East: Neighbors Watch As Russia Moves Toward WTO Membership

Russian goods being loaded for export at the port of Novorossiisk (file photo) (ITAR-TASS) PRAGUE, November 22, 2006 (RFE/RL) -- With official acceptance into the World Trade Organization clearly in sight, Russia is anticipating the benefits of membership.

"We want to take part in the global market [and] participate without being discriminated against," Russian Economic Development and Trade Minister German Gref told reporters on November 21. "We want to protect our producers and service providers. We can see now that the process of [trade] discrimination is growing around the world together with growing competition. So it is not possible to be a full-fledged member of the world trade process without being a WTO member."

But Russia's impending advancement will also reverberate among the country's traditional, regional trading partners.

Some who joined the WTO ahead of Russia have gained a key trump card in current political negotiations with Russia. Others who have yet to join the bloc might soon be seeing additional pressure to eliminate trade barriers.

But all will see changes in their economic and political relations with Russia.

The biggest hurdle to Russia's accession to the global trade bloc was removed last week when it reached a bilateral trade agreement with the United States.

Moldova And Georgia

But Russia still needs the approval of Moldova and Georgia to join the 150-member grouping.

Both are members of the WTO Working Group evaluating Russia's bid, and both are currently engaged in dicey political and economic relations with Russia.

Georgian President Mikheil Saakashvili participating in a festival of Georgian wines in Kyiv in May (TASS)

They have made no secret of their intention to use their position to their full advantage.

Lado Papava, a Georgian parliamentary deputy and former economy minister, says that during a recent trip to the United States he asked Russia's finance minister how the country was planning to join the WTO considering the embargo it has imposed on some Georgian products, notably wine and mineral water.

Papava recalls Aleksei Kudrin's response, which came just days ahead of Russia's trade deal with the United States.

"He answered that, of course, there are problems even among WTO member countries, but that he hopes Russia and Georgia would find a mechanism to resolve the problem," Papava said. "He said that Russians love Georgian wine and that an agreement would definitely be reached before the end of the year. This was quite an optimistic statement by Mr. Kudrin. He probably made this statement in Washington because Russia needed Washington's support. The second reason is that the problem is really serious, because a WTO-member country can make demands on a non-member country."

Ending The Embargo

Georgia's deputy state minister for economic and structural reforms, Vakhtang Lezhava, recently outlined the country's plan of action for getting Russia to drop its embargo on Georgian products.

The embargo, he says, violates the terms of a 2004 bilateral agreement, under which Georgia initially gave its consent to Russia's WTO bid.

"We will back Russia's joining the WTO on the condition that the terms of the protocol signed in 2004 are fulfilled," Lezhava said. "The terms of the protocol are not yet being fulfilled. That's why we officially informed Russia and the WTO that Georgia won't consider agreeing unless Russia fulfils the conditions of the protocol."

Some Moldovan goods have also been subjected to a Russian trade embargo. While Moldova has not followed Georgia's tack of officially pulling out of its bilateral agreement with Russia, it has threatened to do so.

"We are going to discuss the problem of food export from Moldova," Moldovan Economy Minster Igor Dodon told RFE/RL. "We are going to ask that our commercial relations follows the principles of the WTO, which means the rise of the embargo on imports [of food and wines]. Of high concern is the fact that the embargo on the import of some products is imposed with no explanation, no arguments, and no proof."

Ukraine Wary

However, unlike Georgia and Moldova, many of the states who depend heavily on Russia as a trading partner are not WTO members.

Oleksandr Paliy, an analyst at Ukraine's Institute for Foreign Policy, says recent political developments in Ukraine may have set back its own WTO ambitions and opened the door for Russia.

Meat from Ukraine on sale at a Moscow market (TASS)

"Because of the anticrisis coalition in Ukraine, Russia can join the WTO either at the same time or before Ukraine," Paliy said. "This way, as a result of the actions of [Prime Minister Viktor] Yanukovych's government, we missed a vital chance that would have given Ukraine a more advantageous position to negotiate with Russia."

Ihor Burakovskiy, director of Ukraine's Institute for Economic Research and Policy Consulting, said it is feasible that Russia could soon wield influence as a member of the Working Group on Ukraine's WTO bid.

"The question is how much later Ukraine will become a WTO member than Russia," Burakovskiy said. "If this process is delayed a lot longer, we can expect Russia to join the Working Group on Ukraine's WTO accession and, accordingly, expect certain economic demands from Russia not simply as a country, but as a WTO member."

However, Natalya Orlova, chief economist at Russia's Alpha Bank in Moscow, downplays such developments.

"Ukraine has been preparing to join the WTO," Orlova said. "Georgia is in the WTO, but this hasn't prevented a trade conflict arising between Russia and Georgia. The fact that Russia is nearing WTO entry will open new alternatives for regulating trade relations with Georgia and Moldova. In the future, Russia will also be able to come to an agreement with Ukraine on a series of customs rules, on the basis of WTO norms."

What About The Single Economic Space?

For those states whose bids to join the WTO are still very much a work in progress, it is less clear how Russia's impending accession will affect them.

Some of the members of the Eurasian Economic Community (Eurasec), for instance, have been laying the groundwork for their own regional customs union, the Single Economic Space.

Eurasec has six members -- Russia, Belarus, Kazakhstan, Kyrgyzstan (WTO member), Tajikistan, and Uzbekistan. Ukraine, Armenia (WTO member), and Moldova (WTO member) are observers.

According to a November 6 report by the Institute of War and Peace Reporting, Kazakhstan stands a chance of joining the WTO on "more favorable terms as part of an alliance with major trading partners which are also negotiating members of the world trade body."

But the institute also quotes analyst Gulnar Smailova of the Institute of World Economy and Politics in Kazakhstan as saying if the country does not get into the WTO soon, it must prepare for a "fiercely competitive environment."

In the long term, Smailova says, "WTO members will lower their tariffs every year and demand that others in Kazakhstan do likewise.... That's the danger."

In Tandem With Astana?

Kazakhstan expert Qanat Berentaev says Russia and Kazakhstan floated the idea of joining the WTO together during recent talks.

"The general opinion was that we needed to enter the WTO simultaneously, because Russia is our main trading partner," Berentaev said. "When parliament was discussing Kazakhstan's level of preparation for WTO entry, it was said that Kazakhstan and Russia should coordinate their actions to join, but not necessarily act together. Our oversight here is that we should have had a solid agreement with Russia on simultaneous WTO entry."

President Putin hosted a Eurasec summit in Sochi in August (epa)

Meanwhile, Russia, Kazakhstan, and Belarus are the three Eurasec members who have signed on to the Single Economic Space.

"Since we belong to the Single Economic Space, Russia will now have to bring its position within the Eurasec and the Single Economic Space into line with the commitments it makes upon entering the WTO," Berentaev said. "So the structure of relationships within these groupings is likely to change somewhat."

That things will change is clear -- especially for states like Belarus that have built up significant barriers to trade with countries outside Eurasec.

"Within the next three or four years, [the situation] will change significantly, because significant changes will take place in Russia itself," independent Belarusian economist Leanid Zlotnikau said. "They [the Russians] will be obliged to liberalize prices for energy resources on their market. The Russian commodities market will become open for competition from all countries, not only from Belarus -- it will become more competitive. This does not bode well for Belarus in the future."

(RFE/RL's Ukrainian, Belarus, Moldovan, and Georgian services provided material for this story.)