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Ambassador Michael Punke's Statement at the WTO Trade Policy Review of the Russian Federation
September 28, 2016

WTO Trade Policy Review of the Russian Federation

Statement of the U.S. Representative Ambassador Michael Punke

September 28, 2016

Thank you, Chair.

I would like to join others in welcoming Director Medvedkov and his distinguished delegation from Moscow for Russia’s first Trade Policy Review.

Russia became a Member in 2012 after the longest accession negotiation in WTO history.  During those 18 years, Russia made numerous changes to its legal regime to be in a position to comply with its WTO obligations.  It introduced significant market-liberalizing reforms, and spurred its evolution from a centrally-planned, extractive-industry-based economy more toward a diversified market-driven economy.  The United States was hopeful about Russia joining the WTO and integrating into the global trading system, and anticipated the many benefits to the global trading order that would accrue as a result of Russia’s WTO membership.

During the years since Russia’s accession, we have appreciated the efforts of Ambassador Ovechko and his team to contribute constructively to our work here in Geneva, including through Russia’s participation in, and subsequent ratification of, the Trade Facilitation Agreement.  The Russian Team has has rapidly become well-established and collaborative members of our community here at the WTO.

We have, however, been extremely disappointed to see Russia turning away from the core tenets of the WTO — liberal trade, transparency, predictability — in favor of inward-looking, import-substitution, economic policies.  Russia, like most of the world economy, suffered as a result of the global recession, and even more acutely by the more recent decline in energy prices.  However, much of Russia’s economic pain is a result of its own economic policies.  As reflected in the written questions submitted by the United States in the context of this TPR, we are greatly concerned about the increased reliance on local content and import substitution policies adopted by Russia.  Moreover, Russia has expanded these import substitution policies to cover its numerous state-owned enterprises, which, as the Secretariat’s Report notes, remain “significant” in Russia’s economy.  In addition, Russia fails to base its sanitary and phytosanitary measures on international guidelines, but rather appears to base them on political motivations.  We will continue to monitor these policies and call on Russia to ensure they are applied consistent with its obligations.  And it is important to note that these policies undermine the trade liberalizing intent of the WTO.

Another core tenet of the WTO which Russia seems to have moved away from is transparency.   The Secretariat’s Report notes that Russia has not met certain notification obligations, such as those governing state-trading enterprises and industrial support programs.  The United States has asked numerous questions seeking to understand various aspects of Russia’s trade regime, including its export control regime, industrial development policies, and gas exports.

The United States also seeks greater clarity regarding the working of the Eurasian Economic Union.  As a general matter, the United States does not oppose regional trade agreements as such, but we are concerned when such arrangements do more to protect certain industries than to create incentives to increase trade.  The Secretariat’s Report prompted the United States to ask various questions regarding the mechanics of the Eurasian Economic Union – for example, the breadth of its competence, how it develops its trade policies, how it applies different tariff levels, and the degree to which the regulatory regimes of the member states are harmonized.

Russia’s adherence to international standards and its enforcement and protection of intellectual property rights have also been long-standing concerns for the United States.  The Secretariat’s Report notes that Russia is a member of various international organizations in the area of food safety but, in the view of the United States, Russia has often ignored the rules and guidelines of those organizations.  Concerning intellectual property rights, Russia continues to inadequately enforce its own laws, particularly with regard to piracy on the internet.

Being a Member of the WTO brings numerous benefits which, when boiled down to their core, are: transparency, predictability and rule of law.  However, just as WTO Members receive these benefits from other Members, so they must accord those benefits to others.  As Russia continues to turn inwards, it misses the opportunities for economic growth and global engagement that WTO Membership brings.  Furthermore, by ignoring the rules of the international organizations to which it is a member, Russia is denying these benefits to others.  It’s a significant lost opportunity.

A TPR, particularly a first one, is, no doubt, a difficult and challenging process, and we thank Russia for the seriousness with which it has approached this process.  TPRs are a critical element in the WTO’s transparency mission.  We hope that the Russian representative and his team will see today’s discussion as an opportunity, not unlike the accession process, to learn from others’ questions and comments with the goal of improving Russia’s trade regime to the mutual benefit of all WTO Members.

Thank you.