Russia becomes WTO member
RUSSIA HAS finally joined the World Trade Organisation after almost two decades of arduous negotiations, opening the way for greater foreign trade but endangering domestic industries that are still propped up by state subsidies.
Moscow’s accession to the WTO, whose members conduct some 97 per cent of world trade, will lift tariffs on Russian exports to member states but will also force Russia to remove its own levies on imports, exposing local businesses to tough foreign competition. State aid to struggling sectors of the Russian economy will be phased out over seven years, giving everyone from farmers to carmakers time to adjust to the more open market and the more level playing field demanded by the WTO, which now comprises 157 members.
“Today’s WTO accession is a major step for Russia’s further integration into the world economy. It will facilitate investment and trade, help to accelerate the modernisation of the Russian economy and offer plenty of business opportunities for both Russian and European companies,” the EU’s trade commissioner, Karel de Gucht, said yesterday.
“As a consequence of the WTO accession, Russia will amongst others lower its import duties, limit its export duties, grant greater market access for EU services providers and facilitate rules and procedures in many areas affecting bilateral economic relations,” he added. “I trust that Russia will meet the international trading rules and standards to which it has committed.”
The EU is Russia’s largest trading partner. Exports from member states to Russia last year amounted to €108.4 billion, while imports to the bloc from Russia amounted to €199.5 billion, the vast majority being oil, gas and other raw materials.
Brussels estimates that the reduction of duties on imports to Russia will result in annual savings of €2.5 billion for EU exporters, and will stimulate €3.9 billion of additional EU exports to Russia each year.
Russia’s €1.6 trillion economy is the seventh-largest in the world, but it is heavily dependent on raw materials and many outdated and inefficient enterprises only survive due to protection and subsidies from the state. In some parts of the world’s biggest country, entire towns and regions depend on one industry or enterprise which could now struggle to fight off competition from abroad.
Almost 100 major business figures and industry groups recently urged ruling party deputies to vote against ratification of the WTO treaty because of fears for its impact on Russian firms.
Parliament approved accession to the group in July, however, and Russia secured WTO approval to pump some €7 billion of annual subsidies into its farms over the transition period.
Economy minister Andrei Belousov warned that the reduction of import tariffs would cost Russia some €4.7 billion next year and €6.5 billion in 2014, but the Kremlin hopes WTO membership will boost exports and lure more foreign investment to Russia.
Analysts hope membership will accelerate Russia’s privatisation programme and efforts to slash bureaucracy and corruption.