After nearly two decades of negotiations the World Trade Organisation is welcoming Russia as a member.
Up till now, Russia has been the only G20 leading economy nation not in the WTO.
According to some estimates, joining the WTO will boost the country’s economy by the equivalent of one percent of GDP per year with big changes to trade.
Last year Russia’s exports were worth more than 300 billion euros. Commodities dominated with oil, gas and minerals accounting for almost 70 percent, followed by precious metals and precious stones and chemical products.
WTO membership means Russians will pay less for imported industrial machinery and consumer goods.
Last year almost 45 percent of its imports were machinery, including cars, followed by chemicals, including rubber, and food and agricultural products.
Membership will benefit Russia’s steel industry which will no longer be subject to European quotas imposed on some non-WTO countries.
Tariffs on over 700 categories of products will be abolished or reduced with average import duty expected to fall from 10 to seven percent.
That is good news for Russian drivers and will mean an end to high taxes on imported vehicles should cut the price of foreign cars by up to 10 percent.
Russian carmakers fear they will lose out. Foreign companies who currently enjoy tax benefits by making cars in Russia have been promised government help.
The country’s farmers stand to lose billions in state subsidies but those payments will be phased out over time to allow them to adjust.
Russia obviously believes the benefits of membership outweigh the minuses of WTO-imposed discipline and accountability.
As Russia moved to become a member of the World Trade Organisation, euronews spoke to Alexei Portanski, senior lecturer in Trade Policy at Moscow’s Higher School of Economics and Director of the WTO’s Information Office in Moscow.
Natalia Marshalkovich, euronews:
“Against the backdrop of the current crisis, we often hear that the current model of globalisation has outlived itself. So why join the WTO?”
Alexei Portanski, senior lecturer, Trade Policy Department, Moscow Higher School of Economics:
“Yes, there is an opinion that you can protect your national manufacturers without joining global institutions like the WTO, but to believe that is a mistake. The WTO protects national industry. Today the Russian economy is one of the most discriminated against in the world.
“We are facing the maximum limitations from external markets. So, it is only after becoming part of the WTO that we can lift part of these limitations.
“Moreover, it will open new possibilities for Russian producers and world market exporters and concerning the current crisis and the model of globalisation that it is now so fashionable to criticise, I would say it is better to participate in something trying to change today’s global financial and economic institutions, rather than be left out. Because then, it is obvious, any reform would simply ignore Russian national interests.
“Which sections of industry will benefit from Russia joining the WTO and which will be threatened?”
“Our conditions for joining the WTO were such that no area will suffer as a result of Russia’s membership. Some specific companies might get hurt but then we have to look at precisely why these companies were in a difficult position in the first place.
“If we talk about industries that might profit the most from Russia’s membership, the steel and chemical sectors should benefit, especially fertiliser producers. Now you can only export your goods if your country is a member of the WTO, because markets were shared a long time ago and it is near impossible for a new member to enter the market without WTO membership.”
“What will Russia’s membership bring to the world economy and to the WTO itself?”
“As head of the WTO Pascal Lamy has said on a number of occasions, that only after accepting Russia into its ranks, will the organisation become truly universal and global. I remember at the beginning of 2000, people said: ‘Well, Russia and China aren’t part of the WTO so the organisation can’t be considered fully universal’. China joined in 2002 and in 2012, Russia will become an official member. For our commercial partners, Russia will become more transparent, because we will follow universally set and accepted rules. As I said, we will take part on an equal footing in regards to the new rules for global trade. The World Trade Organisation’s jurisdiction will encompass more and more new spheres, including climate change and the environment as a whole, so co-ordinating the efforts of different states will become more efficient overall.”
WTO gains and losses for Russia