From New Cold War to Trade War: Russia at the WTO

♠ Posted by Emmanuel in , at 12/23/2014 11:57:00 AM
Well don't you worry about the situation...
To paraphrase Carl von Clausewitz, trade war is Cold War by other means. Everything old is new again in international relations. This hackneyed analogy got going when Mikhail Gorbachev, last leader of the Supreme Soviet, recently declared the breakdown in Russia-Western relations as indicating the beginnings of (yawn) a New Cold War. Despite being no particular fan of Vladimir Putin, Gorbachev believes that American actions have exacerbated tensions to such a point by "calling the shots in everything" and denying Russia any say in political-economic matters. (Personally, I believe it's Russia believing it can play power politics and finding out that the West has its number at every turn.)

Just when you thought American Russia-bashing was done at least for 2014, the US Trade Representative has just released its annual report on Russian trade practices at the WTO. The USTR is required by law to make an annual appraisal of Russia's trade practices after it acceded in 2012:
This Report on Russia’s Implementation of the WTO Agreement is the second annual Report prepared pursuant to section 201(a) of the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitskiy Rule of Law Accountability Act of 2012 (P.L. 112-208). This provision requires the U.S. Trade Representative not later than one year after the United States extends permanent normal trade relations (PNTR) to the products of Russia, and annually thereafter, to submit a report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives assessing the extent to which Russia is implementing the “WTO Agreement”
The Magnitskiy Rule is essentially a holier-than-thou tool for American drone-striking Guantanamo Ghraibers to bash Russia over "human rights" abuses, but I digress. Fortunately for Russia's critics, this reporting requirement has given another venue for the US to bash Russia over its perceived violations of its WTO commitments: 
In the first year of Russia’s WTO membership, there were encouraging signs that Russia would continue its integration into the global trading community and become a constructive WTO Member. However, into the second year of Russia’s WTO membership, that hope diminished. Russia’s use of unjustified and retaliatory trade measures against many of its neighbors, as well as against the United States, rejects the core principle of open trade based on the rule of law that sustains the WTO.

In addition, many of Russia’s protectionist tendencies appear to have gained momentum. Although the United States has restricted its bilateral engagement with Russia as a result of Russia’s violations of Ukraine’s sovereignty and territorial integrity Ukraine, we have continued, and will continue, to remind Russia of its WTO commitments, and the benefits to Russia and to other WTO Members of Russia complying with those commitments. 
The odd thing is that the US admits that it has restricted trade and investment ties with Russia over sanctions, yet still encourage it to honor such ties with other countries it has more "normal" relations with. Go figure. To me, this report is nothing but a 54-page "bash Russia at the WTO" effort with no real constructive element to it. After all, if Russia so flagrantly violates its WTO commitments, why not kick it out altogether? As it so happens, plans to do just that are being mooted:
Russian sanctions against the EU and other countries violate the rules of the World Trade Organization and could provide the reason for Russia’s expulsion, the Polish Minister of Agriculture Marek Sawicki said in a interview with Gazeta Wyborcza, reports Ukrainska Pravda, August 8.

“Russia does not respect international agreements when it believes there is a threat to its interests. A week ago we did a lot of work designed to resolve the situation with the banning of Polish fruit and vegetables, which violated the WTO agreements. We did not expect that Russia would move further. The ban on all exports from the EU — this is a large-scale violation,” he said.

According to Sawicki, Russia can be punished for these export bans. “These massive violations by Russia are sufficiently large to threaten it with expulsion from the WTO,” he said.
I wonder how Gorbachev would respond to Russia being kicked out of the WTO given his "New Cold War" schtick. Make no mistake: as bad as political-economic relations are at the moment, they can definitely get worse. No country has ever been kicked out of the WTO, but Russia would be my leading contender for that dubious distinction.