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Sunday, August 20, 2006

Annals of Cold War II: Trade Skirmish Escalates

In a pathetic attempt to retaliate against the U.S. for blocking Russia's WTO admission, Reuters reports that Russia is now threatening to ban the import of U.S. meat. Welcome to Cold War II, the one Russia can't possibly survive.

WASHINGTON (Reuters) - The United States reacted sternly on Thursday to a Russian threat to block U.S. meat imports if Washington does not endorse Moscow's bid to join the World Trade Organization within three months.

"U.S. imports of certain beef, pork and poultry are currently subject to measures agreed by both sides after Russia took a unilateral action to limit imports of these products in 2003," said Sean Spicer, spokesman for the U.S. Trade Representative's office.

"This is not an issue of special preferences for the United States. If Russia chooses not to honor this negotiated agreement, it will create a serious problem that will complicate our efforts to conclude the negotiation of our bilateral WTO agreement," Spicer said.

The warning followed a letter on Thursday from Russian Economy Minister German Gref to U.S. Trade Representative Susan Schwab in which he linked continued U.S. access to the Russia meat market to a speedy WTO membership deal.

"If talks (on Russia's WTO entry) ... set for the end of October in Geneva fail, Russia will have to return to its original stance prior to agreements on (bilateral) meat trade that had been reached," Gref said.

Russia has been negotiating for 13 years to join the WTO and its predecessor organization. It had hoped to reach a deal with the United States before the Group of Eight summit, which it hosted last month in St. Petersburg.

However, those talks foundered over agricultural trade issues and U.S. concerns that Russia had not done enough to stop piracy of U.S. movies, music and software.

"The United States is negotiating in good faith with Russia to complete our bilateral WTO accession agreement solely on commercial terms in the next couple of months," Spicer said.


K said...

"Russia, the world’s largest poultry importer, may halt its imports of the product from the U.S. state of Michigan, because two birds infected with avian influenza (bird flu) were discovered there last week, the country’s Federal Veterinary Service said on Wednesday, Aug. 16." - MosNews

K said...

The Russians are in ho hurry anymore...
"The failure to reach an agreement was more of a defeat for Gref, Finance Minister Aleksei Kudrin, and other liberals in the Russian government than for Putin himself. After 13 years of talks, the number of politicians who back Russia's WTO efforts and those who are in no hurry to join the global trade bloc is about equal." - Radio FreeEurope

La Russophobe said...

K: Thanks for the links!

Indeed, we may now be seeing a classically neo-Soviet "sour grapes" approach to the WTO, with Russia now saying it never really wanted admission anyway. However, that's not what we heard from Russia in the run-up to the G-8 meeting in Piter. Those who claim to be in opposition were quite silent then.

However, you make an interesting point, that WTO membership might serve to undermine Putin's dictatorship by helping to bolster the development of diverse industry in Russia. For sure, Russia can't become a participant in the world economy without WTO membership, and there are many in Russia who, like always in Russia's history, don't WANT it to become so.

However, blocking WTO access cannot be done in isolation. Russia can't maintain its position in the G-8 (or for that matter the UN) once the world concludes that it can/will never enter the WTO. What's more, sooner or later Russia will suffer a serious regional competive disadvantage once Ukraine, Georgia and others start benefiting from WTO membership and translating it into further steps towards European integration, leaving Russia in the dust.

Ultimately, Russia will end up locked in another Cold War with the US if it can't gain WTO admission. If that's really what some Russians want, they are insane. Only a Russian totally drunk on oil revenues could imagine that Russia can face such a conflict successfully.

Of course, it's also quite true that Russia doesn't stand much of a chance in a free-market competition, so for sure Russia finds itself between a rock and hard place.