December 5, 2012 5:59 pm

Europe cools on Russia’s WTO accession

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Europe’s top trade official accused Russia of reneging on its commitments to the World Trade Organisation just three months after it joined the group, and warned “the clock is ticking” before EU legal action.

The comments from Karel De Gucht, the EU trade commissioner, set the stage for a tense visit in two weeks when Vladimir Putin, the Russian president, is due to come to Brussels for a bilateral summit.

They also reveal how quickly the optimism that accompanied Russia’s accession to the WTO in August – after nearly 19 years of negotiations – has given way in Europe to a more familiar sense of frustration.

“Since Russia has become a member of the WTO they are doing exactly the opposite of what they are supposed to do or what they have been promising to do,” Mr De Gucht said in Brussels.

“At this moment in time, I’m rather upset about all this,” Mr De Gucht added, calling the developments “very disturbing.”

Brussels has been sparring with Moscow on several trade fronts in recent months, spanning products from wood to slaughtered pigs.

One of the biggest sources of irritation has been a new Russian law that introduces special levies to cover the cost of recycling cars. The law has been billed as an environmental initiative, but EU officials believe it is protectionist because it only applies to imports.

Brussels has also complained about Russia’s blanket ban on imported live animals from Europe – purportedly for health reasons – as well as Moscow’s decision to raise tariffs on hundreds of imported products in spite of joining the WTO.

Russia’s failure to appoint a WTO ambassador thus far has also led some trade officials and analysts to question Moscow’s commitment to its new club.

Viktor Kalmikov, Russia’s deputy ambassador to the EU, questioned the EU’s analysis of the auto recycling fee, and noted that Russia had its own list of complaints against the bloc over matters such as its chemicals regulations.

“What family does not have its quarrels?” he asked, adding: “We believe in the logic of the WTO. We believe in the rules of the WTO.”

Russia is the EU’s third-largest trading partner – after the US and China – but has long been a source of frustration for what EU officials regard as unpredictable, often protectionist, behaviour.

Brussels had championed its bid to join the WTO because it believed it would lock Moscow into a rules-based system that would encourage broader economic reforms and make it easier to resolve occasional disputes.

For Russia, gaining admission to the club removed the stigma of being the last major economy outside it, and was also supposed to help attract foreign investment to diversify an economy reliant on oil and gas exports.

Fredrik Erixon, a director of ECIPE, a Brussels-based think tank that specialises in trade, argued that the Kremlin was trying to avoid a political backlash at home by reinterpreting its WTO obligations.

“Russia entered without a clear idea of why it wants to belong to this club and it has no intention of participating in negotiations to free up trade, the prime purpose of the WTO,” he wrote in an email.

Mr De Gucht warned that his patience was running out, saying: “Either we see movement in this file in the coming weeks, or we will be forced to go to the WTO for dispute settlement. We are left no other choice.”

He also said EU officials would demand answers when they stand “eyeball to eyeball” with the Russian president during the summit, remarking: “I would be very interested to learn from Mr Putin himself what he has on his mind.”

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