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11/11/2006 | U.S., Russia: The Politics Behind the WTO Talks

Stratfor Staff

After 13 years of unsuccessful attempts, Russia and the United States completed their bilateral negotiations for Russia's accession to the World Trade Organization on Nov. 10.

 

Final agreements are to be signed during the Asia-Pacific Economic Cooperation summit in Hanoi, Vietnam, where Russian President Vladimir Putin will meet with U.S. President George W. Bush. However, this agreement is a political one, and many trade problems remain to be settled.


The United States and Russia have completed bilateral talks for Russia's accession to the World Trade Organization (WTO). After 13 years of negotiations and stalling on integral issues, both sides appear to have compromised in the final document. Russian Minister of Trade German Gref and U.S. Trade Representative Susan Schwab are due to sign the final agreement at the Asia-Pacific Economic Cooperation summit in Hanoi, Vietnam, where Russian President Vladimir Putin will meet with U.S. President George W. Bush on Nov. 19.

Recently, both sides have been rather pessimistic about Russia ever completing negotiations. Stratfor wrote two weeks ago that a U.S.-Russian agreement would not be reached, but that negotiations were not yet completely doomed because Moscow was waiting for the midterm U.S. congressional elections in hopes that a Republican loss would give it a stronger negotiating position, though the underlying issues would remain unchanged. That assessment was correct, except for the underestimation of the extent to which Bush's need for a symbolic foreign policy success would override the policy fundamentals still in dispute. Bush needs to show that he can work out a significant international deal that resolves a longstanding problem.

The timing of the WTO deal is also important; the U.S. Congress, held by the Republican Party, would be much more conducive to passing any necessary legislation before the Democrats take over the House of Representatives and the Senate in January 2007. However, it would also serve Bush well to saddle the unwilling Democrats with repealing the Jackson-Vanik Amendment, which keeps Russia from attaining the status of permanent normal trade relations. (Repealing the amendment is an integral part of the agreement.) Considering Russia's poor relations with two other WTO negotiating partners -- Georgia and Moldova -- talks on the Russian WTO accession are more than likely to stretch well into 2007, as both of those countries have veto power. Bush can hand the Democrats the difficult decision to repeal the amendment -- if they do not repeal it (and they will not), they will appear uncooperative and anti-internationalist. Alternately, the Bush administration could have made the agreement knowing that it would be seen as a grand gesture but that it would be stalled by the Democrats -- which would both show the Democrats in a negative light and effectively spike the agreement.

The political resolution to the long U.S.-Russian negotiations will not accomplish all the goals a WTO accession would aim for. Although both sides are saying that all of the disputed issues have been resolved, the truth is that Russia thinks just about anything can be accomplished if the decision is made at the highest level -- the rest is details. However, the implementation of those details might delay any actual benefit Washington and Moscow can derive from this deal. U.S. businesses are hoping to gain better access to the Russian goods and services markets, but no matter what promises Moscow makes, there are still additional politically motivated restrictions that can be imposed later. Even after WTO accession, Russia can employ its usual tactics against uncooperative foreign businesses, such as selective enforcement of its convoluted regulations or an untimely audit. Moreover, Russia's compliance with the terms of the accession treaties is questionable, as it is likely to stall -- much as China has upon its own WTO entry.

The political gains may be limited as well. Though it looks good for Bush to have this grand foreign-relations accomplishment, the WTO deal will not bring Russia closer to the U.S. side in other international issues. Moscow will pursue policy that is beneficial only to its concerns and goals, so although WTO accession is beneficial to its economy, Moscow will not budge on anything that infringes upon its politics. And if anything fails to go the way the Kremlin wants between now and the finalization of Russia's accession, the deal could still be off. Although Russia does gain from WTO accession, the timing of the deal lets Russia join the WTO with fewer losses -- now is the time to negotiate with a weakened U.S. administration.

Stratfor (Estados Unidos)

 


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