What or who keeps Russia in the WTO?

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

Five years ago, Russia joined the World Trade Organization. Taking on the WTO commitments in 2012, we hoped that we would quickly conquer the “energy heights”, attract billions of investments, and at the same time improve the quality and competitiveness of Russian goods and services, having received the key to free trade, but we did not have wide gates to Western markets. did not open.

Russia began knocking on the doors of the International Trade Club back in the nineties, it took nineteen years to agree on the documents. All this time, the issue of joining the WTO has been the subject of serious discussion in Russian political and expert circles.

The most liberal-minded economists, headed by former Finance Minister Alexei Kudrin, believed that accession to the WTO was a necessary condition for the development of competition and the economy as a whole. Moreover, as he believed, joining this organization to some extent will be able to compensate for insufficient economic reforms, and the state will be able to appeal to the WTO rules to protect its own economic interests.

Opponents of Russia's accession to the WTO noted the unpreparedness of the Russian economy to compete at the global level and argued the need to protect its producers. After all, Moscow was demanded to nullify trade duties on meat. Foreigners were also not satisfied with low prices for gas and electricity in Russia, assistance to agriculture, which they called a hidden form of subsidizing our producers, thanks to which they supposedly get an unfair advantage over competitors.

Putting forward such requirements, the WTO member countries wanted to get almost open access to our internal market with practically no duties, to crush agricultural production, as well as an already uncompetitive industry.

After all, both the United States and the European Union protect their producers from all sides by external duties, subsidies, and purely prohibitive measures.

We managed to bargain for some things when joining the WTO. Quotas were established for the supply of certain types of meat products, within which the duty is not levied, a limit of state support was agreed in the amount of up to $ 9 billion a year (with a gradual reduction to $ 4.4 billion by 2018). But in return I had to agree to other enslaving conditions, the consequences of which were not long in coming.

Under the terms of the agreement with the WTO, Russia is still in a state of transition and is moving towards fulfilling all the obligations it has assumed. But today we can say that membership in the WTO has made its own adjustments to the state of the domestic economy. And not with a positive sign, as government officials wanted, but, on the contrary.

In a study by the St. Petersburg State University of Economics on Russia's membership in the WTO, it is said that as a result of joining this organization, raw materials specialization has increased, and we have been barred from entering the markets of high-tech industries. Stronger foreign competitors began to easily absorb Russian producers; due to the equalization of domestic and world prices for energy resources, domestic goods have risen in price; At an unprecedented rate, capital is exported from the country through the subsidiaries of large Western corporations that have settled in our country.

The greatest harm to the economy was caused not even by the accession to the WTO itself, but by the unilateral concessions that our officials hurried to make long before the signing of the official protocol. How, tell me, can our agrarian compete with a Turkish berry producer, if he can freely take out a loan for development at 2%, and ours - at 20-25%, at best - at a subsidized 6.5%? In addition, very often exporters abroad are fully or partially exempted from taxes, just because they save jobs and bring profits into the country. For some reason, this condition is not taken into account in our country.

According to the estimates of the analytical center "WTO-inform", over the years of membership in the WTO, the federal budget has lost 871 billion rubles, and taking into account the multiplier effect - from 12 to 14 trillion rubles.

The most affected were mechanical engineering (production fell by 14%), light industry (by 9%), and woodworking (by 5%). Agricultural engineering in two years has also been almost completely supplanted by American and European manufacturers. On the other hand, the volumes of financial services, oil and gas production, and the coal industry grew the most.

Exports of unprocessed timber and raw timber increased. Tariffs for gas and electricity due to “price equalization” increased by 80% by 2017, while household incomes fell by 10-12% compared to 2012. At the same time, our partners in the WTO declare that Russian trade policy is damaging the European economy.

There was no need to wait for another. All the more so today, in the midst of tightening anti-Russian sanctions. As analysts note, the restrictive measures applied to Russia are in direct conflict with the principles of the WTO. And this allows us to say that the possibilities of membership in this organization in the near future are unlikely to provide us with the expected economic preferences.

