Next Up for the WTO (and Congress): Russia

The U.S. Trade Representative announced yesterday that the U.S. and Russia will sign a bilateral agreement clearing the way for Russia’s accession to the World Trade Organization next year. According to the NYT, the agreement should be signed by President Bush and President Putin during the Asian Pacific Economic Cooperation meeting in Hanoi next week (where, incidentally, President Bush also hopes to announce congressional approval of Vietnam’s accession) (A “factsheet” on the deal can be found here).

Joining the WTO is not such a big deal economically for Russia, because its main export is oil (which is not something other countries are trying to raise trade barriers against). But it will subject Russia to substantial long-term costs in the form of tariff reduction and exposure of key domestic industries to foreign competition. So it is a bit of an international relations puzzle why Russia’s government is choosing to join the WTO, given the small benefits and potentially high costs.

The U.S. Congress, which would also have to approve any Russia-WTO deal by granting Russia permanent normal trading status, has raised all sorts of objections to Russia. As this letter signed in part by key House Democrat Charles Rangel suggests, Russia’s famously weak enforcement of intellectual property rights and its overly-strict enforcement of food safety measures could also be a stumbling block. Still, given that Russia exports so little to the U.S., it would be odd for Congress (even the upcoming protectionist-leaning Democratic Congress) to oppose this deal. But just wait and see.

It may be that Russia will sign this deal, even though the deal appears to be against its own interests. At the same time, the U.S. Congress may oppose it, even though it appears to benefit the U.S. without any serious costs. It is a wacky world we live in.