- Title: RUSSIA/SWITZERLAND/FILE: Russia joins WTO after 19-year wait.
- Date: 22nd August 2012
- Summary: MOSCOW, RUSSIA (FILE) (REUTERS) VARIOUS OF BANK TELLER PUTTING RUBLES THROUGH COUNTING MACHINE VARIOUS OF BANK TELLER PUTTING DOLLARS THROUGH COUNTING MACHINE GE
- Embargoed: 6th September 2012 13:00
- Keywords:
- Location: Switzerland, Russian Federation
- City:
- Country: Russian Federation Switzerland
- Topics: Economy
- Reuters ID: LVA6WOLJDJ98MJI56A9PWUGTN3XT
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- Story Text: Russia joins the World Trade Organization (WTO) after an 19 years of waiting it - a move analysts say will be good for the country's economy, and spur reforms.
Russia joined the WTO on Wednesday (August 22) after a 19-year wait, with analysts saying they expect economic growth, but not the sort of export and investment miracle enjoyed by fellow-BRIC China.
In Moscow the senior executive at Russia's biggest lender Sberbank, Dmitry Sredin, told Reuters that the move was an overall positive one for Western investors in the former Soviet country.
"Russia's accession to the WTO is definitely a positive signal for all Western investors, a positive signal for all companies that work in the Russian economy. We expect economic growth the mid-term to long-term perspective caused by Russia's entry to the WTO. Of course, some spheres of the Russian economy will feel the effect almost right away. I think companies in the consumer sector, especially retail chains, construction companies and developers will feel the effect in 2013 or 2014. Some other companies will feel the effect much later, but we will see the cumulative effect from the GDP point of view fairly quickly," Sredin told Reuters.
Foreign tariff barriers are estimated to cost Russian exporters $1.5 billion to $2 billion a year. The WTO confers lower trade barriers and equal treatment for all members.
Moscow will have to haul up its own barriers, with average tariffs set to fall by a third - tariffs on foreign cars for instance are to halve by 2019. So cheaper imports should leave consumers and companies with more money to spend.
And while parts of some uncompetitive sectors could sink - Russia's auto industry is a much-cited example - others such as banks and telecoms will be opened to foreign investment.
Furthermore, Russia is hobbled by a reputation for crony capitalism, red tape and disregard for investors' rights. Optimists hope WTO-entry, which has the blessing of President Vladimir Putin and is bound by strict previously agreed timetables, will instill a sense of urgency into the Kremlin's half-hearted reform efforts.
Sredin said Russia's entry into the WTO would mean a definite reforms that would benefit investors.
"Many people view Russia right now as some sort of island of stability from the economic point of view and from the point of view of currency. I think it's hard to give a guarantee here. The only thing the government of the Russian Federation can do and will continue to do is to pursue needed reforms, aimed at a more open, diversified economy, which is beneficial for all the investors that come to our country," Sredin said.
While many have predicted positive outcomes from Russia's new WTO membership, few foresee astronomical growth for Russia, similar to fellow-BRIC China.
When China after a 15 year wait joined the WTO in 2001, the Far East country saw a decade that quintupled its exports and propelled its economy from sixth place globally to the world's second biggest.
Russia's commodity-based economy is less well placed to enjoy that kind of spurt. And with trade and investment flows both scarcer than a decade ago, it will struggle to attract investments on a similar scale to its Far East neighbor.
"China 2001 and Russia 2012 are not really comparable. When China joined the World Trade Organization ten years ago its economy was already quite diversified and China's external trade was already very much in manufacturers. Today Russia joins the world trade system with an export structure which is still heavily concentrated on fuels and minerals that will represent more than two-thirds of Russian exports," WTO Director-General Pascal Lamy said in Geneva on Tuesday (August 21).
In Moscow many Russians remained cautious about their country's WTO entry.
"Russia has its own destiny, Russia has always had its own destiny. European and Western elites have always had a more or less aggressive attitude towards Russia. This is the way it is, always has been, and will be. They've always seen us as a sort of energy add-on. This (WTO accession) won't end well," Moscow resident Kirill told Reuters.
Others saw the WTO move as inevitable.
"(WTO accession) is probably necessary for all developed countries. That's what I'd say. I'm not against it," 49-year-old Tamara said.
"We have our own wayof developing - we're a unique country. We have our own culture, our own identity; our own pluses and minuses - well, more pluses (than minuses) probably. Entering the WTO is just, how do I put it, we need to cooperate with the whole world. We can't live in isolation. So this is just a small suplement for us, that's all," Andrei, the director of a small business, told Reuters. - Copyright Holder: FILE REUTERS (CAN SELL)
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