High expectations on Russia's WTO membership
The outlook for trade between Russia and the EU is bright. In the long term, Russia's membership of the World Trade Organisation (WTO) will result in reduced tariffs, increased predictability and increased transparency. But it is still to early to say how long it will take for Russia to completely implement the WTO trade regulations.
Ulf Pehrsson from LM Ericsson, Minister for Trade Ewa Björling, Kaj Hobér from Mannheimer Swartling and Martin Sandbu from the Financial Times debated scenarios in connection with new Russian commitments in the area of trade. Photo: MFA/Anna Backlund (cc)
"It is not only a question of how Russia will live up to its commitments. Trade is reciprocal, and what applies to Russia should also apply to the EU," said Maxim Medvedkov, Russia's chief WTO negotiator, at a seminar on Russia's accession to the WTO at the Ministry for Foreign Affairs last week.
Russia is expected to ratify WTO accession in July and, after formal accession a month later, Russia has the job of explaining the consequences of membership on the home front.
"Scepticism is a normal reaction," said Mr Medvekov. "Many people are concerned about what the new regulations will mean, partly because of purely economic interests and partly because of a fear of increased unemployment. Our task now is to explain how membership, in the long term, will result in improved market access and the removal of technical barriers to trade."
Russia's dependence on oil and gas, and the need for economic reforms, were other issues raised by Mr Medvedkov during the seminar. WTO membership also places demands on increased predictability, transparency and the due process.
"If a company believes that certain regulations have not been implemented in the correct way, it must be able to turn directly to the ministry or agency responsible, and not have to bring the matter to court," said Mr Medvedkov.
The fact that shortcomings in the application of the law and widespread corruption continue to be barriers to Swedish companies in the Russian market was mentioned several times by the seminar participants.
"We are aware of the problem and are working on it," said Mr Medvedkov, and he pointed out that more than 400 Swedish companies have chosen to set up and stay in Russia nonetheless.
So, can Russia be compared with China, which recently celebrated 10 years as a member of the WTO? The figures speak for themselves. Economic development has sky-rocketed since China's accession to the WTO. At the same time, the country still has much to do in its work to completely meet its WTO commitments in the area of trade.
"Of course there are similarities, but Russia is not China. When China joined the WTO the country was extremely poor. Russia, on the other hand, is a middle-income country on the way to becoming a rich country, with major natural resources and a lot of competence. Therefore, Russia will implement the WTO regulations much faster," said Martin Sandbu, leader writer for the Financial Times.
Time will tell which route Russia chooses in the long term - towards continued oil and gas dependency or towards a more diversified economy. Denis Redonnet of the European Commission was convinced that membership means that Russia is now putting itself in the driving seat and that we will see normalised and deeper relations between the EU and Russia over the next five years.
"In addition, the WTO has a monitoring mechanism and an established way of solving any conflicts," said Mr Redonnet.
Russian WTO accession
The Accession Package of the Russian Federation to the World Trade Organisation (WTO) was approved at the WTO Ministerial Conference in December 2011 after more than 18 years of negotiations. Since Sweden is one of the world's ten largest investors in Russia, with more than 400 Swedish companies operating in the Russian market, the country's WTO accession is expected to have significant positive effects for bilateral economic relations with Russia. Russia WTO membership increases access to a market of 145 million consumers.
Voices from the seminar
Tatiana Shelley and Ekaterina Burlakova. Photo: MFA/Anna Backlund
Tatiana Shelley, Savor Media:
"WTO accession can change the image of Russia in Sweden and, in the long term, lead to increased exports and attract more Swedish companies to Russia."
Ekaterina Burlakova, East Event Sweden:
"I hope that the WTO accession will make Russia more open and that it will become easier to do business. Freedom of movement is a prerequisite and today tourism is hampered by bureaucracy and visa requirements."
Leif Lybeck. Photo: MFA/Anna Backlund
Leif Lybeck, Scania:
"This seminar shows that there is major interest from many different quarters, and that we must speak with, not about, Russians to continue on the chosen path. This will take time, for instance for the customs and tax authorities, to fully implement the WTO accession in practice."
Zakaria Hersi. Photo: MFA/Anna Backlund
Zakaria Hersi, Coursio:
"Russia is a geographically close and interesting market for us. With regard to the IT sector, I would like to hear more about how the risks regarding copyright are to be managed on entering a new market."
