding of the WTO.

Japan joins the Russian roulette

I have blogged about the first case Russia is facing on recycling fee on automobile imports at the WTO here, here and here. Now Japan seems to have joined the Russian roulette. Japan filed a WTO case against Russia details of which are found here.

"According to Japan, Russia’s measures appear to be inconsistent with its obligations under several articles of the GATT 1994, the Agreement on Trade Related Investment Measures (TRIMs) and the Agreement on Technical Barriers to Trade (TBT).

Japan claims that through the measures at issue, Russia imposes a recycling fee on each vehicle imported into Russia or produced/manufactured on the territory of Russia. Russia exempts from the recycling fee the vehicles manufactured or produced by companies that have committed to ensure subsequent safe handling of waste. However, this exemption is only available to vehicles manufactured by companies which are legal entities registered in Russia and which have undertaken to produce their vehicles in Russia according to one of the modes involving certain specific manufacturing operations in the territory of Russia, Belarus or Kazakhstan. Therefore, the measures at issue, through these conditions, either taken together or separately, discriminate between imported vehicles and the “like” domestic products."

It would be interesting to see Russia's response, it's legal team, preparation as well as next steps. Will it amend its domestic legislation or will it defend its measure as being consistent with WTO law. Or will it just not comply with an adverse WTO panel ruling, if it so happens! 

All three are distinct possibilities.

EU takes on Russia in the automobile recycling fee case

I was expecting this soon but did not think it would happen this soon. I have blogged about the Russia recycling fee issue here, here and here. The BBC reported it here.

Reports from the WTO indicate that the EU has decided to file a WTO complaint (DS462) against the fee. This would be the first case in which Russia is facing the dispute settlement mechanism after it joined the WTO in 2012.

"The European Union notified the WTO Secretariat on 9 July 2013 of a request for consultations with the Russian Federation on measures imposed by Russia relating to a charge, the so called “recycling fee”, imposed on motor vehicles. According to the European Union, these measures adversely affect exports of motor vehicles from the European Union to Russia. The EU claims that Russia subjects imported vehicles to the payment of a “recycling fee”.  In contrast, domestic vehicles are exempted from that payment under certain conditions. An exemption is also available to vehicles imported from certain countries, such as Belarus and Kazakhstan. However, there is no exemption for vehicles imported from the European Union.  As a result, vehicles imported into Russia from the European Union are treated less favourably than domestic vehicles, or vehicles imported from Belarus and Kazakhstan. The EU also claims that the structure of the “recycling fee” also appears to afford protection to domestic production."

Well, the dispute was anticipated but the complainant and timing was uncertain. Russia's time to defend or amend? There was news about some amendment to the legislation that addressed the alleged discrimination. One will have to see what the Russian response to this is.

US on Russia's WTO commitments

The USTR's first annual report on "Report on WTO Enforcement Actions:Russia" is out. Stewart and Stewart has this brief analysis of the Report.After Russia's entry into the WTO after more than a decade of accession efforts, it is time compliance challenges are gradually faced. Though all issues may not lead to disputes, it will be raised at various fora and opportunities by other WTO members.

I have earlier blogged here and here about a potential challenge of a Russian regulation regarding motor vehicle re-cycling duty that allegedly discriminates foreign and domestic car manufacturers. I was curious to know what this report stated about recycling fee issue.

Here it is:

"Motor Vehicle Recycling Fee

In September 2012, Russia introduced a “recycling fee” on sales of wheeled vehicles for the announced purpose of covering the cost of establishing a recycling industry. Domestic manufacturers of wheeled vehicles, however, do not have to pay the fee if they agree to assume the responsibility to recycle the vehicle at the end of its life. Both bilaterally as well as in meetings of the WTO Council for Trade in Goods, the United States, along with other Members, has objected strenuously to the apparent discriminatory nature of the fee. The United States also has registered its concern with the amount of the fee itself, particularly on large construction vehicles, and submitted written questions to the Russian delegation seeking further information about implementation of the program. In response to these concerns, on May 30, the Russian Duma published proposed amendments to the recycling law that would revise the program and apply the fee to domestically produced vehicles as well as to imports. USTR will monitor carefully the implementation of this stated commitment to ensure that our objectives are achieved."

So as of now, it is potentially open to challenge? No WTO dispute for now but a potential dispute settlement case, perhaps the first one for Russia? Business Beyond the Reef seems to think the modification should work.

Change by July 1st or else...

Could this be Russia's first WTO dispute as a respondent? Reports indicate that EU is contemplating a dispute against Russia with respect to its automobile recycling fee which it asserts discriminates imported cars from domestically manufactured cars. I had blogged about this months ago here, here and here.

