Russian Trade Roulette

By | August 8, 2014

The current cavalcade of sanctions and counter-sanctions in the Russian-Ukraine crisis ultimately involves issues of trade rules under the WTO Agreement. I commented on this in an op-ed piece in the Globe and Mail today (August 8, 2014), my view being that, contrary to the Russian threat, it’s Russian trade retaliation against the West, including Canada, that’s illegal under WTO rules.

To read my op-ed piece, click here.

Russia had the temerity to suggest in late June that Western sanctions were in contravention of the WTO Agreement. It threatened to litigate the matter in Geneva if the sanctions weren’t lifted.

Contrary to the Russian bluster, it’s Russia that is in breach of WTO obligations, by imposing retaliatory trade actions in a crisis that Russia itself is responsible for.

Under WTO rules, governments can take extraordinary trade measures considered “necessary” to protect their essential security interests in cases of “emergency in international relations”. While this is a very broad escape clause and allows governments to self-define what they consider necessary, it doesn’t allow trade actions where it’s the country itself that has caused the emergency in the first place.

So if the Russians persist in taken the case to the WTO, the Western countries, including Canada, should respond by challenging the Russian retaliation action itself as a gross breach of WTO rules — and demand compensation for the economic impact. Those Russian counter-measures represent political gamesmanship and are indefensible under international trade law.

August 8, 2014