Crawling to WTO

Russia still intends to join the World Trade Organization (WTO), but the round of negotiations in Geneva completed recently, demonstrated that implementing this purpose is a complicated task reminding surmounting barbed wire by Army private.
Yet, the statement summarizing the negotiations informs of completing the discussion of the ten more sections of the task force report (the key document for joining WTO). There is some progress in the bilateral negotiations, and Head of Russian delegation Maksim Medvedkov sees the possibility for completing the formalities by the end of 2004. However, new obstacles seem to arise.

Until recently, there was much discussion of the issues of equalizing domestic and global prices for power resources, and subsidizing agriculture. The first issue is especially painful for Russia: if we agree with equalizing the prices, we would face significant increase of the tariffs for gas and power resulting in devastating consequences for power–consuming spheres of economy, and population of Russia. One has to admit that the current viewpoint of Russia (admitting some moderate tariff increase) is maximum compromise.

The EU set some more barriers: it requests to attach the issue of Russia’s joining WTO and ratification of Kioto protocol (limiting releasing ecologically harmful substances into atmosphere). In addition, the EU insists Russia to agree applying the EU regulations to the trade relations between Russian and the ten new EU members (they include a number of countries having long-lasting and mutually beneficial trade relations with Russia). The EU requests that Russia should terminate the bilateral agreements with the “novices” which will result in import duty growth for a number of Russian goods and probably loss of some markets in these countries.

As for Kioto protocol, some government officials believe the results of its ratification should be scrutinized. Earlier we supported Kioto protocol hoping that we will be able to sell part of our quotes for releasing harmful substances which we are not using.  However, the fast tempos of domestic industry development make think about long-term perspectives. Probably, in 5-10 years we will have to stand in line to purchase such quotas for ourselves.

The new problems along with the previously unsolved issues create skepticism about the benefits of joining WTO. Former Minister of Finance, currently - Deputy Head of Rusal (Russian Aluminum) corporation Alexander Livshits names only three basic benefits. First, compensation for the damages from expanding the EU “provided that we will be able to obtain this compensation”. Another advantage – enabling Russia to appeal to the WTO arbitrage court. In addition, the quotas for exporting steel will be terminated. 

Former Minister of Economics Alexander Shokhin says that calculating profits for exporters and losses for the companies operating in the domestic market demonstrates: domestic-oriented companies will inevitably experience losses.  These losses will be the payment for Russia joining WTO. The terms of becoming a new WTO member “do not comply with national interests even from the political outlook”.

The statements of this kind do not mean that Russia refuses to join WTO. This organization is respected within Russian business community, First Vice President of Russian Union of Manufactures and Businessmen Igor Yurgens called WTO “the UN of world trade” for a reason. Finally, Russia will join WTO. Meanwhile, there are no reasons for haste. Currently the viewpoint dominates that some suspense is even beneficial to Russia, it allows to overcome the obstacles with less trouble.

Valery Begishev

Source: Rossiya