Mediator: Russian WTO bid slowed by new strategy

GENEVA — Russia’s troubled bid to join the World Trade Organization could be set back further by its decision to file a common application with neighbors Kazakhstan and Belarus, a key mediator said Thursday.

Icelandic diplomat Stefan Johannesson said Moscow’s new strategy may be deemed illegal by WTO member states, since the proposed customs union would need to be able to act on behalf of all three nations. Russia has tried on its own for the last 15 years to end its isolation as the largest nation outside the global commerce body.

“It’s the member states that have the final say if they consider this feasible under WTO rules or not,” Johannesson said in a telephone interview from Brussels, where he serves as Iceland’s ambassador to the EU. He also has steered Russia’s WTO accession talks.

“There are a lot of questions,” he said, adding that none of the three ex-Soviet republics have officially proposed the idea to the trade body.

Russian Prime Minister Vladimir Putin announced the strategy earlier this month, but offered little explanation for why the Kremlin wanted the three nations to join as a single economic bloc. Some analysts saw it as a signal Russia was sacrificing its frustratingly slow WTO bid to boost relations with its closest neighbors.

The move is unprecedented in the history of the WTO, or its predecessor, the 1948 General Agreement on Tariffs and Trade. The European Union is a WTO member alongside all its 27 member states. Non-countries such as Taiwan, Hong Kong and Macau have joined, but no group of sovereign nations has sought to break in together.

Johannesson said the three countries were peppered with questions from members such as the EU at an informal meeting in Geneva last week. They were asked if their painstakingly negotiated bilateral agreements with dozens of countries would now have to be reworked, and if years of multilateral talks on final accession treaties would now need to be restarted from scratch.

“This could delay the process,” said Johannesson, without giving any firm timeline for Russia’s current or previous path. “This is obviously a complex legal issue. We still need to see what this means. The members will have to approve a new working group. They have to appoint a new chairman. This obviously takes time.”

Even under its previous path, Russia was believed to be years away from satisfying the demands of each of the trade body’s 153 members as is required to join. A number of trade and political issues stand in its way, including disagreements over state monopolies such as OAO Gazprom and tense relations with neighbor and WTO member Georgia.

Georgia has been demanding for years that Russia stop trading with its two breakaway regions, Abkhazia and South Ossetia, and that all goods pass through checkpoints run by the central government. Last year’s war and Moscow’s subsequent recognition of the two regions as independent nations soured relations further, and Georgia has vetoed any formal negotiations at the WTO to spur Russia’s entry.

Washington and Brussels had been trying to persuade Russia to agree on subsidy restrictions for plane maker Tupolev. The U.S. and the EU are already embroiled in their own dispute over payments to rival airplane manufacturers Boeing Co. and Airbus.

U.S. legislation demands that WTO members make their companies operate in a commercial manner. That would force Gazprom to reform its pricing policies for fuel, which is sold far below global prices in Russia but at much higher rates in Europe.

Other old sticking points that have never been fully resolved concern Russian farm subsidies and enforcement of intellectual property rights.

Analyst Vladislav Inozemtsev said Russia’s new strategy was a grab for union members who have little to gain from the WTO. Putin has “linked up with two countries whose economies are even more centralized than Russia’s,” he wrote in a commentary published in the Moscow Times.

In another editorial, the business daily Vedomosti said the Kremlin’s slowing of acceptance into the WTO was “a blow to the Russian government” and “a powerful signal that the word of the Russian government means nothing.”

Johannesson said he would join his counterparts steering the old talks on Belarus’ and Kazakhstan’s bids in a meeting with the three countries soon.

“If they decide to go back to the individual approaches, we can pick up where we left off,” Johannesson said. “That process is suspended — not terminated.”

AP writer Brett Holton in Moscow contributed to this report.