US-Russia Trade Politics Get Sticky

Shortly following some optimistic announcements from Russian officials that WTO negotiations are swiftly progressing, the United States Trade Rep. Susan Schwab put an end to the party with some rather less hopeful words: “The question that I get asked when it comes to Jackson-Vanik and permanent normal trade relations with Russia is, is the WTO ready to let Russia in and the answer is, ‘not yet.'” US Trade Rep Susan Schwab dedicated yesterday’s press conference to doing a hatchet job on China on behalf of Hollywood, but let slip some devastating comments for Russia. The comment provoked a swift response from Russia:

Sergei Prikhodko told a RIA Novosti press conference that the results Russia has achieved in certain sectors testify that it is not lagging behind dozens of other WTO member states. “And in this connection, such a statement, which demands clarification, arouses certain questions,” he said.

Jackson-Vanik (JV) has long been an unfortunate sticking point in US-Russian trade relations, and it has always been the contention of this blog that it should be abolished, and those supporting rule of law in Russia should encourage the country’s admission into the WTO in order to create greater integration into international systems of laws, rules, and procedures. Efforts by the U.S. government to throw obstacles in the path of Russia’s rise to become an equitable trade partner, bound by the same rules and laws as everyone else, not only undermines Western interests, but also is seen as bitterly hypocritical conduct in Russia. It is time to recognize that openly hypocritical policy toward Russia, be it in business, trade, or human rights, is something that is actively utilized by the Kremlin to give the appearance of legitimacy to their absurd arguments of the “unjust victimhood” of Russia to the West as an explanation for autocracy (otherwise known in shorthand as “sovereign democracy“). We continue to assert that JV is retrograde and unnecessarily punitive, and given the necessity of Russia returning to the rule of law and opening itself up to market economics, providing the ruling junta in the Kremlin with legitimate reasons to portray themselves as victims makes absolutely no sense. So the question remains: was the point of Susan Schwab’s dithering on Jackson-Vanik and WTO to achieve some progress on Russia’s support of Iranian nuclear aspirations? If that were the case, the threats seemed to have achieved remarkably little beyond a brief denial of Iran’s claimed capabilities. It seems that other points of pressure would be more fruitful in producing a more favorable Russian policy on Iran. Are there other issues behind the WTO negotiation delays? Konstantin Kozlov of the Center for Finance and Economic Research speculated that it is because the negotiations are shrouded in secrecy:

“The impression one gets is that the government is deliberately delaying accession until after the elections,” Kozlov said. “The process of negotiation has been secretive, and Russia is provoking changes in the rules of the game by not stating unequivocally what it wants.”

Sounds like another unfortunate clash between German Gref and the hardliners.