Russia’s accession to the WTO was an important step forward but it was unwilling to obey the WTO rules and to engage in further liberalisation.
The EU wants to see further trade liberalisation with Russia. There was an important step forward in August when, after lengthy negotiations, Russia finally formally joined the WTO. The EU’s most important objective now in this respect is to make sure that Russia actually follows WTO rules. Currently, there are around dozen issues on which it is in breach of the rules: it has an import ban on livestock; it charges so-called scrapping or recycling fees for imported cars; and there are ongoing anti-dumping cases. Russia also applies tariffs higher than those allowed by WTO rules. The WTO dispute-settlement mechanism has equipped the EU with a good arsenal of legitimate ways for retaliation. But although the EU would prefer to solve the differences without resorting to these, its patience is close to being exhausted – as Trade Commissioner Karel De Gucht made clear in December.
The main reason for the lack of progress in 2012 was that Russia did not reciprocate. A mutual free-trade agreement between Russia and the EU has effectively been shelved, because Russia’s Common Economic Space with non-WTO members Belarus and Kazakhstan makes any progress on this front practically impossible. The EU has also been hoping to negotiate a new wide-ranging partnership agreement with Russia, to replace the old Partnership and Cooperation Agreement (PCA), but negotiations are stuck. The EU wants the trade-related clauses of this agreement to go further than what has been agreed in the WTO framework; it also wants to prevent the agreement being tilted in Russia’s favour like the former PCA, which gave Russia “most favoured nation” status without getting much in return. So far, there is no evidence of enthusiastic reciprocation from the Russian side. EU member states were unanimous in stressing that Russia needs to comply with the rules, with those most affected by non-compliance (such as automobile manufacturers and livestock exporters) in the lead.