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. Last Updated: 07/27/2016

Russia's WTO Bid Hangs in Balance

If Russia fails in its current bid to join the World Trade Organization, the entire accession process could be delayed by several years, a top trade official said Wednesday.

Even as Moscow pushes hard to join the WTO by the end of the year, a number of thorny issues threaten to snarl negotiations. And should Russia stumble now, a growing chorus of experts warns, the quest will only get more difficult, especially if fellow applicant Ukraine succeeds in joining.

"If we don't [join] before the end of the Doha Round, it will take two, three, four more years," said Yury Afanasyev, referring to the WTO's so-called Doha Round of negotiations on trade policy. "Much will have to be reconsidered."

Afanasyev, Russia's top trade officer at WTO headquarters in Switzerland, spoke by telephone as negotiators sat down in Geneva for their latest set of accession talks this week. Russia is in the process of conducting bilateral talks with a number of major trade partners, including the United States, which must bless Moscow's bid if it is to join before a WTO summit in Hong Kong in January.

Russia still has a distinct chance of joining the WTO this year, said the country's top WTO negotiator, Maxim Medvedkov. But talks are hung up on a number of issues, as Washington digs in its heels on disagreements over Russia's closed banking sector and observance of intellectual property rights.

"There aren't many issues left, but they're difficult," Medvedkov said.

Not getting the green light before the Hong Kong meeting could mean that Russia will miss a chance to make a meaningful contribution to the Doha Round, which is setting out new policies for member states on everything from agricultural subsidies to financial services. It is unclear how long the Doha Round talks will continue, but Afanasyev said they could easily take two more years.

"We would like to participate constructively in [Doha Round] negotiations, not jump on the last coach," he said.

Some experts are also warning of difficulties if Ukraine gets in before Russia.

Although the terms for WTO accession are officially kept secret until negotiations are complete, Ukraine is widely believed to have agreed to trade tariffs lower than Russia is ready to accept.

That would mean that if Russia, Ukraine, Belarus and Kazakhstan finalize a planned single economic space before WTO talks are over, Moscow could be put at a competitive disadvantage.

"I think that there are dangers if Ukraine gets in before us," said former Prime Minister Yevgeny Primakov.

Russia could be "drowned" in cheap goods flowing through Ukraine, Primakov said, speaking on the sidelines of a recent conference on Russia's WTO bid.

In theory, earlier accession would put Kiev in a position to make demands for trade concessions as a condition of Moscow's entry.

Countries applying for membership to the WTO must complete bilateral trade agreements with any current member state that requests them.

In the past, Russia and Ukraine have quarreled over trade issues like gas, steel and sugar. Experts said the field was wide open for demands for concessions that would likely depend on the political atmosphere between the two countries.

"Such concessions would be a political question rather than an economic one," said Oleksandr Rohozinsky, director of CASE Ukraine, a think tank based in Kiev.

"I don't think anything really very dangerous can happen in this situation," said Ksenia Udayeva, an analyst at the Carnegie Moscow Center. "But Russia will probably have to negotiate on some issues, and may have to give some concessions on [other] issues."

A WTO official in Geneva downplayed the possibility of conflict between Russia and Ukraine, saying the trade body would likely try to finesse the timing of both countries' accessions if they appear to be more or less on a similar track.

"If the two countries finish almost at the same time, we would try to arrange for both of them to become members at the same time, which I think would be nice for everybody," said the official, who asked not to be named.

But Cato Adrian, the WTO's No. 2 official on accession, told Reuters earlier this month that Russia's application "doesn't look good."

"At the moment, I would say Ukraine is ahead of Russia," he said.

 Leaders of an economic association of former Soviet nations that links Russia, Belarus and three Central Asian nations met in Moscow on Wednesday, The Associated Press reported.

The Eurasian Economic Community, one of several overlapping regional organizations composed of former Soviet states, agreed to set up a regional financing bank with $1.5 billion in initial capital, Kazakh President Nursultan Nazarbayev said.

The participants also pledged to continue efforts to form a free-trade zone and harmonize customs tariffs.

The community's three largest members, Russia, Belarus and Kazakhstan, also belong to the Common Economic Space together with Ukraine. But the future of that body is in doubt because the new pro-Western leadership in Ukraine is reluctant to pursue an integration drive with other former Soviet nations.