Russia's Accession to the WTO

Publication Date: January 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

Type:

Coverage: Russia (Federation)

Abstract:

In 1993, Russia formally applied for accession to the General Agreement on Tariffs and Trade (GATT). Its application was taken up by the World Trade Organization (WTO) in 1995, the successor organization of the GATT. Russia's application has entered into its most significant phase as Russia negotiates with WTO members on the conditions for accession.

Accession to the WTO is critical to Russia and its political leadership. President Vladimir Putin has made it a top priority. He views accession as an important step in integrating the Russian economy with the rest of the world and in fostering economic growth and development by attracting foreign investment and by lowering trade barriers. For the United States, the European Union (EU) and other trading partners, Russia's accession to the WTO could increase stability and predictability in Russia's foreign trade and investment regime.

The Russian accession process is moving forward, but differences over some critical issues remain, making the time for Russian accession to the WTO uncertain. The European Union and the United States have raised concerns about Russian energy pricing policies which allow natural gas, oil, and electricity to be sold domestically far below world prices providing, they argue, a subsidy to domestic producers of fertilizers, steel, and other energy-intensive goods. Russia counters that the subsidies are not illegal under the WTO. Concerns regarding Russian trade barriers in the services sector, high tariffs for civil aircraft and autos, and intellectual property rights have slowed down the process and made the original target of completion in 2003 unattainable. On November 19, 2006, U.S. and Russian officials signed a bilateral agreement on Russia's accession to the WTO, thus completing a major step in the accession process. Russia still needs to complete negotiations with working party members.

Congressional interest in Russia's accession to the WTO is multifaceted. Members of Congress are concerned that Russia enters the WTO under terms and conditions in line with U.S. economic interests, especially gaining access to Russian markets as well as safeguards to protect U.S. import-sensitive industries. Some Members also assert that Congress should have a formal role in approving the conditions under which Russia accedes to the WTO, a role it does not have at this time. A number of Members of Congress and members of the U.S. business community have advised the Bush Administration not to agree too quickly to Russia's accession to the WTO and to ensure that U.S. concerns are met. The Congress has a direct role in determining whether Russia receives permanent normal trade relations (NTR) status which has implications for Russia's membership in the WTO and U.S.-Russian trade relations. Without granting permanent NTR (PNTR) to Russia, the United States would not benefit from the concessions that Russia makes upon accession. Issues regarding Russia's accession to the WTO may arise during the 110th Congress. This report will be updated as events warrant.