Russia trade policy under fire at WTO

GENEVA Mon May 12, 2014 11:46am EDT

GENEVA (Reuters) - The European Union accused Russia at the World Trade Organisation on Monday of failing to do anything to reduce trade friction while the United States said Moscow was implementing more trade restrictions.

Although Russia and the European Union have both launched two trade disputes at each other in the past year - including one apiece last month - the European Union says Russia's illegal trade restrictions go beyond the ones already taken to the WTO.

"There's a real concern about a lot of issues," EU Ambassador to the WTO Angelos Pangratis told reporters after a meeting of the WTO's General Council, where he listed the EU's concerns and said Russia had failed to resolve a single one.

"This is a situation where we see an important (WTO) member not having the overall attitude that is expected."

At the meeting, U.S. Ambassador Michael Punke reeled off a shopping list of areas where Russia had failed to stick to WTO rules or failed to communicate its policies since it joined the global trading club in 2012, according to a transcript.

Russia in turn has already criticized the United States at the WTO for imposing economic sanctions on Russian individuals and companies, following Moscow's annexation of the Crimea peninsula, saying they are a breach of WTO rules.

Punke said the United States was very concerned by "a general rejection by Russia of one of the underlying goals of the WTO - the reduction of barriers to global trade, acutely demonstrated by recent trade actions aimed at Members particularly reliant on trade with Russia."

He mentioned Ukraine, Poland, Lithuania and Moldova as victims of Russian trade restrictions, as well as U.S. exports, and said Russia had tried "to at best obfuscate and at worse increase" various import tariffs.

"More broadly, we note that Russia is moving increasingly to build walls around its economy, whether through implementing trade restricting measures such as those already mentioned or by adopting import substitution and local content rules that have the same trade restrictive result," Punke said.

Pangratis told reporters that Russia's trade policies were "not convincing". Most of the WTO agreed, he said.

"The vast majority are on our side, no doubt. There are around a dozen who spoke which is already a big number for this kind of meeting and shows the pressure and intensity of the way people feel."

But he said Russian negotiator Maxim Medvedkov, who defended Russia's interests at the meeting, had made "an effort to reply with some detail".

The EU on Monday widened its sanctions on Russia in response to Moscow's annexation of Crimea while the United States has recently threatened to impose further sanctions against Russia.

Punke told reporters that U.S. sanctions on Russia were legal.

"We made our statement in there and we indicated that we take our WTO obligations very seriously, we indicated that we carefully considered our obligations in establishing the measures that were discussed, and that we're extremely confident that the actions that we've taken are WTO consistent," he said.

He declined to say if Washington could invoke national security as a reason to restrict trade with Russia, which is allowed under a part of the WTO rules known as Article 21.

But Medvedkov said the national security argument would not be justified for at least some of the sanctions against Russia.

"Those measures that they have in place are punishing for example one company in Russia that is producing soft drinks, just because the people in Washington don't like the owner of the company. If it's (justifiable under) Article 21 I would be very much surprised."

Among the countries who spoke in favor of the European Union and the United States were Switzerland, South Korea, Norway, Japan, Ukraine, Canada and Australia, according to an official present at the meeting.

(Editing by Susan Fenton)

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