On 7 June 2012, almost six months after it was signed by the Russian Government, the World Trade Organization (WTO) Accession Protocol was submitted for ratification to the Russian Federal Assembly.1 Ratification will have to proceed on a fast-track and be completed by 23 July 2012. In parallel, work is being undertaken to bring the legislation of the Customs Union of Russia, Belarus and Kazakhstan in line with Russia’s WTO commitments.
On 16 December 2011, the Eighth WTO Ministerial Conference formally approved the Accession Package of the Russian Federation and set a 220-day period (i.e., by 23 July 2012) for ratification procedures. It is expected that the Russian State Duma, the lower chamber, will vote on the ratification by the end of the Spring session on 6 July 2012, with the upper chamber voting soon thereafter, in order to meet the 23 July deadline to submit the ratification documents to the WTO Secretariat.
The introduction of the WTO Accession Package was delayed by the discussions between the Russian Government, the Russian Parliament and Russian industry over the measures that need to be taken in anticipation of the accession to bring Russia into compliance with its commitments and to avoid any market disruption due to a possible increase in imports. In this context, by the end of July 2012, and acting within the limits of the WTO Agreement, the Russian Government plans to consider the following measures in connection with the WTO Accession package:2
- For agricultural machinery and car manufacturing, certain livestock as well as light and textile industries: (i) careful monitoring of trends in imports to ensure timely adoption of trade defence measures; (ii) subsidization; (iii) adoption of technical and sanitary regulations to put a barrier to imports of sub-standard goods; (iv) Government procurement, albeit to a limited extent and not the detriment of free competition in the market.3
- Introduction of export facilitation instruments, within the limits provided for in the WTO Agreement.
- Setting up a mechanism to effectively participate in the operation of the WTO Dispute Settlement Body.
Also, importantly, work is being undertaken in parallel by the Customs Union of Russia, Belarus and Kazakhstan (Customs Union) to ensure that its single customs tariff and regulations are in line with Russia’s WTO commitments. This piece of work is extremely important given that the majority of issues that will form part of Russia’s WTO commitment are currently under the jurisdiction of the Customs Union, including the customs tariff and non-tariff barriers. On that front, it is planned that the draft Single Customs Tariff of the Customs Union will be made public by 15 June 2012 and enacted in time for Russia’s formal WTO accession, which will take place 30 days after the submission of ratification documents to the WTO.
When Russia becomes a member of the WTO, GATT Article I requires the United States to extend unconditional most-favored-nation (MFN) status to Russia. The United States has taken the position that current US law under the Jackson-Vanik amendment to the Trade Act of 1974 prevents the United States from meeting this WTO MFN obligation, as normal trade relations can only be granted on an annual, rather than permanent, basis. WTO rules allow the United States to refuse to extend permanent MFN status to Russia, and the United States invoked non-application of its obligations toward Russia on 16 December 2011. This excuses Russia from having to meet its WTO obligations to the United States. Russia also declared non-application of the WTO rules to the United States on 16 December 2011.
Thus, for the United States to receive the benefits of many of4 the accession agreement that Russia negotiated with WTO members, the US Congress must affirmatively act to change US law prior to the time that Russia becomes a member of the WTO. However, while there is a small chance the Congress will enact a bill to repeal Jackson-Vanik this summer or fall, it is more likely to occur after the US election in November.
For more information about the matters raised in this Legal Update, please contact Nikolay Mizulin at +32 2 551 5967, Duane W. Layton at +1 202 263 3811, Timothy J. Keeler at +1 202 263 3774, or Tiffany L. Smith at +1 202 263 3882.
1 Resolution of the Russian Government N564 of 7 June 2012.
2 Statement by the Minister of Economic Development of the Russian Federation at the today’s meeting of the Government. Available (in Russian) here: http://government.ru/docs/19194/
3 Russia will not be part of the WTO Government Procurement Agreement upon the WTO accession.
4 The US and Russia have an existing bilateral trade agreement in force that provides for most-favored-nation treatment for goods; thus, even in the event of non-application of the WTO agreements, Russia will still be obligated to subject US goods exports to the same tariff levels as other Russian trading partners. However, this does not apply to services and other areas, and there is no dispute settlement mechanism in the agreement.