No more help from abroad

Seventeen-year negotiations on Russia's accession to the World Trade Organization seems to be stuck again. It is believed to be caused by Russia's crisis management barriers and persistent attempts to create a Customs Union of Russia, Belarus and Kazakhstan. In addition, the line of Moscow to create a "single economic space" can worsen its relations with its main trading partner - the European Union.

Russia has no chance to share  Custom Unions in three parts

Significant differences between the West and Russia concerning its accession to the World Trade Organization (WTO) have been revealed during the St. Petersburg International Economic forum in which representatives of the Western powers have criticized the protectionist policies of Russia and its attempts to establish the Customs Union of Russia, Belarus and Kazakhstan.

In particular, Deputy Director General of European Commission for Trade, Peter Balash made sufficiently unpleasant report for the Russian officials. According to him, the leadership of the EU and Russia managed to reach an understanding on the completion of the accession of Russia to the WTO by the end of 2009, but the Customs Union ruined everything.

"I agree that time has finally come to finish this seventeen year process of negotiations on Russia's accession to the WTO. Between the leadership of the EU and Russia understanding has been reached to complete the process by the end of 2009. However, there were a number of factors that have prevented - in particular, the decision of the three countries to establish a customs union in such a way that it has impeded entry of Russia into the WTO ", - said Peter Balash.
 
According to him, in the West they fear to worsen terms of trade and distribution of anti-crisis tariffs imposed by Russia on Belarus, and Kazakhstan. "We then hear that the crisis is over, that we came out of a recession - and for this reason we appeal to our colleagues in Russia and two other members of the Customs Union to gradually introduce liberalization measures", - Balash noted.

In addition, foreigners note a number of administrative barriers to trade with Russia. "Trading in many regions suffers from various kinds of constraints starting from the new rules, which are introduced, in particular customs ones. Tons and tons of cargo are idling on the border, waiting for customs clearance, there is a change in the rules and all these factors hinder our trade "- representative of the European Commission clarifies in his report.

European Parliament adopted a resolution from 17 June, 2010 stating that the establishment of the Customs Union of Russia with Kazakhstan and Belarus, "may be a further obstacle to Moscow's accession to the World Trade Organization."

"Refrain from any protectionist measures is a prerequisite for entry into the WTO - the document reads. - The European Union wishes to see Russia as a member of WTO, which will allow the country to attract more foreign investment and diversify the economy. "

In addition, the European Parliament is sure, "this move could be a tangible contribution to the further improvement of economic relations between Russia and the EU and lead to the conclusion of a comprehensive integration agreement on the basis of genuine reciprocity."

"The Customs Union between Russia, Belarus and Kazakhstan gives rise of concern in the EU", - Catherine Ashton, EU High Representative for Foreign Affairs and Security Policy confirmed the European position,.

USSR Phantom is haunting Europe

On their part, Russian representatives are confident that the establishment of the Customs Union does not prevent Russia's entry into the WTO, and rebukes to Russia and its initiatives are more political in nature.

Thus, according to Deputy Minister of Economic Development of Russia, Andrei Slepnev, only «technical» issues remained to be resolved for Russia's entry into the World Trade Organization (WTO) ". "What is required is political will to resolve the outstanding issues", - Andrey Slepnev says.

According to the owner of Severstal, Alexei Mordashov, Russia is ready to join the WTO as from a legislative point of view and in terms of liberalization of foreign economic activity. According to the head of Severstal, there are only minor issues to be solved. Thus Mordashov also believes that the basis of claims to Russia has not so much economic as political motives. "I do not want to politicize this issue. This issue is not political, and economic", - Alexi Mordashov emphasized.

June 18, 2010 the president of Russia Dmitry Medvedev declared full readiness of Russia's accession to the WTO. According to him, the entry into WTO and the establishment of a "common economic space" do not contradict each other.

Thus, we can conclude that Russia is not only going to abandon the idea of the Customs Union, under pressure from the international community, but also looks forward to its expansion. So, according to Sergei Lebedev, the chairman of CIS Executive Committee, Kyrgyzstan, Tajikistan and Armenia are interested in the Customs Union of Russia. According to him, the CIS countries' are watching with interest for integration into the Customs Union of Russia, Belarus and Kazakhstan.

According to the statements of the leaders of Russia, the establishment of the Customs Union of the three countries will be just the first step to establish a "common economic space".

At the same time, the establishment of the customs union itself is not so clear cut as Moscow would like. Agree to the conditions failed to Belarus, which resulted in the "gas war" with this country with poorly predictable consequences and the threat of disruption of Russian gas to Europe. It is clear that Moscow is playing a political game, trying by all means to reintegrate the former Soviet space under its auspices, and for this reason is prepared to cool relations with its main trading partner - the European Union.

What concerns barriers related to customs reforms, Peter Balash complained about,  as we have already assumed, customs reform on transfer of customs clearance procedure at the state border alongside with plans to establish a unified customs territory, in our opinion, has not  just an economic, but more of political implications.

As Alexander Osin, chief economist of Finam Management commented to PortNews IAA, there is a problem with the Customs Union concerning the accession to the WTO and it is really substantial. "First of all, it should be noted that negotiations on Belarus accession to WTO are far from completion. The role of government regulation and incentives in the Belarusian economy is relatively high. Accession of this country to WTO is negatively affected by complex political relations between the West and Belarusian authorities ", - the expert explained.

Vitaly Chernov