EU, Russia Threaten Arbitration Over Sanctions
Published: August 21, 2014 (Issue # 1825)
As the war of sanctions and trade bans between Russia and the West smolders, parties on both sides have brandished the World Trade Organization as the final judge of the other's offenses, threatening to transform their deliberately temporary sanctions into a drawn out and acrid court process.
But as Poland officially urges the European Commission to take Russia to the WTO over its bans on EU food imports, Russian politicians should hope the conflict never gets that far, analysts said.
Russia's food bans are significantly easier to fight at the WTO than EU sanctions, said Ian Bond, director of foreign policy at the London-based think tank Center for European Reform.
"[EU sanctions] have avoided any outright bans or tariffs on Russian exports," Bond said. "Paradoxically, the fact that the EU has not really gone down the line of the so-called sectoral sanctions … may actually make it much more difficult for the Russians to make a case in the WTO."
The EU and U.S.'s harshest sanctions, imposed in late July in an attempt to force Russia into ceasing its support of separatist rebels in war-torn eastern Ukraine, cut off state-owned Russian banks' access to long-term debt in Western capital markets and restricted bans on exports of sensitive technologies to Russia. While going further than any previous Western measures, economists agreed that the full scope of the damage would only be seen in the long term.
Russia's food bans earlier this month, on the other hand, had an immediate and drastic impact on trade, diverting food imports worth a total of about $9 billion a year from the U.S., the EU, Canada, Australia and Norway.
Despite frequent Russian threats to take their grievances to the WTO, it was Poland on Tuesday that made a first visible political push in that direction with its official request to the European Commission.
Poland was one of the EU countries that suffered the fiercest losses from the import bans. Agriculture Minister Marek Sawicki said previously that Poland will lose 750 million euros (nearly $1 billion) from the Russian import bans, which cut off 50 percent of Polish food exports, RIA Novosti reported.
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