WTO Has Been Given One Last Chance

October 11, 2013
Head of the WTO, Roberto Azevedo | Reuters / Denis Balibouse

The pro-Kremlin “Kommersant” publishes this assessment of the latest stalemate in the World Trade Organization, which suggests that the WTO is in a stalemate and is at risk of falling apart because of the policies of the European Union and the United States. This is in direct contrast with the assessment of Business News Europe which blames Russian protectionism and Kremlin corruption, and which suggests that it is Russia that is having a difficult time integrating into the WTO. – Ed. 

The very existence of the WTO as an institution that resolves trade disputes between countries is at risk. That was recognized by the leaders of the Asia-Pacific region at their summit on Bali. The Doha Round of WTO negotiations, designed to alleviate trade contradictions between developing and developed countries, is in a deadlock. It’s been going on since 2001, but over then last 12 years its participants have been unable to bring their positions closer. The last hope is the December WTO ministerial conference.

The Doha round of multilateral trade negotiations is at an impasse, the leaders of the AsiaPacific region declared in their final declaration at the Bali summit that was held on October 7-8. “Now we are left with the last chance to resume the WTO negotiations. Thus, our next step will be critical for the multilateral trading system and for the future role of the WTO,” the document says.

The Doha round of trade negotiations was launched in 2001 in Qatar and was intended to resolve trade disputes between developed and developing countries. The main problem was the issues related to agricultural support. Developing countries demand that the U.S. and the EU reduce the multi-billion dollars support to their producers and remove barriers to market access. Developed countries, in turn, also require that developing countries opened their markets for their manufactured goods. But in the 12 years, they never managed to bring their positions closer.

“The protracted and unproductive Doha Round has instilled doubt among many that the WTO in its present form is capable of progress in terms of resolving the issues of further global trade liberalization, reduction of tariff protection and ensuring greater transparency, especially in sensitive sectors such as agriculture”, said Alexei Ulyukayev, the Russian Minister of Economy. But, he believes that the WTO has a future. According to him, serious progress could be expected at the Ninth Ministerial Conference of the WTO in December. There are signals that shifts in tariff policy, agriculture and investment will happen, he said.

The new head of the WTO, Roberto Azevedo, who took office in September 2013, also said that at the upcoming conference the members must prove that they can achieve large-scale international agreements and that the organization is viable.

However there are hopes for positive changes, as shown in the statement by the leaders of the APEC economies in which they declare their intention to phase out the existing protectionist measures that undermine trade and slow down the recovery of the global economy. It was decided that a moratorium on the imposition of additional trade barriers will last until the end of 2016. They also called for the key players “to demonstrate the political will to eliminate the differences in the positions and ensure positive and balanced results of the WTO Ministerial Conference.”

What does Russia get as the result of the accession to the WTO

According to the Moody’s experts, it will take at least three to five years for such beneficial developments, such as facilitated access of Russian companies to foreign markets and harmonization of legislation, to make a positive impact on the credit image of Russian businesses. While 68% of respondents surveyed by the agency have not noticed any changes (17% gave a negative assessment, and 15% positive ). Those who stood to gain from the WTO accession were primarily large retailers, importers and international networks distributors in the consumer goods sector. The ratings of these companies for the year improved significantly, says the agency’s report.