Russia and WTO: closer than ever

Russia and WTO: closer than ever
Moscow has okayed a draft proposal to smooth out remaining issues with Georgia, which had blocked Russia’s accession to the WTO. The move should put an end to the 18-year saga of the country’s attempts to join the organization.

The final hurdle on Russia´s way to the WTO – the issue of monitoring trade on the country’s border with former Georgian regions Abkhazia and South Ossetia – has finally been cleared. The draft bilateral agreement "is based on a concept which we proposed, and corresponds to the framework of Russia's principal position," says Maxim Medvedkov, head of the Russian delegation at the WTO talks.

The document envisages electronic information sharing, as well as trade data auditing by an independent company, with Russia and Georgia submitting such data to an integrated WTO database.

International observers will be placed at both ends of three trade corridors, says Georgian Deputy Foreign Minister Sergei Kapanadze, who heads his country's delegation to the talks on Russia's accession.

"These trade corridors will stretch from the Psou River to the town of Zugdidi, from the Roki Tunnel to the town of Gori, and from the Verkhny Lars checkpoint to the Kazbegi checkpoint," the deputy minister specified.

Russia’s economy should benefit from WTO accession, believes Natalia Orlova, chief economist at Alfa-Bank, as “the WTO will provide for cheaper access to global technologies and high-tech equipment, which at the moment are subject to relatively high import duties. And Russia will also look more attractive for foreign investors”, adds Orlova, as “the management, costs and tariffs will become more transparent.”

WTO accession will also make Russia a bigger player internationally, the analyst concluded.

“WTO entry will potentially offer Russia the possibility of becoming an OECD member – a window of opportunity to become more important on the global political level.”

Chris Weafer, chief strategist at Troika Dialog, says the net economic effect of Russia’s membership in the WTO would be positive and should mean“a more serious approach to economic reform and industrial efficiency” , which will become evident only over time.

“As the benefits of those changes materialize, sustainable incremental economic growth may reach between 1% and 3% annually, according to the World Bank, while a gradual reduction in the risk premium will significantly cut the discount at which Russian equities have consistently traded against global market peers,” the expert said.

A formal meeting of a working group to approve all the documents on Russia’s accession, is scheduled for November 10 – 11. Should all go smoothly, the 153 members of the WTO will look at the papers on December 15-17. The documents will then go to Russia for ratification, and a month after that, Russia should finally join the WTO.