Russia and the EU come to agreement on WTO accession

After the EU gave its formal backing to Russia joining the World Trade Organization Business RT spoke with Roger Munnings, Board member at AFK Sistema and Deputy Chairman of the Association of European Businesses in Russia about the implications.

RT:It has taken a long time for Russia to approach WTO membership partly because the leadership didn’t really seem to know whether it wanted to join or not. Have things changed now do you think?RM:“Yes, I think pre 2008 WTO was one piece on the political chess board, and I think at times Russia looked as though it wanted to join and others outside Russia didn’t, and vice versa.Since the crisis in 2008, there has been a broad realization that the world’s economy is a big place and Russia is part of it.And Russia has wanted to be part of that, and WTO is an important part of that.”RT:We know that the accession to the WTO will initially have a negative impact on industries such as the auto industry or aircraft industry.But eventually it will be positive for Russia, they say.Why is that?RM:“WTO will allow companies to come to Russia and compete, and so Russian industry will have to be competitive.What that really means is that if it’s not fully competitive now it will have to get up to a competitive position or suffer accordingly.So some companies within various industries may suffer for that reason.The long term argument is that being exposed to global competition, being exposed to the best in the world, and Russia is best in the world in some places, being exposed to the best in the world will make Russian industry competitive, and make them make efficient use of resources.”RT:But have there been any unresolved issues still remain between Russia and the EU, or is everything been solved?RM:“What happened a couple of days ago before the EU-Russia summit was that it was agreed that there were no bilateral issues between the EU and Russia anymore, and a memorandum of understanding was produced, and signed between the EU and Russia, which is very positive. There still remains multilateral issues, which are outstanding, but the bilateral agreement with the EU in place, the bilateral with the United States in place, it should mean Russia and the WTO will be able to move very quickly forward towards full agreement and full membership.I think the estimate is at the moment that it should occur sometime towards the end of next year, with all the technical issues removed by then.”RT:The government still has a lot of duties and taxes that protect Russian industry, and by joining the WTO it will have to abandon them.So will they abandon them?RM:“They will in due course, and I think there is a time scale for removing all of the protective mechanisms that are in place at the moment.And to be and continue to be a member, then Russia will have to abandon them over time.I think in some cases the record within the WTO, of not being protective, is not that good, and I dare say if there are reasons to retain protected areas in the past then there may be some protection retained.But the intention is to move towards unprotected industry and full competition within the country in the areas of agreement.”