Russia joins WTO after 19-year wait

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Russia officially joined the World Trade Organization today (22 August), ending a 19-year wait to become part of the global club.

WTO Director-General Pascal Lamy, in announcing Russia’s accession as the 156th member, said it “is especially important as the world goes through troubled times and continues to suffer from one of the worst global economic crisis in memory. Joining the WTO is a sign of confidence in the organization and in what it can deliver for its members”.

European Commission President José Manuel Barroso welcomed the announcement, saying that Russia is the EU's third largest trading partner and a very important market for EU exporters and investors. Russia's WTO accession would bring a qualitative change to the current trade regime, Barroso said.

The Russian Economic Development Ministry said WTO membership would lower prices for both imported and domestically-produced goods. The World Bank calculates Russia's membership will boost GDP by 3.3% annually for the first three years, with that figure likely to increase later.

Critics of Russian membership

Internal critics have claimed Russia’s WTO accession is detrimental to the country’s sovereignty and security, and could ruin entire sectors of the domestic economy such as agriculture and the motor industry, RIA Novosti reported.

But a London business group welcomed Russia’s accession, saying the move would help turn Moscow into an international financial centre and liberalise trade.

“As part of its accession, Russia has initiated a number of measures designed to open up its economy, including tariff reductions on a range of industrial goods and measures to liberalise the Russian services sector, including phased liberalisation of the Russian financial and professional services sectors,” TheCityUK, an independent membership body of the UK financial services industry, said in a statement.

WTO rules would not apply to Russia’s trade relations with the United States however, until that country’s Jackson-Vanik law is changed.

Named after Representatives Henry Jackson and Charles Vanik, the measure was introduced in 1974 to restrict trade with the then-Soviet Union and other non-market economies until they allow free migration.

The restrictions imposed by Jackson-Vanik are often waived, but remain in place and are a thorn in the side of Russian-US trade relations.

"Today's WTO accession is a major step for Russia's further integration into the world economy", said EU Trade Commissioner Karel De Gucht. "It will facilitate investment and trade, help to accelerate the modernisation of the Russian economy and offer plenty of business opportunities for both Russian and European companies. I trust that Russia will meet the international trading rules and standards to which it has committed."

Economist at Aalto University in Finland Pekka Sutela also commented:

"We expect that there will be a positive impact on our exports of goods and services to Russia. It will also help improve the employment situation in Finland," Sutela told Yle News.

"According to research at the Bank of Finland, the employment impact on Finland might be around 5,000 personnel years, and that is a notable amount of improved employment," he added.

Robert Sturdy, Conservative MEP for Eastern England and vice-chairman of the European Parliament's International Trade Committee said:

"As Parliament's rapporteur on EU-Russia trade relations, I am acutely aware that trade between Russia and the EU is increasing rapidly. The EU is already by far Russia's largest market accounting for some 47% of all its trade, and Russia is Europe's third-largest trading partner."

"We must remain wary, however," Sturdy warned. "Protectionist barriers are not unknown to Russiaand too often Moscow's knee-jerk is to resort to reactionary policies."

"Today we say to Russia - welcome to the club. Now mind the rules," he added.

 

The protocol on Russia’s accession to the Marrakesh Agreement, the foundation document for the world trade club, entered into force on 22 August, RIA Novosti reported. The document was signed in Geneva on 16 December 2011, after 18 years of negotiations.

Russian President Vladimir Putin signed a federal law that authorised the protocol on 21 July. Georgia, which fought a brief war with Russia in August 2008, withdrew its veto over its neighbour's accession in 2011.

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