“I cannot forecast to you the action of Russia,” said Winston Churchill on the eve of the Second World War. “It is a riddle wrapped inside a mystery inside an enigma.”
I understand the sentiment--Russia is a puzzling place, inscrutable even to people who have spent their lives there.
But I’m sure of one thing: Russia is going to become a member of the World Trade Organization. It’s inevitable. The Russians want to join and we want to have them. I’m not exactly sure when they’ll gain membership, but it’s going to happen soon--and very possibly within the next year. That’s good news for the world economy.
The WTO has been in the news lately, with a new framework agreement announced in late July. The purpose of the WTO, of course, is to spark economic growth by lowering trade barriers. When people can barter products and services among themselves freely and fairly, everyone benefits.
Right now, 147 nations are members of the WTO. Russia is the only major country that isn’t involved. With a population of some 145 million people, it’s tied with Pakistan as the planet’s sixth most populous. Its gross domestic product, estimated at $310 billion, is the sixteenth largest.
Although Russia’s population may decrease in the years ahead, its economy will boom. Earlier this year, the Russians boasted a growth rate of 8 percent. In a speech to parliament in May, President Vladimir Putin promised to double Russia’s GDP by 2010.
That’s a roundabout way of saying Russia is a huge marketplace for Americans and everybody else in the WTO. Clearly, this is a nation we want fully integrated into the world economy.
Russia applied for WTO membership more than a decade ago. Yet it still hasn’t met a few basic obligations required of all nations that belong. To get in, the Russians still need to cut some tariffs and reduce subsidies on agriculture and natural gas. Another major hang-up is intellectual property rights. On the streets of Moscow, it’s possible to buy pirated DVDs of American movies for as little as $4. The Russians are going to have to work harder to shut down this black market.
These things are going to happen and perhaps quite soon. The Russians themselves have said they would like to satisfy American concerns sometime before this year’s presidential election. That’s probably an ambitious time frame. After all, our government officials will be increasingly distracted by the upcoming vote. Yet the Russians speak about the WTO with a growing determination that eventually will pay off.
My one concern grows out of an agreement Russia struck with Europe in May, when Putin agreed to sign the Kyoto climate-change treaty in return for EU support at the WTO. “The European Union has met us halfway in negotiations on the WTO, and it could not help but have a positive effect on our attitude toward ratification of the Kyoto protocol,” he said.
Six months earlier, Putin declared that he would not sign the Kyoto pact. But he wants Russia in the WTO more than he wants it out of Kyoto. And so he made a deal. As it happens, Russia’s inclusion in Kyoto would have the effect of ratifying the treaty among the nations that have signed it.
I don’t want to debate the merits of the Kyoto treaty, except to note that our government pulled out of it three years ago because of concerns that it would hurt the U.S. economy. Russia’s decision to sign doesn’t affect us directly.
Yet I am worried about this apparent quid pro quo with Europe. This arrangement strikes me as one of those shady Russian mob deals that we read about in the newspapers from time to time. Russia should be admitted to the WTO when it satisfies all the requirements of WTO membership--not as a political deal when it embraces a separate treaty that some WTO members belong to.
Russia, in fact, won’t join the WTO until the United States approves its membership--so we’ll be able to raise all the concerns we have about Russia’s devotion to free trade and the rule of law. In the end, we’ll find common ground and Russia will become a full partner in trade liberalization.
Call it a prediction wrapped inside a certainty inside a conviction.
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“I cannot forecast to you the action of Russia,” said Winston Churchill on the eve of the Second World War. “It is a riddle wrapped inside a mystery inside an enigma.”
