Several top Russian officials have suggested the country should suspend its WTO membership, should its arbitration panel decide to fine Russia for introducing pork import restrictions towards the EU in 2013.
The top officials can be found in the Federation Council, the upper chamber of Russia’s parliament. For instance Sergey Kalashnikov, deputy chairman of the council’s Economic Committee, was quoted as saying Russia would have to refrain from participation in the World Trade Organization (WTO), ‘probably completely’, if the WTO court would agree with the demands of the European Union (EU).
He was supported by Vladimir Djabarov, deputy chairman of the council’s Foreign Affairs Committee. He told local press that “Russia must protect its interests in full, up to the withdrawal from the WTO.” He added that Russia could not execute the decision to pay € 1.39 billion/year of sanctions, due to the associated ‘damage to the national economy’.
Djabarov said that Russia should follow the example of the United States, which according to him “doesn’t recognise the jurisdiction of any international courts”.
Russia closed its borders for pork from the European Union when in 2013 African Swine Fever (ASF) was discovered in EU member states, i.e. the Baltic states and Poland. Complicating the situation is that an additional trade ban was instated 1 year later as a result of geopolitical tensions related to the Crimea.
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Should Russia decide not pay the fine, then the EU is entitled to charge import duties for compensation purposes. The EU has asked permission for a penalty for up to € 1.39 billion/year – an amount against which Russia has protested. The WTO arbitration panel is now to decide about the matter.
On January 8, Russia’s Ministry of Economy Development, however, issued a release, saying that the government is not considering the withdrawal from the WTO at the moment. The ministry explained that the Russian WTO membership has provided a ‘predictable and transparent legal framework’ on the foreign markets. It added that it was very import as the country had been struggling to diversify its export supplies for the last few years.
Russia joined the WTO late 2011 after long rounds of negotiations.
At the same time, the decision of WTO court to fine Russia for its restrictions would not mean that the money would not be taken from the country directly, Alexey Lisitsky, chairman of the board of the Moscow Legal Agency, explained to local media BFM.
Instead, Russia could lose some preferences it was granted with when it joined WTO, while import duties on some of its goods could be increased, he added.
Russian lawyers have raised concerns that the WTO court might raise duties on Russian oil, metals, and possibly pork. In that case, the efforts of the country’s authorities to turn Russia into a net pork exporter in the coming several years could be jeopardised.
Earlier, Russia’s ministry of agriculture, had revealed plans to establish exports of up to 400,000 tonnes of pork to foreign markets by 2020. According to preliminary estimates, in 2017 Russia exported nearly 75,000 tonnes of pork, up by 50% compared to 2016.