MOSCOW, 28 Dec 2021, RUSSTRAT Institute.
The European Union has appealed to the World Trade Organisation (WTO), presenting claims to Moscow for €290 billion. It is for such an amount, according to Europe, that Russia “discriminated” against European goods with the policy of import substitution. What is this about?
This story began on July 22. The EU requested consultations from the WTO on disputes with Russia, which took place on September 13. According to Brussels, Moscow has assumed certain obligations under the WTO regarding public procurement. Obligations include the absence of “discrimination between domestic and imported products and between the services of Russian and foreign organisations”. However, Russia “has developed measures that put European companies at a disadvantage when selling goods and services to Russian state-owned enterprises and other organisations in the framework of commercial procurement”. According to the EU, the price of the issue in 2019 amounted to 23.5 trillion rubles, or about €290 billion (equivalent to about 20% of Russia’s GDP) – so much was the cost of the tenders of Russian state-owned enterprises.
On November 29, during the consideration of the request of the European Union to start the dispute settlement procedure within the WTO, the Russian side vetoed it. After that, Brussels submitted a second request, which, in accordance with WTO rules, was automatically satisfied on December 20. As a result, a working expert group has been created that will hear the EU’s claims and Moscow’s objections. Australia, Korea, Colombia, Brazil, Switzerland, USA, Canada, China, Japan, Ukraine and India reserved the right to participate in the proceedings as a third party. According to Russian experts, the policy of replacing foreign products with Russian analogues does not contradict the rules of international trade at all. As for the trial itself, which can last up to three years, it can get bogged down in the nuances of bureaucratic procedures, and Russia itself is still threatened only by reputational risks, the Izvestiya newspaper notes.
Meanwhile, there is clearly a political component this case too. Whether by chance or not, reports of the opening of a case on the EU-Russia dispute over the public procurement market coincided with the publication of the US Trade Mission (USTR) report. It claims that Moscow “continues to depart from the commitments made ten years ago to join the WTO”. USTR criticised “Russian restrictions on the import of agricultural products” and “import substitution policy”. The report says that in the agricultural sector, “Russia maintains scientifically unjustified restrictions on imports and refuses to recognise the guarantees of other countries regarding exports”. USTR announced that the United States “will use all necessary means to resolve this issue and make the Russian market open to American exports”.
At first glance, there is coordination between the speech of Brussels and Washington. Especially in the current situation, when the US–Russia–EU triangle discusses the issue of preventing the expansion of NATO to the east and a new configuration of European security. However, in the opinion of the RUSSTRAT Institute, in this case we are rather dealing with an attempt by the European Union, weak from a military point of view, to open wide fronts of “trade wars”. Moreover, not only against Russia, but also against China, and also – in the future – against the United States. This is indicated by the initiative put forward by the EU at the beginning of December this year to create a so-called institute for countering coercion, with which Brussels intends to counter attempts to influence its political strategies with the help of economic pressure (for example, trade restrictions or a boycott of European products).
The proposed measures will give the European Commission broad powers to impose punitive sanctions against individuals, companies and countries. According to The New York Times, the initiative includes regulation of tariffs and quotas; restriction of intellectual property rights; restriction of access to financial markets, public procurement (! – RUSSTRAT) and research programs funded by the European Union. Moreover, Brussels wants to make it so that individual EU member states do not have the opportunity to block sanctions measures. It is obvious that, first of all, the activities of the institute for countering coercion, if the decision to create it is taken, will be directed against Russia and China. However, some experts believe that Washington may also be under attack. As the head of the Brussels-based European Policy Center Fabian Zuleeg emphasises, one of the questions is how “countries such as China or the United States will respond to deterrent measures from the European Union”.
And these are not empty words. Not so long ago, the chairman of the European Parliament’s trade committee, Bernd Lange, said that it was important to have a “broad definition of economic coercion”, citing the example of the US’ threat to tax digital companies in France. According to him, “we are talking about the possibility of resisting coercive measures”. Such anti-American sentiments among the European political elite cannot be called marginal, they are becoming increasingly widespread. The RUSSTRAT Institute has already pointed out that the EU’s problems are its vulnerability to US sanctions, the weakness of the European currency relative to the dollar, and the dependence of European policy on Washington’s desires. After all, after the end of World War II, the involvement of European business in trade and military alliances with the United States led to the subordination of Europe to American foreign policy goals.
Today, the EU is trying to consolidate and prove itself as a fully-fledged subject player on the world stage. And as its main tool it sees the mechanisms that will allow it to conduct effective “trade wars”, which will be difficult for the opposing side to respond adequately to. However, it is possible that such an aggressive course of Brussels will lead to the fact that Russia, China and even the United States will be in the same boat and give battle to a united Europe. In the end, no matter what Washington’s quibbles with Russia about restrictions on American exports, the price of blocking it on the European market will cost the United States disproportionately more.