EU Will Back Russia’s WTO Entry

By Juliane von Reppert-Bismarck | December 8, 2010

The European Union formally backed Russia’s bid to join the World Trade Organization on Tuesday, clearing the way for Moscow to join the body in 2011, after 17 years of trying.

EU Trade Commissioner Karel De Gucht and Russian Economic Development Minister Elvira Nabiullina signed an agreement on the sidelines of an EU-Russia summit, after the resolution of a tariff dispute that had held up EU approval.

“Our difficult bilateral issues are resolved. We signed a memorandum of understanding to this end today,” EU Commission President Jose Manuel Barroso said. “Russia becoming a WTO member in 2011 is a realistic perspective.”

The EU, the world’s largest trading zone, is Russia’s biggest trading partner. Its decision to end its WTO veto — largely thanks to Moscow’s commitment to phase out export tariffs on timber and rail freight fees — removes a major obstacle to Moscow’s accession to top trading nation status.

Russia’s $1.2 trillion economy makes it the largest outside the WTO. The World Bank has estimated that entry could increase Russian gross domestic product by as much as 3.3 percent in the medium term and 11 percent in the long term.

As part of Tuesday’s agreement, Russia has promised to lower export duties on timber, which are currently set at about 15 percent. This will benefit EU paper makers such as UPM, Stora Enso and M-Real.

Russia will also lower fees on Asian freight reaching Europe via Russian railways, EU officials said.

Russia’s accession still needs approval from the 153-member WTO. Multilateral negotiations are expected to focus on Russian concessions that will make it easier for foreign car makers to export and produce cars in Russia.

“Foreign car makers operating in Russia and joint ventures are going to be the big winners. They’re the ones that will progressively take over the market,” said Eric Bergelin, Director for Trade and Economics at the European Automobile Manufacturers’ Association.

Russia hopes WTO entry will increase foreign direct investment and its exports of steel to the EU market.

Russian Prime Minister Vladimir Putin has said the country hopes to join the 153-member WTO in 2011, completing a process that began in 1993. The WTO represents more than 97 percent of global trade.

(Reporting by Juliane von Reppert-Bismarck, Editing by Rex Merrifield and Matthew Jones)

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