Expel Russia from the WTO
To have maximum impact, the rapidly emerging separate and individual actions by NATO countries to add trade sanctions to the accumulation of other economic sanctions punishing the government of Russia for its invasion of Ukraine must be broadened. They must include multilateral action to kick Russian President Vladimir Putin and his kleptocratic government out of the World Trade Organization (WTO).
Canada has withdrawn equal and discriminatory treatment – “most-favored-nation” status – from Russian products and has slapped higher tariffs of 35 percent on Russian imports. The European Union (EU) has said it is considering suspending the same action, which would enable it, too, to raise tariffs and apply import bans, export restraints and other trade restrictions that are generally prohibited in trade relations among the 164 member countries of the WTO.
Several bills have been introduced in Congress that would do the same. These proposals and growing bipartisan sentiment for further isolating Putin and his regime economically should push the Biden administration toward emulating our NATO allies in the EU. For now, the office of the United States Trade Representative has said only that the administration is considering a “range of options.”
These actions and potential actions are legal under the WTO treaty. An exception in the treaty permits any WTO member to take “any action which it considers necessary for the protection of its essential security interests…taken in time of war or other emergency in international relations.” Former President Trump pushed way beyond the bounds of this exception when he claimed that imports of Mercedes Benz automobiles from Germany, a close American ally, were a threat to U.S. national security. But current events created by the Russian war on Ukraine certainly fit within the meaning of this exception.
But these actions alone are not enough to cripple Russian trade. One way to magnify the impact of the proposed actions by the U.S. and EU would be for other like-minded WTO members to take similar domestic actions. Over time, the cumulation of such actions would add to the overall economic impact of these trade sanctions and would thus impose considerably more pressure on the Russian aggressors.
A better way to magnify and maximize this impact would be for the U.S. and the EU to work together to encourage Russia’s many other trading partners worldwide to join them in taking multilateral action within the WTO to boot Putin and his corrupt and crony-ridden government out of the global trading system.
There is no specific provision in the WTO agreement relating to expelling a WTO member. Looking more closely at the agreement, however, it is possible for two-thirds of the WTO’s 164 members to alter the rights and obligations of members and – if a member refuses to agree – for three-fourths of the members to expel that member from the organization. (This option is set out in Article X of the agreement.)
Last week, 141 of the 193 members of the United Nations (UN) voted in favor of a resolution condemning Russia’s invasion of Ukraine. Resolutions of the UN General Assembly are not legally binding in international law. They can have weight, but they are only symbolic and aspirational collective gestures.
WTO actions, however, are legally binding. A vote by WTO members that ejects the Putin regime from the multilateral trading system would have real consequences. For all WTO members would then be within their rights in international law to ramp up tariffs on Russian imports beyond the agreed WTO limits and otherwise discriminate against Russian products in any way they wished.
Trade accounts for about one-fourth of Russian GDP. In 2020, Russia ranked 16th in merchandise exports and 21st in merchandise imports in the world. Denying Russia the considerable benefits of WTO membership could, along with numerous additional and unprecedented economic sanctions, help squeeze the Russian economy to the point where Putin will feel increasing domestic pressure to pull back from Ukraine.
At the least, the exercise of such collective will by a sizable majority of WTO members would be a demonstration that not only the United States and our NATO allies are willing to stand with the courageous people of Ukraine in this global crisis. So, too, are many other countries that are equally appalled by the Russian invasion of a neighboring country that has done nothing whatsoever to justify such a brutal act. This will give them all an opportunity to prove it.
One approach would be for the amendment to deny all WTO benefits to a WTO member that violates Article 2.4 of the United Nations Charter by engaging in military aggression through “the threat or use of force against the territorial integrity or political independence of any State, or in any other manner inconsistent with the Purposes of the United Nations.” This would address the current situation in Ukraine while also sending a strong message to any other WTO member that may contemplate military aggression in the future.
Although WTO law is a part of overall public international law, the WTO is not part of the United Nations. For this reason, some WTO members will no doubt balk on principle at importing a provision of the United Nations Charter into enforceable WTO law and action. Some may also be reluctant to take an action that would have implications extending beyond Russia and beyond the current international crisis.
Thus, a second approach would be to frame the amendment simply and solely as an ejection of the Russian Federation from the WTO. Putin would then either instruct his emissaries at the WTO to accept the amendment or refuse to accept it. Either way, if the vote tallies are sufficient, the Russian Federation would be expelled from the global trading system, with all the trade consequences that would follow for the Russian economy.
Without question, it will be a delicate diplomatic challenge to muster the sufficient votes for an amendment expelling Russia from the WTO. Although just telling Putin to leave would be best, to secure the required number of votes, it may be necessary to frame the amendment as a suspension instead of an outright expulsion. On the other hand, diplomatic challenges that seemed insurmountable a week ago are being met today all over the world in response to the plight of Ukraine.
Whatever approach is taken, it would be a mistake to frame the amendment in such a way that a Russian government led by Vladimir Putin would be able to return to the fold of the WTO if it stopped the bloodshed and left Ukraine. The NATO countries may not be seeking regime change in Russia, but, for as long as Putin leads Russia, the Russian Federation should not be welcomed back in the WTO.
There must be no place for aggressors in an international commercial institution devoted to the peaceful resolution of disputes. The WTO’s economic goals cannot be achieved in a world where powerful large countries feel free to impose their will without provocation on their peaceful smaller neighbors.
James Bacchus is a professor of global affairs at the University of Central Florida and an adjunct scholar at the Cato Institute. He is a founder and former chief judge of the Appellate Body of the WTO and a former member of the U.S. Congress. His latest book, “Trade Links: New Rules for a New World,” will be published by Cambridge University Press on March 10.
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