The fifth round of the World Trade Organization (WTO) talks between Georgia and Russia, mediated by Switzerland, did not yield any substantial changes. Negotiators met in Geneva on September 12 for the latest round of WTO talks. The discussion sought to close the positions of the two countries on establishing custom checks and international monitoring mechanisms in the Georgian breakaway regions to increase the transparency of trade in these territories. Tbilisi considers Russian compliance on such measures to be a key precondition for Russian WTO membership, whereas Moscow views the proposal as contradictory to its interests.

The WTO secretariat organized negotiations on Russia’s WTO accession between Tbilisi and Moscow for a few years until the 2008 war between Russia and Georgia halted the process. In early 2011, Switzerland mediated the resumption of talks and proposed a paper foreseeing the establishment of trade corridors and border crossings in the breakaway regions of Abkhazia and South Ossetia under the supervision of international monitors. The proposal, revealed prior to the third round of talks in July, also envisages the introduction of an advanced information exchange system rather than the mere exchange of statistical data between the trade partners.

Georgia applauds the Swiss offer as the paper stresses Tbilisi’s major concerns. Its combination of two components – the formation of international monitoring mechanisms and improved information exchange systems – could from a Georgian point of view help prevent illegal trade and ensure the transparency of custom administrations. Tbilisi claims that an agreement achieved on this basis will be status-neutral, eschewing the politicization of Russia’s accession process in the WTO. Russia, however, does not consider the deployment of international monitors on the territories of the proxy regimes as necessary.  “If you want to know about the movement of goods, including about transit goods moving through Abkhazia and South Ossetia, we are ready to provide such information, including in digital form, in the state of the art form,” Russian president Dmitry Medvedev said.

Russia thus continues to view the demand for international monitoring of the checkpoints as a Georgian attempt to change “political reality.” Whereas Medvedev declares that Russia’s WTO membership is not worth alterations to this “new reality,” Georgian president Mikheil Saakashvili insists that an approval of international monitoring of trade across the disputed territories is the “minimum price” that Russia should pay for its entry into the organization. In addition, officials in Tbilisi think that Georgia has already made significant compromise by dropping its demand for deployment of customs officers on the Psou River and the Roki Tunnel, the two points connecting Russia with the breakaway regions.

Moscow suggested reopening the talks on lifting its trade embargo on Georgian agricultural produce on the Russian market, a bargaining chip Moscow has used from time to time. Nevertheless, Tbilisi considers the Russian market to be unreliable and does not exclude a possible re-imposition of the embargo on Georgian products even if it is lifted. According to Georgian diplomats, if national companies will again be expelled from the Russian market, this would inflict them even greater damage than the embargo currently causes.

Meanwhile, IDS Borjomi International, which represents a group of enterprises producing bottled mineral waters in Russia, Ukraine and Georgia, applied to RosPotrebNadzor – Russia’s consumer protection agency – for a possible reintroduction of Borjomi mineral water to the Russian market. However, IDS Borjomi International’s local subsidiary in Georgia has so far rejected this information.

Georgia’s Deputy Foreign Minister Nino Kalandadze stated that no request to reintroduce Borjomi to the Russian market had been sent to RosPotrebNadzor. She said the Russian authority “speculates” on the trade embargo issue because it has never been a part of the ongoing talks. According to Kalandadze, Georgia does not need to discuss this issue with Russia since Moscow will have to lift this politically motivated embargo upon its entry into the WTO. Despite Georgian claims, given the size of the Russian market, resumed exports of currently banned products would certainly be beneficial for Georgian trade. However, it would also grant Moscow increased economic leverage on Georgia.

Though the Georgian government declares that it seeks to isolate trade from other disputed political issues, the WTO talks replicate the same contradictions as another negotiation process in Geneva. More specifically, the Kremlin views the proposed deployment of any form of international monitoring on the territory of the proxy regimes as a threat to the independence of the “two new independent states,” Abkhazia and South Ossetia. Preventing international monitoring of these territories remains one of Russia’s top priorities. The trade negotiations should be understood within this broader context and represent only one of the principal disagreements between Georgia and Russia.