A proposed Bill to amend the law to make it "WTO compliant" is under consideration - that is making it applicable to both imported as well as domestically manufactured cars.A detailed paper on the present law is found here. I am not sure what the amended proposal is - perhaps removing the exceptions relating to domestic manufacturing since the earlier law applied to domestic manufacturing too.

All eyes on July 1st - the deadline given for initiation of a dispute. This case also vividly shows how domestic legislation and policy making is impacted by multilateral trade rules. Russia, after entering into the WTO last year after 18 years of tough negotiations, would have to, inevitably face the realities of the multilateral trade body membership - dispute settlement.

Russia and WTO - new challenges

Russia's entry into the WTO has been heralded as a major event in the world trading regime's history. I have blogged extensively on Russia's entry here, here and here.

While Russia is settling down in its new position in the multilateral trading institution, its trading partners are getting a little impatient it seems. Reports of the EU being unhappy with certain restrictions placed by Russia in the automobile sector, exports of live animals and other goods.

Reuters commented on the issue thus:

"Russia joined the WTO this year after a 19-year wait and Putin has said the country would use its membership to develop worldwide trade links. 

But he said in November the country's $1.9 trillion (1.17 trillion pounds) economy could suffer from WTO entry due to the increase in imports that would result. 

Russia's team at the WTO is not fully up and running, something which may be delaying an EU decision to launch a case at the global body."

The Russian Team - Case for the strengthening of the legal capacity of the Russian Federation to meet these challenges? It is just the beginning. 

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.

Global Trade Alert on Russian automobile disposal fee

I had written about the Russian recycling fee on automobiles which could be potentially incompatible with WTO law here. Global Trade Alert refers to the disposal fee and the Russian order. 

The official order is here. 

It is in Russian and I could not translate it into English.

Russia's national interest in the WTO

(Russian dolls and the global economy)

With Russia having entered the WTO, every domestic measure (automobile recycling duties and the duties on vegetable oil) having an adverse impact on trade is being scrutinized carefully. I have blogged about them here and here. Moscow Times has an interesting analogy of Russia's measures here:

"The logic of introducing the utilization fee immediately after joining the WTO is like that of a man who, feeling ill, visits a renowned physician to get the best diagnosis and prescription that money can buy, but then refuses to take the recommended medicine. Accession to the WTO enables the government to deal with lobbyists, but introducing the new fee immediately negates that advantage."

Will the Russian government be able to withstand the pressure of "domestic" interests to uphold their WTO commitments. While protecting national interest is not antithetical to joining the WTO (the U.S. speaks about national interest - interest of US manufacturers, US workers and US consumers all the time), it should not be blatantly violative of the provisions of WTO commitments. Will Russia be able to devise a smarter way of compliance yet protecting its national interest? Difficult line to tread? 

 

Russia - Will it be challenged at the WTO again?

It is barely a month into the WTO for Russia and it seems it may have to brace itself for a second challenge, this time from Netherlands and the EU. I had blogged earlier about a possible complaint from Ukraine and other countries on the recycling duties on automobiles that came into effect from September 1st 2012.

Bloomberg reports that the Dutch Product Board for Margaraine, Fats and Oils, MVO is contemplating moving the Dutch government to take up the issue of Russian duties on vegetable-oil that is beyond the bound commitments of Russia under GATT.

Now, this seems to be a straightforward violation of WTO obligations unless there is a misreading of the provisions. Either the Russian administration has overlooked the WTO commitments or has interpreted it differently. Either way, it would have to do some explaining if the EU decides to take it up at the WTO.

Time for Russia to get its legal capabilities tested at the multilateral trade forum?

Will Russia be challenged at the WTO? Recycling fee, automobiles and discrimination

In what could be the first WTO dispute against Russia since its recent entry into the multilateral trading body, the Russian legislation imposing a "recycling fee" on automobiles is causing considerable disquiet with its trading partners. The move has irked Ukraine and the EU and the possibility of a trade dispute has been reported here and here.Russia's entry into the WTO led to the reduction of import tariffs on automobiles considerably. This, critics say, has led to the imposition of this "recycling fee" in an apparent bid to "protect" domestic production of automobiles. An analysis of the impact WTO entry would have on Russia is found here.

What does the Russian measure entail? Though I could not lay my hands on the actual legislation, a newsletter provided me with sufficient details. The Russian law in question is the Federal Law of the Russian Federation No. 128-FZ “On Amending the Federal Law “On Production and Consumption Wastes” and the "Recycling Duties Regulation" that essentially came into effect on September 1st, 2012. This law provides for establishing recycling duties which are payable in respect of cars "imported" into or "manufactured" in Russia.

