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. Last Updated: 07/27/2016

Following Trade Rules to Gain Respectability

It may come as some small comfort to the World Trade Organization, struggling without much success to put the Doha round back on its feet, that WTO membership is still regarded as a badge of international respectability. But that credibility could be undermined if Russia, the largest economy outside the WTO, is allowed to enter without making a serious effort to enforce its rules. The United States, the only remaining obstacle to Russia's accession, is right to press for pledges that laws will be not just enacted but enforced.

It is certainly time for Russia to seek entrance into the WTO. It has become ever more embarrassing that the Group of Eight nations, supposedly a club of rich democracies, includes a country that has yet to achieve what more than 30 of the world's 50 least-developed countries have already done.

At least in the short run, it is doubtful that WTO membership will make any real difference for Russian trade. No producer of oil and gas is exactly finding it difficult to hunt out international buyers for its exports, and the Kremlin, whose status as an energy exporter has given it a powerful negotiating weapon, seems to have some of what it wanted with regard to trade in financial services.

The issue that has held up membership most is one that many trade economists say should not be in a WTO agreement at all: the protection of intellectual property rights, or IPR. Russian optical disc plants continue to produce millions of DVDs that infringe the copyrights of U.S. film studios.

The problem the United States faces, even more than with China, is not the law but its enforcement. With the highhandedness it typically shows towards inconvenient regulations, Russia's leadership has shown almost no enthusiasm for clamping down on piracy; while the number of criminal and civil counterfeiting actions has increased, the number convicted and fined or jailed has not.

These are intrinsically difficult areas in which to set quantifiable performance criteria, which is merely one of the reasons that IPR is an awkward addition to trade deals. The United States cannot demand that Russia lock up a minimum number of counterfeiters every year, though U.S. officials have occasionally been known to gaze wistfully at the horizon about the idea.

While the presence of IPR in WTO law is a matter for controversy, now that it is there it ought to be enforced, if only to preserve the credibility of the entire system. WTO membership should not be an automatic right or a privilege that can be extorted by energy blackmail. If Russia wants the respectability of belonging to the WTO, it needs to demonstrate it can play by its rules.

This comment appeared as an editorial in the Financial Times.