Russia should withdraw from WTO in response to new sanctions

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3/13/2015

In response to new sanctions Russia should withdraw from WTO

Translated from Russian by J.Hawk

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Russia has the right to part ways with WTO or to stop
abiding by its rules. That’s the conclusion of the expert group of the
Department of Political Economy at the G.V. Plekhanov Russian Economic
University. USA and the EU have grossly violated WTO rules by launching the “war
of sanctions” against Russia.

WTO membership has cost Russia dearly. It weakened the
country’s economy on the eve of the second wave of crisis. WTO membership is
especially harmful under the conditions of a “sanctions war.” “It’s pointless
to attempt to have the US or other northern Eurozone members, who are the
masters of that organization, excluded from it, but a refusal to abide by WTO
rules is a timely and necessary step for our country,” says the Political
Economy Department Chair Ruslan Dzarasov. In his view, the US is placing impossible
conditions on Russia to have the sanctions lifted, such as the withdrawal from
Crimea, or the implementation of Minsk Agreements which are dependent only on
Kiev and Washington. Therefore the Russian Federation is within its rights to
propose that WTO members refuse to abide by the WTO rules in response by its
violations by the US and the EU.

In spite of US encouragement, the EU held back from
introducing new sanctions against Russia in February. Angela Merkel
transitioned from threats aimed at Russia in February to calls to preserve the
sanctiosn in March. However, German representatives and Brussels
representatives are still looking to consolidate the EU opinion to adopt a new
packet of sanctions against Russia, which the US is also seeking. The fact that
sanctions contradict WTO principles is being ignored, which is something that
Vladimir Putin addressed already in November 2014. Retaliatory sanctions by
Russia had a limited character and did not place its membership in the WTO on
the agenda. However, the likely escalation of the “war of sanctions” in the
second half of 2015 may change the situation. Remaining in the WTO will become
pointless even for its supporters within the Russian Federation.

J.Hawk’s Comment: Dzarasov is correct in arguing WTO is
harmful to Russia in the sense that its tariff regulations prevent Russia from
rebuilding its manufacturing base. Being in the WTO makes sense if Russia is
happy to limit itself to being a supplier of natural resources to the rest of
the global economy. That would be the niche Russia would be limited to if it relied
on the “invisible hand of the market”, in keeping with the neoliberal economic
dogma that is still dominant in the West and which has its adherents in Russia.
However, the sanctions have had the paradoxical effect of weakening the
neoliberal faction in Russia, and have accelerated the adoption of an import
substitution strategy aimed at rejuvenating Russia’s domestic manufacturing.
Exiting the WTO would only be a logical step in this process. It would also be a major blow to any country or corporation which is counting on the Russian market, unless their manufacturing operations are actually located in Russia.

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