As the newsletter explains:

"Scope 

According to the Draft the duty shall be payable for wheeled vehicles of categories “M” and “N” in respect of which vehicle registration certificates are issued. 

The following persons shall be recognized as payers of the duty:

• the persons importing vehicles to Russia;
• the persons manufacturing (producing) vehicles in Russia;
• the persons acquired vehicles in Russia from those persons who did not pay the recycling duties on the grounds specified in the law or the persons failed to pay such duties in breach of the established procedure."

Thus, the recycling duty is applicable to both "imported" goods as well as "locally manufactured" goods. However the draft rules also provide that the duty would not be need to be paid in cases, inter alia, where it is "manufactured (produced) by the organizations voluntarily undertook to ensure safe recycling of the manufactured vehicles". The duties shall also not be paid in cases where the automobiles are "imported to Russia from the territories of the Customs Union member states and enjoying status of goods manufactured in the Customs Union: (i) released in the Republic of Belarus (further, the “RB”) or in the Republic of Kazakhstan (further, the “RK”) for domestic consumption with duties payable at the rates that differ from those established by the Common Customs Tariff, or (ii) manufactured in the RB or RK if manufacturing organizations assume obligations similar to those recycling obligations that were assumed by Russian manufacturers".

Do these exceptions bring into play the national treatment and Most favored Nation principles of the GATT? Are they violated? Are domestic manufacturers of automobiles favored here? Are imported vehicles treated "less favorably" than locally produced automobiles? If local manufacturers voluntarily undertake to recycle as per the regulations they are exempt from paying the recycling duty. Does this discriminate against imported products? WIll the measure be protected under the general exception clause of Article XX GATT as it has the objective of protecting the environment?

Whether this would erupt into Russia's first full blown WTO dispute is anybody's guess. It signifies that entry into the multilateral trading system has a cost - one's domestic legislation is open to scrutiny for being discriminatory and protectionist. What Russia could do a few months back in terms of protecting its local manufacturers with higher import tariffs or additional duties is no longer existent if it violates the principles and commitments under GATT. One would have to wait and see how Ukraine and EU proceed on this matter.

Vsego Dobrogo (All the Best) Russia!

Russia finally is the 156th member of the multilateral trading system bringing to an end 18 years of negotiation. News of the membership trickled in here, here, here and here. Various analysis and comparisons with China are beginning to be made. Will russia take advantage of the WTO as China did? Will WTO be the magic wand that Russia will use to boost it's economy as China did? i have earlier blogged about Russia's entry here, here and here.

The WTO website has a detailed table on the progress of the accession process from June 1993 to December 2011.

1.	Application Received	June 1993
2.	Working Party Established	16-17 June 1993
3.	Memorandum	1 March 1994 (Goods) 27 October 1995 (TRIMs) 21 November 1995 25 October 1995 (Services) 25 October 1995 (TRIPS) 7 April 1997 9 April 1997
4.	Questions and Replies	2 June 1995
5.	Meetings of the Working Party	17-19 July and 4-6 December 1995 30-31 May and 15 October 1996 15 April, 22-23 July and 9-10 December 1997 29-30 July and 16-17 December 1998 25-26 May and 18-19 December 2000 26-27 June 2001 23-24 January, 25 April, 20 June and 16 December 2002 10 January, 6 March, 10 April, 10 July and 30 October 2003 5 February, 2 April, 16 July and 8 November 2004 17 February, 15 April, 24 June and 19 October 2005 23 March 2006 10 November 2011
6.	Other Documentation
	(a) Additional Questions & Replies	24 January 2005
	(b) Information on agriculture (WT/ACC/4)	18 March 2008
	(c) Information on services (WT/ACC/5)	25 October 1995
	(d) SPS/TBT checklists (WT/ACC/8)	10 July 1997 (TBT) 11 July 2011 (SPS)
	(e) TRIPS checklist (WT/ACC/9)	25 October 2000
	(f) Legislative Action Plan	14 August 2007
7.	Market Access Negotiations
	Goods (a) initial Offer (b) Goods Schedule	16 February 1998 17 November 2011
	Services (a) initial Offer (b) Services Schedule	8 October 1999 17 November 2011
8.	Accession Package Approved by the Eighth WTO Ministerial Conference (December 2011)
	Working Party Report Goods Schedule Services Schedule	17 November 2011 17 November 2011 17 November 2011

