Russia yesterday cleared the last major obstacle in its 18-year effort to join the World Trade Organisation in what the head of the institution called a milestone for global trade.
"It's a victory for Russia, a victory for WTO members, and a victory for the WTO," said director-general Pascal Lamy after a panel at the group's headquarters in Geneva cleared the final terms of Russia's entry. Only the formality of approval next month at a meeting of WTO national trade ministers remains.
President Obama commented on Russia’s accession to WTO stating that, “Russia’s membership in the WTO will lower tariffs, improve international access to Russia’s services markets, hold the Russian government accountable to a system of rules governing trade behavior, and provide the means to enforce those rules.”
This was made possible after Russia finally overcame a thorny dispute with Georgia tied to commerce with two breakaway Georgian provinces, with a neutral company set up to monitor trade between them.
Another 26 countries are currently negotiating to join the WTO, but Russia — a permanent member of the United Nations Security Council and a member of the Group of 8 leading countries — was by far the most important still outside the global trade regime, which seeks to reduce barriers to international commerce and provides a forum for resolving disputes.
Russia’s trade negotiator, Maxim Medvedkov, said during a news conference that China’s economic performance since it joined in 2001 had helped to convince Moscow of the importance of getting a deal.
“China’s accession really boosted trade and investment, and it was one of the factors that was taken into account in our decision making when we decided to join and to complete these negotiations,” he said.
Hillary Clinton Comments on China
Commenting on China as well, US Secretary of State, Hillary Clinton spoke Thursday before the East-West Center in Hawaii, where she is attending the APEC summit. She urged China to allow its currency, the Yuan, to appreciate in value, remove barriers to trade and take steps to improve human rights.
Clinton recently said China, by deliberately holding down the value of its currency to boost exports, has piled up the largest trading surplus in world history to the detriment not only of the United States, but other major economies. She accused China of what she described as efforts to “game” the global trading system.
Trans-Pacific Partnership Deal
In other trade-related news, President Obama hopes to push for a trade deal, through the Trans-Pacific Partnership (TPP) which could shape the future of US commercial relations overall, and with fast-growing Asia in particular. The Trans-Pacific Partnership deal which is being negotiated currently will unite the US, Australia, Singapore, Brunei, Malaysia, Chile, New Zealand, Peru and Vietnam in a single free-trade community. Additionally, TPP would lower tariffs and other trade barriers among the nine countries.
TPP is also important because the US this year exported more to Pacific Rim countries than to Europe, according to the US Commerce Department. Further, TPP also promises something truly revolutionary: persuading Asian governments to accept new rules of the road for state-owned enterprises, a hallmark of Asian-style capitalism. In return, the US will probably be asked to drop some of its own protectionist barriers, beyond lowering tariffs.
However, some economies are understandably cautious because of the TPP’s all-encompassing coverage – trade, services, investments, intellectual property, labour rights, and environmental protection – which some say constitutes the US. wish list that it has had a hard time pushing in the WTO. This has not been helped by the apparent lack of transparency in the negotiations fuelling suspicions of a hidden American agenda.
The negotiations for the TPP deal will take place on the sidelines of the APEC summit. Were America a member of the TPP, its trade with its eight fellow TPP members would amount to little more than 5% of all its foreign trade. But some quietly hope that the TPP will serve as a “docking station” for an APEC-wide free-trade area. That would further move the global centre of economic gravity from the Atlantic Ocean to the Pacific.
In Japan the prime minister, Yoshihiko Noda, was expected to declare that his government would join the TPP talks, despite strong reservations even from within his own party. Japan’s share of America’s trade, at 5.6%, exceeds that of all the current TPP partners put together. A combination of American and Japanese heft could, say TPP advocates, entice other countries, such as Canada, to join the group. Even China, where some are deeply suspicious about the project, might eventually feel compelled to join.
It remains to be seen how the TPP deal might turn out. Perhaps, TPP might soon become more than just another Asia-Pacific acronym that only wonks have heard of.
Report: Russia Clears Last Hurdle for WTO Membership (11 Nov 2011, The New York Times)
Report: Clinton Presses China on Trade, Human Rights Issues (10 Nov 2011, VOA)
Analysis: Dreams and realities- A battle over American-led free trade brews in Asia (12 Nov 2011, The Economist)
Analysis: Trans-Pacific Trade Deal Could Revolutionize Commerce: View (11 Nov 2011, Bloomberg)