Tbilisi, Moscow sign deal paving way for Russia's WTO entry

9th November 2011, Comments 0 comments

Georgia and Russia sealed a deal on Wednesday removing the final obstacle to Moscow's 18-year bid for membership of the World Trade Organization.

The Swiss-mediated accord, described as "a victory" by Tbilissi, will see international monitoring of cross-border trade through Georgia's Kremlin-backed breakaway regions of Abkhazia and South Ossetia, despite Moscow's initial rejection of external oversight.

"Representatives of Georgia and of Russia today signed a bilateral agreement in Geneva governing customs administration and the supervision of commercial goods between the two countries," said Swiss mediators, confirming the accord in a statement.

"With this agreement, the parties have paved the way for Russia to join the WTO in the near future.

"Switzerland is convinced that this measure will lead to improved economic development for Russia and for Georgia," the Swiss foreign ministry said.

Russia submitted its application to join the WTO in 1993 but talks dragged on and its membership bid was further delayed after its brief war with Georgia in 2008.

As a member of the WTO, Georgia is able to veto any accession bids and it was only after months of Swiss-mediated talks that Tbilisi and Moscow finally reached a bilateral agreement.

The accord includes the deployment of a private firm to monitor the situation on the ground. A neutral third party -- Switzerland -- will also play the mediator role "in the event of difficulties."

"For us, all the crucial elements that Georgia was asking from Russia are there," Georgian ambassador to the WTO, Zurab Tchiaberashvili told AFP, stressing the importance of having independent monitors on the ground.

"From this point of view, this is a victory for Georgians," he said.

With Georgia's opposition removed, a formal negotiating session on Russia's accession will open Thursday, when the 62 countries participating actively in discussions on Moscow's membership are expected to rubberstamp an overall package of accession commitments.

Other major economies including the European Union, China and the United States have earlier already sorted out their disputes with Russia over its accession bid.

After the first green light from Thursday's meeting, a second approval would be required from all 153 WTO members to confirm the accession.

This approval is likely to be made during a conference of ministers in mid-December.

The Russian parliament would also have to ratify the overall WTO deal for it to come into force.

While President Dmitry Medvedev has been enthusiastic about WTO entry, Prime Minister Vladimir Putin has blown hot and cold on the issue.

Putin caused bewilderment among trading partners when in May 2009 he announced plans to submit a joint WTO bid for Russia and its two customs union partners -- the authoritarian ex-Soviet states of Belarus and Kazakhstan.

He also accused the West of hiding behind Georgia to block Russia's WTO bid.

Some economists have warned that membership has its price -- something that Putin has often referred to while serving as both president in 2000-2008 and prime minister today.

They say that the WTO will sound the death knell for some Russian companies that sell on domestic markets that suddenly become flooded with cheaper -- and often much better -- imported goods.

The new rules will also hurt Russian airlines that lose the extra tariffs they levy on European carriers that fly over Siberia while Russian farmers will have a much harder time securing protectionist policies from the state.

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

Renaissance Capital investment house observed that most of the benefits for Russia would come from increased efficiency, as money flowed to more competitive sectors.

© 2011 AFP

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