An interesting aspect of Russia's entry would be to analyze the impact of the protocol of accession on Russia's commitments. We have seen that the Chinese accession protocol uncharacteristically ran into more than 500 pages providing for WTO plus obligations for China which was reflected in disputes over export restrictions imposed by China.A look at the Russia's accession protocol gives a different picture. It is a brief document and does not seem to have similar provisions like China.However it refers to paragraph 1450 of the Working party report wherein Russia has agreed to specific commitments. Para 1450 of the Working party report states:

"1450.The Working Party took note of the explanations and statements of the Russian Federation concerning its foreign trade regime, as reflected in this Report.  The Working Party took note of the commitments by the Russian Federation in relation to certain specific matters which are reproduced in paragraphs 34, 72, 99, 115, 116, 117, 132, 133, 183, 209, 214, 215, 227, 251, 275, 302, 313, 319, 323, 324, 337, 351, 352, 353, 364, 366, 369, 382, 392, 417, 424, 472, 476, 477, 480, 481, 483, 486, 487, 497, 514, 527, 548, 562, 566, 574, 591, 613, 620, 638, 668, 669, 677, 698, 712, 714, 715, 719, 728, 738, 739, 744, 745, 756, 761, 765, 772, 773, 784, 785, 787, 789, 798, 799, 803, 804, 813, 826, 844, 847, 870, 875, 876, 880, 885, 890, 893, 895, 901, 904, 908, 923, 926, 927, 928, 932, 935, 936, 944, 950, 952, 955, 981, 984, 989, 1009, 1011, 1030, 1031, 1033, 1035, 1051, 1055, 1060, 1062, 1089, 1090, 1122, 1124, 1137, 1143, 1144, 1161, 1186, 1187, 1189, 1200, 1208, 1218, 1224, 1226, 1232, 1253, 1260, 1271, 1277, 1294, 1295, 1303, 1312, 1325, 1331, 1338, 1339, 1350, 1353, 1392, 1393, 1395, 1397, 1398, 1400, 1401, 1402, 1404, 1405, 1406, 1413, 1426, 1427, 1428, 1430 and 1449.  The Working Party took note that these commitments had been incorporated in paragraph 2 of the Protocol of Accession of the Russian Federation to the WTO."

Now, these are a lot of paragraphs and commitments and the devil is always in the details. One would have to make a more detailed analysis about whether Russia has agreed to onerous "WTO plus" commitments like China. Further, a dispute (now that Russia is a member its trade measures would be open to scrutiny under the DSM) would bring to the fore such commitments as in the case of China.A synopsis of Russia's commitments under the WTO have been provided here.

One would have to wait and see how Russia faces the multilateral challenge, what impact it's accession protocol will have on its WTO commitments, how engaging with the international trade network would benefit it's exporters and importers and how other countries would engage with Russia in the multilateral forum.

All we can say is "всего хорошего" (Vsego dobrogo) meaning "All the Best" in Russian!

Will Russia cope?

Russia's entry into the WTO has been watched with great interest around the world. I have blogged about Russia's entry into the multilateral forum here, here and here. The consequences of Russia becoming a member of the WTO has been widely discussed. Experts have largely felt that while liberalizing trade would have an adverse impact on the local industry in some sectors, on the whole Russia will benefit from increased competition, market access and transparency.World Bank has analyzed the probable impact here. Reform of domestic laws to be in consonance with WTO rules would be a natural corollary.

A recent piece by David Collins in FT blog brings out the challenges Russia would have with it's WTO entry. Capacity to comprehend and effectively use trade rules to protect as well as advance one's national interest has been a recurring theme in this blog.The lack of capacity is a serious impediment that many nations face even after being in the WTO for decades. How would russia cope with this challenge. The piece rightly highlights the importance of building capacity to effectively engage with the WTO.

"Although Russia’s accession process has been planned for a number of years there remains a very significant knowledge gap within Russia regarding what WTO membership will mean to the country.  It is widely believed that many of the politicians who voted for (and against) WTO accession did not fully appreciate its implications in all sectors. The Russian government is eagerly seeking to recruit personnel with experience in international trade, including lawyers and economists.  Several hundred positions need to be filled in Moscow and Geneva and there is an insufficient pool of qualified professionals to draw from because Russian universities do not yet offer courses on the WTO. Clearly the development of a suitable foundation of local expertise in international trade could take some time. Until then foreign expertise will be needed, likely in the form of expensive American and European law firms.  The WTO itself sponsors a number of training initiatives and it is hoped that Russians will make use of these."

