Implications of Russian's Accession to the WTO
2/13/2012 1:55:00 PM
Russia took a big step economically this past December when it joined the World Trade Organization after 18 years of negotiations that will require the nation to cut tariffs and open its economy to a greater competition. Dr. Aleksey Shishayev, who was the lead Russian trade negotiator in the WTO talks, told students at Johnson on Feb. 13 that the nation will focus on its “core competencies” in the energy business and infrastructure technology as it engages trade partners.
Russia’s entry into the WTO was not popular with the public, but government leaders lobbied to join the organization as part of its immersion into a market-based economy, said Shishayev, Sr. Counselor and head of the economic office at Russia’s Embassy in the United States. Russia was the largest nation to remain outside the WTO and now faces the same set of trading rules that apply to the other 153 members.
As one of the fast-growing BRIC nations (Brazil, India and China), Russia is one of the world’s leading commodity producers and the third biggest steel exporter. Since the 1998 financial crisis, the Russian economy has grown an average of 7 percent annually despite the global economic crisis in 2008-09 that led to lower oil prices and tighter credit.
As a consequence of joining the WTO, Russia will abide by the Information Technology Agreement and it is committed to cutting tariffs in important export sectors such as chemicals, civil aircraft, agriculture equipment, construction equipment, and medical equipment, as well as dairy, grains, oilseeds, wine, and meat, Shishayev told students at Johnson.
Shishayev emphasized that Russia is very different from other emerging countries, since it is not focusing on consumer
electronic production, which is prevalent in many East Asian nations. Russia plans to devote a significant investment in
“innovation policy” to foster more economic growth as it moves toward a market-based economy from a centralized economy that attempted to control production of goods.
One example of this opening of markets is to allow foreign investment. Russia will be open to 100 percent foreign ownership of non-life insurance companies, for example.
Shishayev found that joining the WTO has led the United States and Russia to be engaged in 19 different working groups relating to agriculture, health and energy. This is setting the groundwork for more bilateral trade between Russia and the United States, opening a market for U.S. exports to $19 billion from $9 billion. Russia opened itself up to competition, but Shishayev believes this will improve Russia’s international credit rating because it opens itself up to more growth. The nation’s strong monetary policy has created a safety net for an economic downturn, he added.