May 23, 2002 | News Releases on International Organizations

Bush Should Urge World Trade Group to Admit Russia as Member, Analyst Says

WASHINGTON, May 23, 2002-President Bush should urge members of the World Trade Organization (WTO) to admit Russia as a member next year or in 2004, provided that the former communist country meets all the requirements to join the free-trade group, a new Heritage Foundation paper says.

President Bush and Russian President Vladimir Putin should use their summit in Moscow this week to discuss how Russia can join the trade group and why that would advance the interests of both Russia and the United States, writes Ariel Cohen, Heritage's research fellow in Russian and Eurasian studies.

"Given Russia's growing importance as a strategic partner in the war on terrorism and the growth of its economy over the past three years, Russia's accession into the WTO is clearly in America's interests," Cohen says.

Since China joined the WTO last year, Russia is the largest economy that's not part of the group, which already has 144 member countries-including the former Soviet states of Estonia, Latvia, Lithuania, Georgia and Moldova.

Russia has come a long way from its central planning days but needs to make a final push to be truly qualified for membership, Cohen says. It's already the second-largest oil-producing country in the world, often acting as a "swing" oil producer that increases output to keep oil prices from jumping too high. Russia's economy also has been growing steadily, posting a 5 percent growth in 2001.

Cohen also notes that Russia's market reforms have moved the country toward a freer economy, making it a better candidate for membership now than in the past. It has lowered taxes on personal income to 13 percent (a flat tax), on small business income to 20 percent and on corporate income to 24 percent. It also has taken great steps to privatize land ownership and has achieved a federal budget surplus.

But Russia isn't ready to join just yet, Cohen notes. It still needs to make progress on protecting intellectual property rights to curb its thriving black-market sales of movies, music CDs and computer software. The country also has to modernize its banking system, which collapsed in 1998 and is dominated by a government monopoly, Cohen says.

Still, once Russia qualifies for WTO membership, U.S. exporters and consumers would benefit greatly. Russia has been the largest market for U.S. poultry (until a recent temporary ban) and a major market for U.S. beef and pork. Also, U.S. consumers buy 2 million gallons of Russian vodka and more than 3.6 million Russian Arctic King crabs each year. The United States also could buy Russian uranium fuel for its nuclear power stations.

"In the long run, opening Russia's economy to free trade through the WTO will increase foreign competition and investment and allow Russia to reduce its $137 billion debt," Cohen writes. "Russia would progress from one of the world's largest debtors to an important economic partner of the United States and other Western countries."

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