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  January 12th, 2016 | Written by

USTR: Russia Moving in Wrong Direction on Trade Rules

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  • USTR report: Russia continues to move away from trade liberalization, transparency, and rule of law.
  • Russia pursues protectionist policies such as local content requirements and discriminating against imports.
  • In some cases Russia reduced tariffs below the level it committed to as part of accession to the WTO.
  • USTR: U.S. continues to believe that having Russia in the WTO benefits the U.S., Russia, and the global trading system.

Russia became a member of the World Trade Organization (WTO) on August 22, 2012, 19 years after first applying to join the General Agreement on Tariffs and Trade 1947 (GATT 1947) in 1993.

During the years leading up to accession, Russia adopted numerous measures to modernize its economy and create a stable business environment. WTO members worked with Russia to ensure that the country’s legal regime incorporated WTO principles of transparency and the rule of law.

But the recently-released report from the Office of the U.S. Trade Representative, Russia now appears to be moving in the opposite direction.

“Notwithstanding the nineteen years of constructive work to align Russia’s trade regime with the principles of the WTO,” the USTR report says, “in the past year Russia has continued to move away from those core tenets of trade liberalization, transparency, and rule of law. In many areas, Russia’s initial progress toward open, non-discriminatory trading practices has slowed, or even reversed.”

Russia increasingly pursues protectionist policies to economic development, including local content requirements and discriminating against imports. It also continues to use retaliatory trade measures against its neighbors and the United States, for political reasons, the report says.

As part of Russia’s accession to the WTO, it committed to a staged reduction of many tariffs. Russia made those tariff reductions according to schedule, and in some cases reduced tariffs below the level it committed to.

But this good news has been tempered by changes in the duty type of some tariff lines that have resulted in applied rates above Russia’s bound rates. The U.S. has reserved its right to participate as a third party in a WTO dispute concerning certain of these tariffs, the report notes.

In addition, some of the benefits that would have accrued from Russia’s tariffs reductions were undermined when, in August 2014, Russia banned imports of certain agricultural goods from the U.S. and other countries.

Other problems identified in the report include a lack of transparent regulations on customs valuation, burdensome import licensing requirements on some products, lack of full implementation of sanitary and phytosanitary measures for agricultural products, and non-tariff measures that that favor domestic products.

“The United States continues to believe that having Russia in the rules-based system of the WTO benefits the United States, Russia and the global trading system,” the USTR report says. “However, reaping the benefits of Russia’s WTO membership is becoming increasingly difficult as Russia rejects the trade-liberalizing tenets of the WTO in favor of inward-looking, import-substitution, economic policies.”