MOSCOW (RIA Novosti economic commentator Nina Kulikova) -Will Russia join the WTO next year? EU and US leaders showed interest in Russia's early accession to the WTO at the beginning of this month. In mid-May, the Russian Ministry of Economic Development and Trade echoed them, growing increasingly insistent in its attempts to assure the public of the necessity to join the WTO.
When Maxim Medvedkov, head of the Russian delegation and director of the trade negotiations department of the Economics Ministry, met with transport officials at one moment, chemical officials at another and then journalists, his main thesis was that it is crucial for Russia to finish talks with the WTO this year. "And we have all grounds to expect this," he said.
According to Medvedkov, delays in the accession may raise the price for the "entrance ticket". First of all, WTO countries may increase their requirements to Russia if Moscow fails to finish the talks by the turn of 2005. Second, there may appear new members of the organization, for example Ukraine, which Russia will have to enter talks with. Meanwhile, "Russia has a good chance to complete the talks on sensible terms in December", Medvedkov said.
There seems to be little doubt that Russia, short of other alternatives, should join the WTO. If it happens, Russia will get access to new means of production, new technologies and will be able to participate in devising the rules of the game on the world trade market.
However, Russian business is worried.
It is clear that WTO membership is likely to benefit competitive sectors of the Russian economy. For example, metallurgists welcome the idea. Alexei Mordashov, chairman of the Severstal board of directors, stated he did not expect the country's joining the WTO to have a negative impact on the Russian economy, because the latter was already closely connected with the global economy. The WTO can play a significant role in protecting Russian exports abroad.
Besides, after Russia joins the organization, foreign companies will have better access to its market. Both Russian and foreign investors will be able to turn to international arbitration, which will attract foreign investment into Russia. However, the Russian automotive and light industries, aviation, agriculture and other sectors fear possible competition with western companies
Most WTO member states are known to be subsidizing agriculture and the light industry. And it is obvious that Russia is far from being a match to the EU in terms of budget support. Accordingly, some of the Russian industries can hardly survive global rivalry. President of the Don-Tex textile company Anna Ignatova is sure that Russia's light industry is not ready for WTO membership. Indeed, the Russian market is flooded with textiles from Turkey, China and India. "We work in unequal conditions," she said. "The US subsidizes the supply of raw materials for its textile industry, Turkey subsidizes up to 25% of its electric energy supply. In Russia the conditions are far worse."
In many WTO member states governments allocate significant funds for the development of new aircraft, Director of the Ilyushin Aviation Complex Viktor Livanov said. For instance, out of the $12 billion necessary to develop a new model of aircraft in the Airbus company, $4 billion is allocated by the EU. In Russia, long-term investment is a problem. In Livanov's opinion, Russian aircraft will be able to compete with Boeing and Airbus only if the government provides proper investment support and lifts tariffs on imported parts and accessories. And this, no sooner that in a decade.
Therefore, if there is no alternative to joining the WTO, there is alternative as regards the terms and conditions of the move. So far nobody has provided a clear answered from an economic viewpoint why Russia should be in a hurry to join the WTO. Head of the Institute of Globalization Problems Mikhail Delyagin says Russian national markets are vulnerable and poorly protected, and joining the WTO will prevent Russia from enhancing their protection in the future.
In addition, to be able to compete on the world market as an equal partner, Russia must have an appropriate level of economic development and a clear-cut structural and industrial policy. According to Nikolai Shmelyov, Director of the Institute of Europe of the Russian Academy of Sciences, the Russian economy is not ready to join the WTO today. "By some estimates, 90% of Russia's manufacturing sector will be hit badly. Therefore, the later, the better," he said.
According to the WTO statistics, Russia is second after China on the list of most discriminated countries. The higher added value of Russian exports, the stricter measures are applied against the country. Will Russia be less discriminated after the talks? The question remains open.