EU to Russia: Join WTO, Then We Talk Trade

I've had this looooong running series of posts [1, 2, 3, 4, 5, 6] about Russian negotiations to join the WTO. My intuition of Russia being a long shot contender is based on the Ukraine and Georgia joining well ahead of it. After cutting off the former's gas supplies and engaging in a border conflict with the latter--both matters with trade interests, of course--Russia will have an almighty difficult time of getting these two countries' assent as it must do with all WTO members.

Now comes word that the EU Trade Commissioner Baroness Ashton is prodding Mother Russia to join the WTO prior to engaging in negotiations concerning EU-Russia trade. While there is an existing deal, both parties want to update it to account for changes since then. Moreover, with Russia engaging in all sorts of protectionist policies, those don't bode well either for its membership prospects. Here are excerpts from a recent article by Reuters:

The European Union's trade commissioner ruled out on Friday finalising a strategic pact with Russia before it joins the World Trade Organisation and warned Moscow against introducing new protectionist measures. "WTO accession paves the way to the broader free trade agreement we need," Catherine Ashton told Reuters in the city of Khabarovsk where Russian and EU leaders met on Friday. The wide-ranging strategic deal, intended to replace a 1994 pact puts trade as a cornerstone of relations that may cover all areas of relations between Brussels and Moscow, but is still under negotiation.

The European Union has voiced concerns about Russian protectionist measures including a hike in export tariffs on timber and restrictions on foreign gas imports which were adopted to support domestic industries in the crisis. "Russia needs to demonstrate it really is keen to move to WTO accession and part of that is not imposing any new duties, which in any event damage business," said Ashton. "We want to see them not impose new duties," she added.

Her remarks followed an angry statement by the Kremlin's chief foreign policy advisor Sergei Prikhodko, who said on Wednesday Russia was losing patience with delays in WTO adoption and could scrap self-imposed trade restrictions.

We then get to the heart of the bilateral matter, with the EU pushing for a more comprehensive deal with a major trading partner:

Russia is the third largest trade partner for the EU, which is dependant on Russian energy imports. The EU had a 70 billion euro trade deficit with Russia in 2008. The two sides are now working on the details of the new partnership agreement, but differences have stalled the talks. Russia is seeking a short document laying down key problems while the European Union insists the treaty should include detailed agreements on key sectors like energy and trade rules.

Asked if the EU-Russia agreement could be concluded without Russian membership of the WTO, Ashton was clear: "It is contingent, not least because all the issues for me have got to be within the context of WTO rules, it's just a much more straightforward and simple process on trade."

Can EU demands that Russia join the WTO spur it to membership? Perhaps it's another motivating factor. With energy prices at least temporarily lower, Russia's leverage in going it alone may also be diminished with regard to the EU.