Poised for WTO membership: the Russian Federation

7 December 2011
ITC News

When I opened the 31st formal, and final, Working Party on the Accession of the Russian Federation to the WTO, jubilation and excitement were in the air. It was among the most eagerly awaited events at the WTO, bringing to a close 18 years of talks between the Russian Federation and WTO Members. Our proceedings set the stage for WTO Members to approve Russia’s membership terms at their forthcoming Ministerial Conference in mid-December this year.

Russia’s entry into the WTO family of nations marks a defining moment in the WTO’s history and in the evolution of the rules-based, open, multilateral trading system. The event will change both Russia and the WTO in profound ways. Russia’s negotiating process was the longest in WTO history, longer even than China’s, which lasted 14 years. In each case, the arduous nature of the negotiations has symbolized the political and economic strength of the country’s economy, as well as the desire of WTO Members to strengthen trade and commercial relations with the country.

But each accession is unique and conducted at its own pace and on its own merits. The essence of each accession negotiation has been to achieve an acceptable balance between preserving the integrity of the WTO system while accommodating the special requirements of the acceding country.

In Russia’s case, it was no different. The entry terms reflect this balance and accommodate the special features of Russia’s present economic and trade regime. The historic result was the product of a great deal of hard work by a great many people. In the end, the length of the journey mattered less than the outcome achieved.

For Russia, WTO accession will create new market opportunities for Russian businesses. WTO membership implies an end to the discriminatory barriers that Russian exporters face in their major markets abroad. It also provides a trusted dispute-settlement mechanism for the defense of its rights and interests.

Russia’s 150 million consumers will gain substantially, through lower prices and a greater selection of goods and services. Its major exports are oil and natural gas, and there is an urgent need to diversify economic production, bring in new investment and technology, and increase its goods and services for export. Russia also needs to keep pursuing and expanding domestic reform and modernization, and establish modern institutions based on laws and satisfactory enforcement mechanisms. The WTO will be an effective anchor for these reforms, as well as a means to ensure that momentum for liberalization is not lost.

For WTO Members, the entry of the 11th largest economy in the world marks the most significant step ever taken to make the organization truly global in scope and coverage. Russian membership has been an important goal since the 1996 Singapore Meeting, and is vital for the WTO’s credibility and effectiveness as a world trade body.

In specific trading terms, Russia’s accession package represents new opportunities and openings. Russia has made significant market opening commitments in goods, agriculture and services that will make doing business there more attractive to foreign enterprises. The bound tariff ceiling has been reduced from 10% to 7.8%, with 0% tariff for cotton and information technology products. Services commitments cover 11 sectors and 116 sub-sectors. Domestic support in agriculture is to be halved by 2018 and agricultural export subsidies legally bound at 0%. And all existing quotas, bans, prohibitions, licensing requirements and other restrictions that cannot be justified under WTO rules are to be eliminated.

Russia has undertaken a number of important systemic commitments as well. The commitment to ensure that provisions of the WTO Agreement are applied uniformly throughout the territory of the Russian Federation, including in regions engaging in frontier traffic and special economic zones, is particularly important. So is the commitment to promptly publish all legislation affecting trade in goods, services and intellectual property rights, in keeping with WTO requirements.

In the course of these 18 years of negotiations, Russia has succeeded in putting in place an infrastructure of liberalization and openness backed by institutional support for the enforcement of WTO legislation, which puts it in a position to be a meaningful player in the WTO system soon after entry. Russia’s inclusion in the WTO family will strengthen the multilateral trading system and enhance global economic cooperation.

The management of Russia’s post-accession phase will be of great importance, particularly the tasks of strengthening and modernizing the private sector and creating greater awareness of the benefits of the WTO. Entering an organization like the WTO is not the end but the beginning of a journey that is exciting and challenging. The WTO’s benefits are neither automatic nor immediate. All depends on whether Russia’s private sector has the capacity and skills to compete in markets abroad and live up to the demands of increased competition at home.

The need to strengthen the private sector, create capacity, and increase awareness of WTO benefits is of essential importance. I wish Russia every success in this endeavour.