Delegates attend the opening of a World Trade Organization ministerial conference delayed due to technical problems, on December 15, 2011 in Geneva (AFP Photo / Fabrice Coffrini)
TAGS: Markets, Russia and the global economy, Big deal, WTO
With a stroke of a pen on Friday evening Russia joined the World Trade Organisation, something that’s been a long time coming.
Experts agree the end of the eighteen year courtship with the WTO will not bring immediate results for Russian economy.* Immediately it will seriously hit a number of uncompetitive industries, such as agriculture and automobiles, as well as light industry and machine manufacturing.
“A lot still needs to be done in terms of understanding what WTO membership will bring to Russia,” said Viktor Vekselber, Russia’s metals tycoon. “We must open our eyes to what we pay for a ticket to this trade club,” Vekselber added.
The longer term economic impact, will is likely to prove positive, as the reduction of trade barriers should spur Russian companies to become more competitive.
“The main question is balance*– and I am sure positive effects will outweigh the negative ones,” Vekselber said.
According to Russia’s Ministry for Economic Development, consumer prices are expected to go down 10%, with the accession adding another 4.3% to a GDP growth. The World Bank also calculates that spending will go up 7%.
Russia's accession to the global trade club is likely to boost its foreign trade as well. The United States expects its exports to Russia to double over the next five years.
Karel de Gucht, EU Trade Commissioner, believes Russia's WTO membership will spur trade with European companies as well, “because the accession to WTO will give them the assurance that they were in a legal environment that was more transparent than it was before.”
“Whether it will mean doubling in 5 or 10 years – we’ll see,” Gucht concluded.
More immediately the big winner is likely to be the Russian consumer, who’ll get better quality goods at a more competitive price, experts agree.
“Russian consumer cannot indefinitely tolerate inefficiency, excessive costs, and inability of managers," said Anatoly Chubais, Rusnano CEO.
At the same time Russia's joining the WTO"will be beneficial for the organisation itself,"said Alexander Lukashevich, spokesman of Russia's Foreign Ministry.
"By admitting the only major state, which has been outside the multilateral trade system for a long time, the organisation will improve its status of a truly overwhelming cooperation platform,” he said.
Pascal Lamy, Director General of the WTO, agreed and said that having such a giant as Russia in the team would strengthen its world status.
“Russia is the world's 12th largest trading nation ($400 billion in exports and $250 billion in imports) and until we have this important country among our members, we cannot truly be the World Trade Organization.”
Once the WTO accession protocol is signed in Geneva, the Russian Parliament then has 8 months to ratify it.
And it's more than just paperwork, as the leading industrial lobbyist Alexander Shokhin explains.
“Before ratification, both the government and business will have the task of adapting current state support for vulnerable industries. These include the agriculture and automotive sectors of the economy. State support schemes will be changed into new mechanisms allowed by the WTO's rules.”
Usually, admission to the WTO takes about 10 years. The WTO has 153 member states, which account for 95% of the world's trade turnover. Russia filed an application for admission back in 1994.
Hello, WTO! — RT