December 7, 2010 / 6:12 PM / 10 years ago

EU agrees to back Russia's WTO entry

BRUSSELS (Reuters) - The European Union formally backed Russia’s bid to join the World Trade Organisation on Tuesday, clearing the way for Moscow to join the body in 2011 after 17 years of trying.

EU Trade Commissioner Karel De Gucht and Russian Economic Development Minister Elvira Nabiullina signed an agreement on the sidelines of an EU-Russia summit, after the resolution of a tariff dispute that had held up EU approval.

“The European Union and Russia have concluded their bilateral negotiations on the WTO...and we agree that we should now focus on the multilateral negotiations so that Russia can become a member of the WTO as soon as possible,” European Council President Herman Van Rompuy told reporters after the summit.

“This is a paramount step forward and a step the world is closely watching,” he said.

Russian President Dmitry Medvedev said the prospect of WTO membership next year was realistic, an assessment seconded by EU Commission President Jose Manuel Barroso.

“After the signing of the agreements...Russia’s accession to the WTO becomes a reality,” he told the news briefing.

The EU, the world’s largest trading zone, is Russia’s biggest trading partner. Its decision to end its WTO veto — largely because of Moscow’s commitment to phase out export tariffs on timber and rail freight fees — removes a major obstacle to Moscow’s accession to top trading nation status.

Russia’s $1.2 trillion (760.2 billion pounds) economy makes it the largest outside the WTO. The World Bank has estimated that entry could increase Russian gross domestic product by as much as 3.3 percent in the medium term and 11 percent in the long term.

As part of Tuesday’s agreement, Russia has promised to lower its 15 percent export duties on timber to 7 percent for birch wood and to 5 percent for aspen. This will benefit EU paper makers such as UPM, Stora Enso and M-Real.

Russia will also lower fees on Asian freight reaching Europe via Russian railways, EU officials said.

Russia’s accession still needs approval from the 153-member WTO. Multilateral negotiations are expected to focus on Russian concessions that will make it easier for foreign car makers to export and produce cars in Russia.


“Foreign car makers operating in Russia and joint ventures are going to be the big winners. They’re the ones that will progressively take over the market,” said Eric Bergelin, Director for Trade and Economics at the European Automobile Manufacturers’ Association.

Russia hopes WTO entry will increase foreign direct investment and its exports of steel to the EU market.

Russian steelmakers welcomed the news.

“Strategically, WTO accession allows the business climate to improve which would give an impulse to Russia’s economy,” Alexei Mordashov, chief executive of Severstal, Russia’s largest steel maker, told reporters in Brussels.

Dmitry Pumpyansky, the majority owner of Russian steel pipe maker TMK, said: “We hope that Russia”s accession... will allow our company to supply our produce to European countries.”

Russian Prime Minister Vladimir Putin has said the country hopes to join the 153-member WTO in 2011, completing a process that began in 1993. The WTO represents more than 97 percent of global trade.

Editing by Rex Merrifield and Tim Pearce

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