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Russia officially joins World Trade Organization as 156th member

MOSCOW, RUSSIA (BNO NEWS) -- The Russian Federation on Wednesday officially joined the World Trade Organization (WTO), a month after Russian President Vladimir Putin's signing of a bill cleared the last hurdle to finish an 18-year-long process to join the global trade body.

Putin signed a federal law ratifying Russia's Accession Package on July 21 and officially notified the Secretariat of the WTO on July 23, commencing a required 30 day waiting period before Russia could take its seat at the table of trading nations. This period ended just after midnight Geneva time on Wednesday, making Russia the body's 156th member.

Russia was the biggest economy in the world still outside the WTO, and its accession is considered significant from both a multilateral and bilateral perspective. Russia first applied to join the WTO in June 1993, just two years after the collapse of the Soviet Union, and the accession on Wednesday ends 18 years of negotiations.

Russia and the European Union (EU) had long been in disagreement because Russia's export duties on lumber increased the cost of inputs for European manufacturers such as the Nordic timber and paper industries. Russia wanted to introduce prohibitive rates to stimulate the wood processing industry but Finland, one of the main consumers of Russian timber, strongly opposed the initiative.

The path to Russia's accession to the trade body was largely cleared when Russia reached agreements with the United States and the EU, including a deal which will reduce customs tariffs from a current average level of 9.5 percent to 7.4 percent in 2013, 6.9 percent in 2014 and 6.0 percent in 2015.

However, after the EU gave its backing to Russia's entry bid in December 2010, the government of Georgia insisted it would not allow Russia to join WTO unless it cedes control of customs in the breakaway Georgian regions of South Ossetia and Abkhazia. The dispute was resolved last year when the Swiss brokered a deal between the two parties.

The Eighth WTO Ministerial Conference, which took place in Geneva in December 2011, endorsed the accession of Russia.

The lower house of Russia's parliament, the State Duma, and the upper house, the Federation Council, also approved the accession last month. With Putin putting his signature on the bill on July 21, Russia finally completed the long and troubled accession process. It is expected to benefit both the EU and Russia.

The World Bank expects Russia's accession to the WTO will bring a boost worth 3.3 percent of Russian gross domestic product (GDP) in the first three years after joining. Over the next ten years, the World Bank expects this gain will increase to about 11 percent of the country's GDP.

The EU is also expected to benefit as Russia is its third largest trading partner after the United States and China. But the United States will not benefit from Russia's accession to WTO until it abandons the controversial Jackson-Vanik amendment, an old U.S. law that was intended to pressure the Soviet Union but remains in effect for Russia.

The legislation was authored in 1974 by U.S. Senator Henry "Scoop" Jackson and U.S. Congressman Charles Vanik and was originally intended to pressure the Soviet Union to allow more Jewish emigration by denying a so-called most favored nation trade status to countries that restrict emigration.

The Jackson-Vanik amendment, which was signed into law by former U.S. President Gerald Ford, remains a major irritant and controversial issue in U.S.-Russian relations as the law remains in force, although it has been regularly waived in recent years.

U.S. Vice President Joe Biden said in March 2011 that the U.S. government "strongly supports" the repeal of the law, as did the Clinton and Bush administrations, but it is unclear why the U.S. Congress has not acted on it. Some observers have argued that legislators in the U.S. Congress see the law as an "all-purpose" vehicle for expressing opposition to some Russian policies.

"The Jackson-Vanik Amendment was a landmark accomplishment," said David Harris, the executive director of the American Jewish Committee (AJC) in a July 2010 Op-Ed. "It spoke to the highest values of America's commitment to human rights. It served its noble purpose. As a result, countless people gained their freedom."

He added: "Congress should stop 'playing chicken' and do the right thing: recognize reality and graduate Russia from this throwback to the Cold War."

(Copyright 2012 by BNO News B.V. All rights reserved. Info: sales@bnonews.com.)

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