WTO Approves Terms Of Accession For Russia
After eighteen years of negotiations, World Trade Organization (“WTO”) members voted on December 16 - during the WTO’s 8th Ministerial Conference - to approve Russia’s terms of accession to join the organization as its 154th member.
Russia’s commitments under its accession package include reduced tariffs, elimination of industrial subsidies, and provision of greater market access to foreign companies. With respect to tariffs, upon entering the WTO, Russia’s average bound tariff will be 7.3 percent for manufactured products (compared with 9.5 percent currently) and 10.8 percent for agricultural products (compared with 13.2 percent currently). Russia also agreed to modification of some technical barriers applicable to agricultural imports and was granted special investment flexibilities for its automobile industry, allowing it to continue some local content rules until 2018 that are intended to benefit Russia’s domestic manufacturers.
Russia’s lower house of Parliament (the Duma) must now ratify the accession package for Russia’s entry into the WTO to have legal effect. Russia’s Deputy Prime Minister Igor Shuvalov stated at the Ministerial Conference that the Russian government will wait to submit the accession package to the Duma until the second quarter of 2012. He attributed the delay to the government needing to consult with industry and to determine the extent of necessary changes to federal law. Some observers have speculated that the government also wants to wait until after the March 4 presidential election to submit the package to the Duma due to the controversial nature of some Russian concessions.
The United States indicated at the Ministerial Conference that it would not be able to extend its own WTO obligations to Russia until the U.S. Congress passes legislation to revoke the applicability of the so-called Jackson-Vanik amendment to Russia. The Jackson-Vanik amendment is a 1974 U.S. law that denies permanent Most Favored Nation status to certain nations that restrict emigration, including Russia. Russia has no obligation under the WTO to extend the benefits of its own WTO commitments to the United States as long as the United States does not apply WTO benefits to Russia.
President Obama recently stated that he will push Congress to repeal the Jackson-Vanik amendment for Russia early in 2012 so that U.S. businesses can enjoy opportunities afforded by Russia’s WTO membership. Congressional debate on this subject is expected to be intense as a number of Members of Congress have already indicated that they oppose revoking the Jackson-Vanik amendment for Russia.