Georgia deal paves Russia's way to WTO

3rd November 2011, Comments 0 comments

Russia stood on the verge of ending its tortuous 18-year wait to get into the World Trade Organization on Thursday after accepting a Swiss-mediated deal that removed reservations by its arch-foe Georgia.

The decisive breakthrough with the last holdout nation came after months of closed-door diplomacy in Switzerland between two rivals that have only had limited ties since waging a five-day border war in 2008.

Russia is now finally poised to shed its status as the world's biggest economy outside the world's premier free trade club by winning formal accession at a meeting tentatively set for the middle of December.

"We are happy that Georgia supported the draft and that the agreement has finally been reached," Interfax quoted chief Russian negotiator Maxim Medvedkov as saying.

Tbilisi had been demanding international monitoring of cross-border trade in its Russian-backed breakaway regions of Abkhazia and South Ossetia. Moscow had wanted to police the border with the help of local and Russian patrols.

Medvedkov said a part of the deal would see an independent company contracted to audit trade in the disputed region.

That firm would also act as a mediator and information handler between Georgian and Russian customs agents.

The agreement "is based on our proposal and does not go outside the frameworks of Russia's principled stand," Medvedkov said.

Georgian Deputy Foreign Minister Sergi Kapanadze for his part said a Georgian delegation would be arriving in Switzerland later Thursday for talks with the Russians and the Swiss negotiators.

"I think the agreement will be signed within several days," he told AFP.

There are two more lower-level WTO sessions scheduled for November before all of the bloc's top representatives gather for a December 15-17 ministerial meeting at which Russia's membership is due to be put up for a vote.

Russia has already ironed out its disputes with the European Union and has no direct trade issues remaining with the United States. Other big nations such as China are also on board.

But the US Congress has still not revoked the 1974 Jackson-Vanik amendment -- a piece of Cold War-era trade legislation that strips most-favoured nation status from countries impeding the emigration of Jews to the West.

That amendment could theoretically lead to retaliatory steps being taken against the United States once Russia joins the WTO.

Analysts are united in viewing free trade as a net benefit for Russia.

The World Bank estimates that WTO accession may add up to 11 percent to Russia's gross domestic product in the long term as the business process becomes more streamlined and the investment climate improves.

"I think this was a big event for Russia -- it is very good for its image," said Renaissance Capital analyst Ivan Tchakarov.

But some economists warn that membership has its price -- something that Vladimir Putin has often referred to while serving as both president in 2000-2008 and prime minister today.

Putin is set to return to the presidency in March elections. But the final push for membership was spearheaded by President Dmitry Medvedev that came to power month before a global economic crisis broke out.

Some analysts said it was the realisation of Russia's dependence on global partners that ultimately made the Kremlin decide in favour of the WTO.

"The Russian side has been pushing very strongly in the past couple of years to be a WTO member. And I think the reason for that is that Russia was -- as a country -- a little bit humbled by the 2008-2009 crisis," said Tchakarov.

Tchakarov said he expected the full benefits to start affecting Russia's growth and production figures two or three years down the line -- the same it took for the impact to be felt in fellow emerging nation China.


© 2011 AFP

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