Azernews.Az

By Araz Said, Azernews Staff Writer

After 19 years of negotiations Russia became a full-fledged member of the World Trade Organization on Wednesday, August 22. The law on ratification of the protocol on Russia's accession to the WTO was adopted by the State Duma on July 10, approved by the Federation Council on July 18 and signed by the President Vladimir Putin on July 21. Although many experts are worried about the impacts of becoming a WTO member on the domestic industry, the government officials believe that this is the most effective way of modernizing the economy through increasing the competition for local manufacturers.

Gov't to back local producers

The government officials were rebuffing all predictions, which raised concerns that WTO membership will cause a crisis for local automotive industry and agriculture,

The Russian First Deputy Prime Minister Igor Shuvalov, who personally supervised the negotiation process and analyzed all possible negative consequences of the WTO membership, assured in April the members of Federation Council that the government will give full support to those sectors by all means, that do not contradict the norms and principles of the organization.

"WTO membership will not be an ordeal for our economy," Shuvalov said.

According to the World Bank, transition to the new tariff rates ensures for Russia at least a 3-percent increase in the GDP. In the long term, Russia's economy could grow by 11 percent.

Shuvalov has once again reminded that the WTO agreed upon a limit of government support to agricultural sector up to $9 billion a year, with a gradual decrease to $ 4.4 billion by 2018.

Russia's Minister of Economic Development Andrei Belousov believes that the WTO membership will be beneficial mostly for the local consumers. "As a result, not only imported finished goods and services, but also the domestic production will fall in price, especially those produced by using imported components."

Unemployment threat

One of the biggest worries of the experts concerns agriculture and automotive industry. They believe that accepting the WTO terms Russia will face a decrease in domestic production due to inability of local manufacturers to compete in the commodity market, which will ultimately leave thousands of people jobless.

Head of Trade Negotiations Department of the Russian Economic Development Ministry Maxim Medvedkov said the Russian federal budget may short-receive about $ 7.2-7.5 billion in the last year of the seven-year transition period, due to cut in customs duties in connection with Russia's WTO accession.

In an interview to "My area" newspaper, Associate Professor of the Faculty of Economics Vadim Kapustkin summed up the pros and cons of joining the WTO.

According to Kapustkin, now Russia will be able to participate in developing global trade rules. Decrease in prices for most goods and services, higher quality, greater choice - all of this will happen as a result of the increase of competition in the domestic market. Another benefit of joining the WTO is that it will be easier for Russian exporters to sell their goods abroad. It will be most beneficial to exporters of metal and mineral fertilizers, which are now facing the most restrictions. Accession to the WTO may also force domestic market participants to be more clear: now their activities will be monitored not only by Russian authorities, but also by the authorities of other countries.

Speaking about the disadvantages of WTO membership Kapustkin said that for producers with poor technical equipment, outdated technology and high costs, increase in competition may result in exit from the market - and it is not just about the loss of certain companies, it is a loss of jobs and taxes. Also, because of the reduction of customs duties on imported goods, the state treasury will have less income. Compliance with intellectual property rights will be monitored more strictly: naturally, people will have to pay more for branded products than for counterfeit.

Azerbaijan on its way towards WTO

The working group on Azerbaijan reporting to WTO Secretariat was established on July 16, 1997. Since 1997, the country is represented in the Organization as an observer. Azerbaijan began negotiations on WTO membership in 2004.

The negotiations have been completed and protocols were signed with Turkey, Oman, the United Arab Emirates, Georgia, and Kyrgyzstan. In the ninth round of multilateral talks on Azerbaijan's membership in the Organization, in February 2012, Azerbaijan held bilateral talks with the U.S., the EU, Norway, Canada and Venezuela.

"In July Azerbaijan, as part of the negotiations, held discussions with the United States, Canada, Brazil and China, as well as experts from the WTO and the UN. This process is in progress and Azerbaijan is continuing negotiations on accession to the WTO," Azerbaijani Foreign Ministry spokesman Elman Abdullayev said.

One of the long discussed matters between the WTO and Azerbaijan is the status by which the country will be submitted to the Organization. The WTO insists that Azerbaijan joins the Organization as a developed country, just as all of the other CIS countries did, while Azerbaijan, in turn, intends to join the WTO as a developing country.

Recently, more than 20 laws and regulations in Azerbaijan have been brought into compliance with the WTO demands, and the process continues. Currently, Azerbaijan is negotiating with ten countries on joining the WTO.

Azerbaijan remains the only country in the region which has not entered the WTO. In an interview with Echo, economist Azer Mehdiyev stated that Azerbaijani political desire to join the WTO is not so noticeable. "True, there were some efforts, even a legislative act that requires the acceleration of the process was adopted. Yet the course of negotiations suggests that the political interest is not so elevated. On the other hand, our country does not want to suspend the negotiations," the expert said.

According to Trend analytical center expert Leyla Abdullayeva, joining the WTO could result in a decrease in interest on bank loans, but "given the fact that the banking sector of Azerbaijan is just developing, and cannot really compete with Western partners, the government should achieve a few years of delay in complying with the WTO conditions".