Russian Foreign Ministry Suggests EU Suffering From Sadomasochism in WTO Spat With Russia

Last week, the World Trade Organization agreed to review a dispute complaint submitted by the European Union against Russia. Brussels accuses Moscow of “illegally discriminating” against European goods and services with its import substitution policies. Russia has dismissed the claims.

The EU’s complaint against Russia in the WTO is absurd and exposes the “stupidity and lack of independence of its own political elites”, Russian Foreign Ministry spokeswoman Maria Zakharova has suggested.

“Stupidity, because import substitution became Russia’s response to EU sanctions. Brussels spent a long time saying how they had ‘harshly punished’ our country, not just ‘harshly’, but sadomasochistically. Lack of independence, because in a 2014 speech at Harvard University, then-vice president Joe Biden said that European countries were not prepared to sanction Russia in connection with events in Ukraine, and did not want to do so, but [President Barack] Obama had to put Europe in a difficult position and force them to act against Russia, notwithstanding the economic risks to themselves,” Zakharova wrote on her Telegram page.

“The EU agreed only under strong pressure from Washington, and this pressure was the result of America’s desire to inflict as much damage as possible on the Russian economy as possible, Biden stressed, noting that it was the White House effort specifically which allowed the US and the EU to unite. He didn’t mention, of course, how much Brussels would pay for this,” the spokeswoman added.

Remarks by Vice President Joe Biden at the John F. Kennedy Forum, Harvard University, October 3, 2014

© Photo : The White House

Last week, the World Trade Organization agreed to review an EU dispute complaint alleging that Russia’s import substitution policies illegally discriminated against up to 290 billion euros worth of goods, and demanding that Moscow return to compliance with its WTO commitments.

Specifically, Brussels suggested that EU firms had been “seriously disadvantaged” in tenders by Russian state-related enterprises, which allegedly required foreign equipment suppliers to submit additional paperwork. Russian companies are also accused of submitting bids 15-30 percent below their actual cost. Brussels is also concerned by a Russian government directive requiring as much as 90 percent of state orders of vehicles, medical devices, textiles and other products to be Russian-made.

Bloomberg says the EU’s chances of an enforceable ruling against Russia are slim to none, with an initial decision expected to take up to three years, after which Russia could take the case to the WTO’s Appellate Body, which has the final say on trade disputes. The latter has been effectively defunct thanks to the ongoing multi-trillion dollar trade dispute between China and the US, with Washington blocking the appointment of new judges to the Appellate Body after it sided with China in a ruling.

The EU’s claims against Russia follow a similar complaint by the US Trade Representative issued last week claiming that Moscow’s import substitution strategy violates WTO norms. Moscow dismissed the US complaint, saying it was peculiar to hear Washington complaining about Russian import substitution measures, when at the same time that the US imposes unilateral sanctions.

Russia joined the WTO in 2012 after 18 gruelling years of negotiations, with Moscow expecting membership to improve the climate for foreign direct investment, and to help Russian companies access Western technologies. The downturn in relations between Russia and the West over the crisis in Ukraine – which began when US and EU-backed politicians and right-wing nationalists overthrew the Kiev government in a coup in 2014, has dashed these hopes. Meanwhile, some Russian lawmakers have drawn up legislation to withdraw from the trade body, calculating that membership has cost the Russian economy about 12 trillion rubles ($163 billion) in losses over the years.

Since 2014, the US and the EU have imposed hundreds of sanctions on Russia, targeting everything from banking and energy to the sale of high-tech industrial and drilling equipment, plus asset freezes, import and export bans, and tourism restrictions. Russia has retaliated by drastically limiting imports of food products from nations which have sanctioned it, costing EU countries hundreds of billions of euros in losses over the past seven years.