As soon as Russia tries to defend its rights and interests, it is not heard. As soon as the WTO pointed out the restrictive measures of the sanctions imposed against our country, a rebuff immediately followed. Or take the case of European pigs. Their supplies to Russia are limited due to outbreaks of African swine fever (ASF) in Poland and Lithuania. But in the WTO, our bans on suspicious pork were somehow considered discriminatory and did not meet the requirements of the International Bureau of Epizootics.

Under pressure from foreign partners, Russia appears to be ready to yield. This summer, the Ministry of Economic Development and Trade reported that most of the duties that appear in the dispute with the European Union have already been lowered, the rest will be dealt with in the near future.

By joining the WTO, Russia learned a good lesson with palm oil, imported refrigerators, paper and pork flooding our markets.

What makes us bow down or make endless concessions? First of all, the terms of trade that the state assumed upon joining the WTO, and the inability of our legislation to protect the domestic market, while remaining within the framework of the rules of the International Trade Club.

An example of how it was necessary to prepare for the entry of a trade organization is China, which was able to quickly fit into the WTO system, and is now claiming the first roles, pushing the United States and its allies out of the markets. This became possible, first of all, because the PRC, unlike us, went to the International Trade Club, not playing giveaway, but creating a developed industry and agriculture. The Chinese have built more than 600 powerful export factories, succeeded in logistics and financial and credit system. Moreover, all this was done with the support of a domestic manufacturer.

Russia, on the other hand, entered the WTO in a different capacity. We were taken to the trading club among the developing and underdeveloped countries with a raw material economy.

During the 19 years that we were preparing for accession to the WTO, it was possible to calculate and adopt adequate taxation conditions that would allow us to compete on equal terms with world manufacturers, develop a system of government procurement and leasing, create our own system of standards and norms that would accommodate Western competitors. … None of this was done.

At the same time, from the first days of Russia's membership in the WTO, our Western partners acted confidently, arrogantly, and sometimes even aggressively. So, for example, having conceived to close their domestic market from foreign aircraft, European countries have introduced requirements for engine noise. As a result, our aircraft, which did not meet these requirements, left the market in the first place. Thus, the formal requirements of the WTO were met, and the European market was fenced off from competitors.

The WTO, like any other international organization, is subject to the influence of lobbying groups of the largest states, and therefore only representatives of developed Western countries always win.

By the way, this feature was “surprised” to be discovered by the Nobel Prize laureate, former senior vice president of the World Bank, Joseph Stieglitz.

Today Russia is involved in ten cases, each of which can cost up to $ 2 million. So the hopes that the WTO instruments could be used to defend against US sanctions collapsed.

But is it worth despairing? The sanctions limiting the penetration and actions of Western corporations in the Russian market are still playing in our favor. In recent years, agriculture has grown decently: store shelves are filled with domestic meat, grain harvests are hitting post-Soviet records. The export of agricultural products is growing: we export our food products abroad for $ 18 billion. Our fields have their own tractors and combines, displacing the German "John Deers" and "Ursus". From our airfields now more and more often it is not Boeings that take off, but domestic planes, the newest VAZ cars are returning to Europe.

Analysts are talking about the fact that the WTO is now in a deep crisis. Both developing countries and the United States are unhappy with it. The former are not satisfied that an acceptable solution has not yet appeared within the framework of the so-called Doha Round of negotiations on agricultural trade. And the United States cannot come to terms with the fact that the WTO imposes restrictions on them.

Not in favor of this organization is the fact that after the crisis, international trade dropped sharply. It is now growing twice as slow as world GDP. Trade is constrained by various import restrictions related to anti-dumping investigations, political differences or security issues, the number of which quadrupled in 2017 compared to 2008. At the beginning of 2017, there were 1,200 such restrictions in the G20 countries. And with the coming to power in the United States of Donald Trump, the danger of an increase in protectionist measures has only intensified.

Analysts started talking about the fact that the WTO may soon be replaced by the Transatlantic and Trans-Pacific Partnerships with the leading role of the United States.

What keeps us in the WTO? Isn't it time for us to reconsider the terms of participation in the "trade club" and think: is this organization really necessary for Russia?

Should we, a self-sufficient country, 95% endowed with natural resources and not losing scientific and technical potential, remain in the trade club as a stepson?

Russia participates in much more democratic and independent trade and political structures - from the Customs Union to the Shanghai Cooperation Organization and the emerging Eurasian economic space. Why choose the worst case scenario?