By Igor Siletsky
Three days after being approved by the Russian government, the package of papers that seals Russia’s membership of the World Trade Organization has been approved by a ministerial conference of the WTO in Geneva. Russia now has 220 days in which to ratify it. The country is to become a full WTO member on July 23rd at the latest, 30 days after the package is signed into law by the Russian President.
Hampered by crises and politically motivated objections from members like Poland and Georgia, the membership talks lasted 18 years and could not be brought to fruition before all WTO members became convinced that they would benefit from Russia’s entry.
Despite managing to negotiate rather favourable entry terms, Russia is still facing challenges as a WTO member.
We have an opinion from Dr Leonid Polyakov of Moscow’s Higher School of Economics:
“On one side, Russia can now conduct its foreign trade as a fully-fledged market economy. On the other, it only has 5 to 10 years to diversify and modernize its economy to the level of international competiveness. If it fails, its WTO membership will prove a disaster.”
A leading analyst for the Univer Capital company, Mr Dmitry Aleksandrov, largely agrees with Mr Polyakov but sounds more positive about Russia’s WTO entry:
“Membership of the World Trade Organization makes Russia a respectable partner in everything that concerns investment and trade and boosts its attractiveness as an investment destination. Fortunately, Russian negotiators have also managed to stipulate favourable terms for all the vulnerable sectors of the Russian economy.”
Indeed, Russia has been allowed to raise its annual subsidies to the farming sector to $9bn and to reduce them very gradually, during 5 or even 7 years. The chief Russian negotiator with the WTO Maxim Medvedkov does not expect an economic shock from the WTO entry, because for about 8 years now Russia has been managing its economy in accordance with new laws that are fully compatible with the WTO rules. These laws include the Customs Code, the Technological Regulation Rules and the Law on Foreign Trade.
Unfortunately, Russia’s economic relations with the United States remain exempt from the WTO rules. The sticking point is the 1974 Jackson-Vanik amendment, which restricts Russia’s trade with the US under the now preposterous pretext that Russia hampers the repatriation of its Jews to Israel. The measure is yet to be abolished by the US Congress.