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Russias WTO Bid
June 14, 2006 15:30

Russia’s bid for WTO has aroused much controversy in and out of the country. Today, the organization unites around 149 states controlling more than 95% of the world trade.

Formally, Russia seeks access to the international market and non-discrimination regime for its goods, along with:

  • Access to international institutions resolving trade disputes;

  • Improvement on the investment environment by touching up legislation to meet WTO standards;

  • More opportunities for Russian investors in WTO member states, including the banking sector;

  • Conditions for the improvement on domestic products against the inflow of foreign goods, services and investment from abroad;

  • Participation in the creating of international trade rules with regard to national interests;

  • Enhancing Russia’s image as a partner in international trade;

  • Doubling its GDP.

Negotiations kicked off in 1995. This March the working group had a 30th session. Russia has still to finalize talks the USA. On May 16, 2006 Russia successfully concluded talks with Colombia and on June 6, 2006 it was given green light from Australia.

To move along, Russia has complied with many requirements by introducing laws on anti-dumping and protection measures for imports, currency control, special economic zones, amendments into its customs regulations, etc.

Russia has also pledged to lift all financial checks on capital flow and make Russian rouble, its national currency, convertible by July 1, 2006.

Russia has held negotiations on the access to commodities market with 58 WTO member states, and discussed the access to services market with 30 countries.

Georgia and Moldova, former USSR republics, tried to lay claims and impede Russia’s accession. They were not satisfied with a ban on their wines products.

The hardest partner to win over is the USA. It demands access to Russian financial market, including the presence of foreign banks. Russia is strongly against foreign subsidiaries on its territory. It proposed a 50% quota on foreign capital in the banks but the USA rejected the move as insufficient.

"One of the most important problems is intellectual property. We also have differences about the access to the market of financial services and certain types of agricultural products," said Russian delegation head and chief of the trade negotiations department at the Economic Development and Trade Ministry Maksim Medvedkov.

Earlier, there were statements from both sides that the outcome is near. But along with that came harsh-tone comments from the Kremlin. The USA, it was noted, is putting too many additional requirements.

Apart from the banks and other claims, the USA wants a duty free export of aircraft. Russia is prepared to half its current rate to 10%.

In America, a group of senators sent a letter to President Bush warning him not to hurry with the decision. They say Russia is not ready to join the organization. It needs to fight violations of intellectual property rights and open its market for the U.S. agricultural produce.

There has been a lot of debate at home as well. Russian regions, both industrial and agricultural, are wary of possible tough competition leading to bankruptcy, unemployment and losses to economy.

The State Duma, the lower chamber of Russian Parliament, has even proposed to suspend talks before it is finally decided that accession is absolutely vital.

Ordinary citizens may suffer, too. First, the move is likely to increase gas and energy prices to meet European standards, otherwise EU may point to subsidies and inequalities. But Russian wages are far from European, and the exorbitant price of fuel in the world’s major energy supplier is hardly something everyone is ready to accept.

There are a lot of pros and cons. Eventually, Russian economy may lack stability to withstand the intervention of foreign capital and interests. Integrating into a global community can bring huge benefits, starting with the introduction of worldly recognized financial practices and a more secure ground for investment, but it may also may make Russia more dependent on global economic processes.

Giving up a certain percentage of self-protection may make a person more sociable, but it will also make them more open to outer threats.



Tags: Russian trade Russian economy Russian International   

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