How is WTO membership seen in Russia one year on?
Russia’s first year of WTO membership
How is WTO membership seen in Russia one year on? To assess how both negative and positive attitudes have evolved in Russia after a year of WTO membership, Global Counsel conducted a series of in-depth interviews with the representatives of Russian and foreign businesses and professional services firms.
The majority of Russian businesses have felt little or no change following Russian accession to the WTO in 2012. This reflects a range of factors including the transition periods for tariff and market access changes and the slow process of restructuring supply chains to reflect changed market conditions. A depressed European economy and other barriers to entering the Russian market have almost certainly also limited any initial flows of inward investment. The Russian authorities expect that the impact of new competition will begin to be felt after three to five years, but the full impact could take much of this decade to emerge.
The agricultural sector is perhaps the one major exception to this perception of limited impact, where WTO entry has to some degree exposed a lack of price competiveness and a dependence on state support. The pork industry in particular has felt the impact of a reduction in in-quota tariffs to zero by some Russian companies.
Many Russian businesses do not fully understand the implications and potential benefits of WTO membership in terms of a more level global competitive playing field. This has often encouraged a defensive position in which WTO entry is seen as something for which industry must be compensated with domestic protection or subsidy. In some cases, the Russian government seems to see the problem the same way.
WTO accession has had little impact at this early stage on perceptions of Russia as a place to do business, in part because of the Russian government’s often defensive stance on WTO membership. However, a slowly evolving regulatory culture and a wider market for professional services firms has the clear potential in time to improve business perceptions of Russia as a place to invest and do business. Russia needs to use WTO membership as the first step in a longer process of global economic leadership, engagement and reform.
Both in government and in the private sector, the first year of Russian WTO membership has highlighted a clear shortage of qualified experts on WTO law and procedures. This limits the Russian government’s ability to navigate legislative dossiers linked to WTO issues effectively, and forces Russian firms to procure expensive advice from foreign legal and consultancy firms.
Russia’s first year in the WTO has been defined by some high profile disputes and a perception that Russia will be a combative WTO partner. While Russia should clearly take a strong line on its interests, it could remove tension by proactively meeting its WTO obligations with respect to barriers to trade. It would benefit from bringing Custom’s Union practice quickly into line with WTO practice, and bring both Kazakhstan and Belarus into the WTO as soon as possible.
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