Multidisciplinary teams, both for negotiation as well as dispute settlement, is a way forward to address this issue. Indigenization of legal expertise and capacity to effectively engage with the quagmire of multilateral legal rules is a sine qua non of a strategic use of the WTO. How and when Russia will achieve this self sufficiency would be an interesting aspect of Russia's tryst with the multilateral trading regime.

Russia - Joins WTO and has a locally made national Olympic dress

Russia has formally joined the WTO with the Russian President signing on the legislation that ratified Russia's accession to the WTO. This ended an almost two decade old accession process and brings Russia into the multilateral trading system eleven years after China entered it. The reports of Russia finally joining the WTO are found here, here and here. I had earlier blogged about Russia joining the WTO here, here, here and here.

Apart from the signing of the WTO ratification, President Putin also called on his Russian Olympic Team to "Let London hear the Russian Anthem" in the official Presidential send-off exhorting them to excel in London.

 On a lighter note, I was curious to know about who manufactured the national Olympic dress of the Russian team in the light of the controversy about the U.S. Olympic Team's "Made in China" dress, that I had blogged about here. The Russian national dress is manufactured in Russia by a Russian company, Bosco Sport based in Moscow. Thus, no controversy over outsourcing of Russia's Olympic dress to China though a murmur about a U.S. company American Apparel being offered the deal was doing the rounds here and here.

Just to add colour to the debate, I researched further on China's official national dress for the Olympics - it was perhaps made in China but sponsored by a U.S. company - Nike. Truly globalized world indeed.


As one commentator rightly put it:

"Oddly enough, the Olympics exist as a place where nations can compete — and compete furiously — in place of real world disputes. One sentiment yet to be expressed, that the two nations just settle it in the field/court/pool/track."

Who would have imagined that the Olympics would be the next stage for globalisation and its tensions to take over? 

Deep divide on accession - Russia inches towards WTO membership

Russia's entry into the WTO looked more certain with its accession having been ratified by the Parliament by a slender majority. The majority 238-208 vote itself showed the sharp divide domestically to the accession to the WTO. It also shows internal domestic pressures with respect to multilateral trade rules and this dichotomy will continue even s Russia becomes an active member of the WTO.The Bill would now move to the upper chamber of the Russian parliament and would then have to be signed by the President for it to become law.


(Courtesy Reuters/Denis Balibouse)

The accession news was widely reported in the BBC, Reuters, Chicago Tribune, The Moscow Times and the RT. The official U.S. reaction to the Duma approving the accession came from the USTR:

"U.S. Trade Representative Ron Kirk welcomed the news of the Russian Duma’s ratification of Russia’s World Trade Organization (WTO) accession package.

“We are pleased to hear that Russia has completed this critical first step in its domestic process for approving the terms for becoming a Member of the World Trade Organization. Russia’s membership in the rules-based global trading system of the WTO will contribute to Russia’s economic growth as well as provide us with new opportunities to guide and grow our bilateral economic relationship. We reiterate our call on Congress to act now on Jackson-Vanik and Permanent Normal Trade Relations legislation,”Ambassador Kirk said."

This piece in The Moscow Times offered the rationale for viewing WTO membership as being positive for Russia:

"But maybe the biggest and most important benefit that WTO membership will bring is that it should bring the cost of goods down.

The cost of living in Russia (and especially Moscow) is famously high. Journalist Yulia Latynina once poignantly asked why a cup of coffee in Moscow cost as much if not more than the same in London or New York when the average income was less than half of those in the West.

The reason, of course, is the closed nature of the Russian market, which allows big companies to charge huge margins with impunity and has lead to the astronomical growth and creation of a super-rich class filled by all businessmen that have successfully set up and captured a market niche. That will start to change.

This will also have important political consequences. Going into the Duma elections last year, a survey found that the No. 1 biggest concern among voting Russians was the high cost of living. WTO-inspired competition could start bring down prices from this year to a level more appropriate to Russia's income levels. Making life more affordable will make life better and so make President Vladimir Putin more popular. If he does have ambitions to stand again for the presidency in 2018 (the gossip in the Kremlin is that he won't, but that could change), then he will be able to point to lower prices as a real and significant (and vote-winning) achievement of this term in office."

There is a recognition that WTO membership will be a trade-off and there will be benefits with costs. there will be winners and losers in the process. How Russia will address the loss and cope with the challenges would be interesting considering that a large segment of the democratic process were not in favour of the accession.

On the other side, what is the validity of the Jackson Vanik Amendment of the U.S. in relation to the PNTR status for Russia. Will address this issue in another blogpost.