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Russia & PNTR: The Time For Reform Has Arrived

November 14, 2012

In approving Permanent Normal Trade Relations (PNTR) for Russia this week, the U.S. House of Representatives can take a big step in establishing a relationship between the U.S. and Russia in the WTO. It is a useful moment to step back to survey the implications and future economic relationship of our two countries. The WTO is the bedrock agreement governing global trade, and is premised on accountable and transparent economic policies based on the rule of law. Unfortunately, to this point at least, the open and accountable implementation of Russia's system of laws has been suspect, and this has been particularly true in the area of intellectual property. Russia has appeared on the U.S. Trade Representative's list of worst intellectual property rights offenders for more than a decade. Even more worrisome, unlike some other habitual offenders, Russia has thus far demonstrated little inclination to modify its practices.

For example, Russia's music market lags far behind those of its partners--principally the result of allowing major actors such as vKontakte (a site identified as a ‘notorious market’ by USTR) to operate music services based on providing access to infringing materials. Against the backdrop of such significant unfair competition, legitimate music services struggle to find any oxygen.

Which is why this vote is a particularly opportune moment for a new beginning: vKontakte has been found liable for copyright infringement (see here). Meanwhile, the Russian government is poised to adopt new rules in which they can significantly enhance accountability in the online space to make room for legitimate commerce. Now is the time for the Russian government to demonstrate its willingness and ability to promote legal services and to meet its international commitments. Taking action to prevent vKontakte from operating illegally would be a major signal that this moment is indeed meaningful.

It is our hope that Russia's desire to join the global trade pact reflects a newfound willingness and intention to join the community of nations in modernizing its relevant legislation and in taking the steps necessary to create an environment conducive to innovation and creativity.

Neil Turkewitz
EVP, International