Russia Joins the WTO as 156th Member
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Russia officially joins the World Trade Organisation today, after a 19-year wait, as the group’s 156th member. As a permanent member of the UN Security Council and a leading G8 country, Russia is the last major economy to join the global trade body.
After 19 years of negotiation and waiting, Russia today joins the ranks of the World Trade Organisation, a status that is expected to lower trade barriers and increase the level of foreign investment in Russia.
Russia officially joins the World Trade Organisation today, after a 19-year wait, as the group’s 156th member. As a permanent member of the UN Security Council and a leading G8 country, Russia is the last major economy to join the global trade body.
After 19 years of negotiation and waiting, Russia today joins the ranks of the World Trade Organisation, a status that is expected to lower trade barriers and increase the level of foreign investment in Russia.
At the same time, membership with the trade body will likely lower prices for both imported and domestic goods, as well as accelerate the formation of a transparent and open market based on established foreign trade rules.
According to estimations by the World Bank, the admission will give Russia a 3.3 percent boost to its annual gross domestic product for the first three years, equivalent to $49 billion a year, with the figure likely to increase to $162 billion annually when the longer-term impact on the investment climate is factored in.
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However, critics say Russia’s accession to the WTO is detrimental to the country’s national sovereignty and security, and Russia is unlikely to emulate the success China achieved when it joined the WTO in 2001.
For Beijing, its accession, after a 15-year wait, set the stage for a decade of exponential growth that propelled its economy from sixth largest to the world’s second largest.
Russia, on the other hand, is less well placed to enjoy that kind of spurt. With trade and investment flows both scarcer than a decade ago, Russia will struggle to attract investments on a similar scale to its Far East neighbour, said Reuters.
John-Paul Smith, head of emerging equity strategy at Deutsche Bank, said:
[quote] What China benefitted from was that for many years you had a period of debt-driven growth in the West. [/quote]
While Russia’s banking and telecoms sector will likely gain from foreign investment, uncompetitive sectors as such the auto and agriculture industries could sink as the country complies with its trade liberalising obligations. Russia’s manufacturing-for-export model is also unlikely to take off because of relatively high labour costs.
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In June, Russian Prime Minister Dmitry Medvedev said Russia will have to focus on its national priorities after its accession to the WTO. “We will go by our national priorities after WTO accession. We should learn how to react to our partners’ actions firmly and rigidly as they are our competitors,” he said.
According to President Vladimir Putin:
[quote] The WTO membership gives the opportunity to defend our interests in a civilised and legal way. [/quote]
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