Publication: Monitor Volume: 5 Issue: 212

The U.S. steel industries and its protectors in Washington need not concern themselves with too many details regarding Russian steel imports. This is because Russia is not a WTO member: It is instead classified as a “nonmarket economy,” and antidumping cases initiated by WTO countries against such economies face a much lower burden of proof. Russia’s continued exclusion from the WTO essentially leaves its exporters defenseless in such antidumping cases, even when the evidence against them is at best flimsy. But while WTO accession was an important foreign policy goal for Moscow during the mid-1990s, the momentum has gone out of its membership campaign since the August 1998 financial crash. Latvia, Kyrgyzstan and Georgia joined the WTO during this period, and Russia remains tarred with the “nonmarket economy” label.

To make matters worse, Russian steel exporters faced the levying of similar antidumping duties in June. These duties were only avoided when Russian companies “voluntarily” agreed to dramatically limit steel shipments to the U.S. Although this agreement apparently did not cover certain types of Russian cold-rolled steel, the Russian officials who negotiated the June deal responded to the November ruling by crying foul. Aleksei Ruzhin, an official at Russia’s Foreign Trade Ministry, expressed his “bewilderment” at the preliminary ruling (St. Petersburg Times, November 12), a sentiment probably shared by other observers.

While exports to U.S. and European Union markets are very important for the Russian steel companies in Magnitogorsk, Cherepovets, Lipetsk and other Russian cities, the economic implications of this ruling could be less significant than its political consequences. Russian officials have for years been told by G7 and IMF representatives to put their faith in the “objective” rules of the international market place. This ruling, and Washington’s apparent negation of the June agreement limiting Russian steel exports, is instead likely to strengthen Moscow’s belief that great power politics, rather than market forces, determine success and failure in the international economy. Of course, a more determined Russian effort to gain entry to the WTO could have prevented these problems from arising in the first place. But this argument may not carry much weight in Moscow at the moment.