Joint Session of the Institute and the Valdai Club: A Discussion on Sanctions

On May 23, the HSE-Skolkovo Institute for Law and Development together with the Valdai International Discussion Club held a practical discussion session on the theme: "Blocs, Sanctions, and International Trade in the 21st Century: Unified Rules, or the Continuing of Fragmentation?"

An expert speaker panel was assembled by Institute Director Alexey Ivanov: Harvard Professor Robert Lawrence, Columbia University professor Petros Mavroidis, Harvard University's Mark Wu, and First Executive Vice-President of Gazprombank Elena Borisenko. The meeting was moderated by Fedor Lukyanov, Academic Director of the Valdai International Discussion Club. The American professors came to Russia at the invitation of the Institute staff who individually studied their various courses at Harvard. The Institute also suggested the topic of the discussion and developed the concept and the agenda.

 

In 2012 Russia joined the WTO, agreeing to a number of provisions that opened the domestic market for foreign goods and services. However, over the past two years, the balance of the established international trade regime and the future of the WTO has come into question. Alexey Ivanov opened the discussion. He noted that today the role and impact of regional economic blocs overshadows the role of the WTO, and sanctions against third countries are used as a rallying force. "Collegial blocs that emerged after the Second World War grew closer due to the strengthening of trust between members, at the same time cloistering off from the global system of governance in matters of trade and economic cooperation," said Ivanov.

 

He also emphasized the issues related to Russia's accession to the WTO, which was championed by Russian decision makers as the key to accessing the "global club", despite many objections and conflicts of interests in the realm of national politics. Alexey noted that in the conditions of an embittered struggle for influence in the world, Russia is increasingly moving towards the principle of self-sufficiency (especially since the reunification of Crimea), which was the primary perspective in the Soviet era.

Unilateral economic sanctions applied by major economic players are a great challenge for the existence of a unified international trade regime. WTO rules protect member states from a number of relatively minor trade restrictions, but at the same time, they are absolutely ineffective in preventing the large-scale difficulties of global free trade, such as full-scale unilateral economic sanctions imposed because of "national security" and "international necessity". "'Sanctions' are the new 'regulation'," said Fyodor Lukyanov.

 

It is ironic that WTO members, when they are in conflict with each other, are more willing to apply unilateral economic sanctions or counter-sanctions instead of engaging the dispute settlement body of the WTO. This situation leads to a division in international trading regulation and again the concept of traditionally 'friendly' blocs. Political 'allies' establish trade and economic associations, spurning several important segments of the international trade regime which originally was answerable to WTO regulatory rules. Some of these blocs (in particular, the Transpacific partnership and the Transatlantic trade and investment partnership) span vastly, yet also fall under the jurisdiction of the WTO.

 

Our experts presented their vision for the development of the international trade regime in the context of the abovementioned challenges. The panelists discussed the role of the WTO in preventing the impact of political tensions in international trade.

 

The trend of bloc clustering, according to Professor Robert Lawrence, shows the willingness of some countries to deepen the integration process that can have a positive effect in the form of a proliferation of uniform rules on a global scale. However, the interests of developing countries should be taken into account. One of the possible solutions to this issue may be the establishment of a general membership global trading system which differentiates responsibilities of member states depending on their level of development.