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USDA International Egg and Poultry

22 August 2012

USDA International Egg and Poultry: Russia Joins World Trade Organization (WTO)USDA International Egg and Poultry: Russia Joins World Trade Organization (WTO)

On July 10, 2012 the Duma, Russia’s lower house of Parliament, passed the Federal Law on the Protocol on the Accession of the Russian Federation to the Marrakesh Agreement about Establishing the World Trade Organization from April 15, 1994.
USDA International Egg and Poultry

The Federation Council, Russia’s upper house of Parliament, approved it July 18, 2012. Russian officials formally notified the WTO July 23, 2012 the membership agreement had been ratified. According to WTO policy, Russia’s membership to the WTO will be official within 30 days ending 18 years of negotiations.

According to the ratification, Russia will assume all obligations under the Marrakesh Agreement and comply with WTO rules and regulations thus dismantling its protectionist policies. Transition periods for the liberalization of market access are expected to take 2-3 years for most goods and 5-7 years for the most sensitive goods (i.e. automotive, agriculture, agricultural machinery, light industries, etc.).

Russia’s admission into the WTO will remove trade barriers for foreign trade (i.e. lower import duties and put caps on subsidies), level the playing field for trade between Russia and the rest of the world as all parties will be subject to global rules, and increase competition and efficiencies in Russian industry. Russian opposition is concerned domestic industry is too vulnerable without government protections.

Yet the US stands to lose initially with Russia’s entry into the WTO August 22, 2012. As it stands the US will not receive the same benefits as other nations upon Russia’s admission into the WTO as the US will be in violation of WTO rules. In order for the US to establish permanent normal trade relations (PNTR) with Russia US Congress needs to repeal a piece of Cold War era legislation, Jackson-Vanik amendment 1974. The Jackson-Vanik amendment prevents the US from granting most-favored-nation status to countries that restrict emigration. US Congress failed to lift the Jackson-Vanik amendment before its August recess. Upon the return of US legislators in September 2012 a bill to extend PNTR to Russia will be considered, along with the Sergei Magnitsky Rule of Law Accountability Act. In the meantime, US businesses in Russian markets will be at a disadvantage to businesses from Europe and Asia.

Russia initiated its quest to join the WTO in 1993 under President Boris N. Yeltsin and current President Vladimir Putin will finish it on August 22, 2012 when Russia becomes the 156th member of the WTO. Over the years President Vladimir Putin has both opposed WTO membership and expressed unenthusiastic support; however the worldwide financial crisis has since changed his views about membership. In recent times, Putin has expressed encouragement for Russia’s need to be a WTO member and more involved in decision making regarding world economics and policy, as Russia is highly dependent on world markets for both production and consumption.

According to the World Trade Organization, Russia is the 9th largest exporter in the world and the last of the BRIC countries (Brazil, Russia, India, and China) to join the WTO. The last accessions into the WTO were Montenegro (April 29, 2012) and Samoa (May 10, 2012. Other countries that are not yet WTO members include Iran, Iraq, Libya, Syria, Belarus, Algeria, Bosnia, Serbia, Sudan, Uzbekistan, and Kazakhstan. Russia’s overdue entry into the WTO is not the longest duration of negotiations held as Algeria has been trying to join the WTO since 1987.

Russia’s Broiler Situation

Russia’s broiler production is projected slightly lower than the previous estimate for 2012, but still 6% higher than 2011. Broiler imports are increased substantially, based in large part to the revised 2012 TRQ and expectations that Russia will continue with unfettered imports from Belarus. Exports will remain reliant on Kazakhstan despite extravagant calls for substantial sales from Russian political leaders. Poultry consumption is set to rally, as TRQ quantity reductions are no more, thanks to WTO Accession, yet Russia remains poised to continue domestic support programs to continue increasing production.

Source: USDA FAS Attaché RS1211

Customs Union

In the past year, 3 countries have expressed interest in joining the Customs Union: Kyrgyzstan (April 2011), Vietnam (July 2012), and Syria (August 2012). Kyrgyzstan Prime Minister Omurbek Babanov filed an application with the Customs Union in July 2012 and has begun working towards official membership.

In July 2012, Vietnam President Truong Tan Sang announced it would begin negotiations for a free trade agreement (FTA) with the Customs Union at the Asian Pacific Economic Cooperation (APEC) Summit in Vladivostok in September 2012. Both Vietnam and the Customs Union hope to boost bilateral trade and economic relations. Kazakhstan, Belarus, and Russia also hope that with Vietnam’s accession it will persuade Ukraine to join the Customs Union versus the European Union (EU).

Syrian Deputy Prime Minister Kadri Jamil recently led a delegation of Syrian ministers to Moscow in early August 2012 to meet with Russian officials to discuss economic issues. While in Russia he announced Syria’s plans to join the Customs Union, something Syria has been considering the past three years.

The Customs Union is a trade block consisting of Russia, Kazakhstan, and Belarus, which became officially operational July 1, 2010. In November 2011, all 3 countries signed a declaration on Eurasian economic integration, aimed at creating the Eurasian Economic Union, which is based on the Customs Union and the common economic space among all 3 countries. The Common Economic Space was launched January 1, 2012.

Source: World Trade Organization/Various News Wires

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