Daily Archives: October 8, 2012

WTO and the Level Playing Field: Europe v. Russia

Europe’s trade chief threatened to take Russia to the World Trade Organization over a string of restrictive practices saying Moscow needed to play by the rules now it was a member of the global body.  Trade Commissioner Karel De Gucht singled out Russia’s ban on European live animal imports, plans to levy fees on imported vehicles, two anti-dumping cases and another trade defense case launched by Moscow against Europe in recent months.  In the same week that the European Commission opened an investigation into Russia’s Gazprom and China’s solar panel exports, De Gucht said the measures sent “the wrong signal”, Reuters reports.

“Membership of the WTO means a country is subject to the dispute settlement mechanism of that organization,” he told an EU-Russia seminar in Helsinki. “Russia should understand that Europe takes that mechanism very seriously and that we will not hesitate to enforce our rights where they are violated,” he added.

Russia joined the WTO last month after an 18-year wait. President Vladimir Putin said on Wednesday the country would use its membership to try to develop freer trade across the world, but he’ll also be hoping it will further boost the energy-driven $1.9 trillion economy.  De Gucht said Russia was violating WTO rules by keeping its markets closed to competitors.  “What these and other measures … have in common is that they affect products where significant market opening is due to take place under Russia’s WTO commitments,” De Gucht said.  “This is the wrong signal to send at a time when liberalization is supposed to be moving forward.”

Russia and the EU are deeply intertwined, with Europe relying heavily on Russian energy exports and Russians hungry for EU products and access to its 500 million consumers.  But the two sides argue over issues ranging from energy supplies, trade and market access to human rights. While relations are at times frosty, both refer to each other as “strategic partners” and meet for twice-yearly summits.  Negotiations between Russia and the EU towards closer economic and political ties have also stalled, and Brussels is concerned by Putin’s plan to develop a “Eurasian union” of ex-Soviet states, including Kazakhstan and Belarus.

EU warns Russia to play by WTO rules or face action, Reuters, Sept. 7, 2012

Russian President Vladimir Putin signed a decree giving the government the right to protect its natural gas-export monopoly, OAO Gazprom (GAZP), from an anti-trust inquiry by the European Union.  Putin’s measure bans strategic companies from disclosing information, disposing of assets or amending contracts without government approval in case claims are made by foreign states or entities, the president’s office said in an e-mailed statement from Moscow today. The Russian leader on Sept. 9 warned the EU, which relies on Russia for a quarter of its gas needs, that there would be “losses on both sides” if the issue isn’t resolved. He accused the 27-nation bloc of trying to shift responsibility for subsidizing former communist EU members onto Russia by forcing Gazprom to cut prices for customers in eastern and central Europe.

Excerpt, By Henry Meyer, Putin Moves to Protect Gazprom From EU Pricing Dispute, Bloomberg, Sept. 11, 2012