Trade as the next stage in the US 'reset' with Russia
In his trip to Moscow, Vice President Biden emphasized trade and commerce as the next stage in the 'reset' of relations between the United States and Russia. He's on the right track.
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True, Moscow has a long list of wrongs in foreign policy and governance, and in the way it manages its state-heavy economy. Mr. Biden didn’t shirk from publicly pointing them out in a speech at Moscow State University on Thursday. He repeated Russian President Dmitry Medvedev’s phrase of “a country of legal nihilism.”Skip to next paragraph
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But bringing Russia into the WTO and restoring normal trade relations with that country should not be viewed as rewarding bad behavior. Rather, it’s a way to support and encourage better behavior – more transparency and predictability. The WTO is a rules-based system that, while sometimes flouted and slow, provides a framework for trade and a process for redress.
Changes required by WTO membership would lead to greater business competition as more imports came into Russia. The World Bank estimates Russia could boost economic growth by 11 percent over the long term if it joined the WTO. That growth would help build up Russia’s middle class. Even leading political opposition figures in Russia support Moscow joining.
Membership also provides a means of recourse to trade wrongs. “We absolutely share many of your [anxieties] about Russia coming into the WTO,” Ambassador Kirk told senators this week. “But the reality is unless we get them into a rules-based environment, our ability to seek redress on many of these concerns are limited because they’re outside of the WTO.”
As for China’s mixed record, many economists believe that on balance, the world is better off with Beijing in the WTO. Membership has helped China’s economy grow. China is now the biggest export market for Japan, South Korea, and Taiwan; US exports to China have grown substantially. Consumers worldwide enjoy inexpensive, made-in-China products.
And, while China still abuses intellectual property rights, progress is slowly being made. In recent years, the US has pushed harder for copyright enforcement, taking cases to the WTO and winning several of them. The Chinese are “begrudgingly” beginning to understand that living by the rules will help them attract more of the innovative businesses they want, Kirk said.
The Russian economy is not nearly the size of China’s, nor is Russia a key export market for America (it ranks 37th). But in this time of stubborn unemployment, the US needs every market it can find. And a more vigorous market economy, one that is rules-based and transparent, might renew Russian democracy.
With Russia and trade, it’s helpful to take the long view: Better in than out of the WTO, and better that the US participates in Russian economic growth by restoring normal trade relations with that country.