- After 19 years of waiting, Russia officially has become the 156th member of
the World Trade Organization (WTO). The
historic step, which was welcomed by Brussels and the United States, continues
to be accompanied by the concerns of local producers, fearful of crushing
import taxes, and the warnings of experts, according to who Russia's joining the
WTO will not lead to a boom
comparable to that experienced by neighboring China, a member since 2001.
On 22 August, the Protocol on the accession of the Russian Federation to the Marrakesh Agreement, the founding document of the WTO came into force. Thus bringing to an end 19 years of negotiations in which Moscow (an economy estimated at 1.9 trillion dollars) was practically the only remaining world power outside the Organization. The European Commissioner for Trade, Karel De Gucht, said he was sure that "the accession will facilitate trade and investment, stimulate the modernization of the Russian economy and will offer enormous opportunities to both Russian and European companies."
The entry of Russia into the WTO, according to Bloomberg, will mean first of all a greater openness to trade on Moscow's part: lower import duty (down from 10 to 7.8%, with tariffs on foreign cars halved in 2019) and greater competitiveness in export demand, something that will force a modernization of many sectors that are lagging behind. Moscow will in turn enjoy the end of customs duties, which cost its exporters from 1.5 to 2 billion dollars a year. Agricultural subsidies will be gradually abolished and the protection of intellectual property and new healthcare measures will be introduced.
If the car market is seen as the sector to suffer most because of the competitiveness of foreign banks and telecommunications - according to experts - it will open to foreign investors, who will be able to enter the capital of a credit institution to a market share of 50%.
There will be no effect, however, on the export of oil and gas as energy sources are not covered by WTO rules.
According to the World Bank, the World Trade Organization membership will give rise to a short term economic output for Russia amounting to 49 billion dollars a year of, a figure expected to rise to 162 billion dollars a year in the long term. Much, however, will depend on Moscow's willingness to fight some of the historical wounds of its economy, a crony capitalism where corruption invades every sector of society and justice is often used for individual purposes. "The WTO is not a magic wand with which you can improve the climate for investment - said Ed Conroy of HSBC Global Asset Management - but if you actually create less restrictive conditions, then automatically you can increase your chances of growth."
In any case, analysts are all convinced that Russia will not live the Chinese miracle. As noted by Reuters, beyond the different conditions of the world market compared to 10 years ago, the Russian export is dominated by oil and gas sector unaffected by tariff barriers, in addition, the model of a manufacturing intended to 'exports, such as China, may not work in Russia, where labor has a relatively high cost.