Russia and WtoEssay Preview: Russia and WtoReport this essayAfter 18 years of talks and negotiations, Russia finally joins the World Trade Organisation. Being the last of the G20 countries to join the trade body, it also stays the biggest economy in the world that has not yet become a full-fledged WTO member. Surviving almost a dead-end veto of Georgia in 2008 after the military conflict in South Ossetia and Abkhazia, Russians desire to join the organisation was finally backed by the EU members and the United States. Having finally reached an agreement with Georgia in November last year, Russian officials signed the formal agreement with other WTO member countries to initiate the accession procedure.
It is expected that by joining a global trade body of 153 member countries that define actual trade policies and trade rules, Russia will be able to benefit dramatically from its membership in the World Trade Organisation. Some experts believe that the countrys economy will be boosted by tens of billions of dollars a year. Still dominated by oil and gas exports, Russian economy represents a highly attractive opportunity for the worlds largest exporters – China, Germany, and the United States.
Worth mentioning, the reason why Russias export profile appears to be rather unexciting partially stems from the fact that, unlike commodities, non-discriminatory access to global markets for non-commodities is usually severely limited by trade barriers. Not being a part of the WTO can simply impede and diminish countrys exports. Besides, WTO rules also eliminate barriers on trade of services, including telecommunications, financial and business services, access to which will be extremely beneficial for Russias development. On top of that, WTO creates a legal framework, along with credible enforcement institutions, for improving foreign trade and investment in member countries. Once signed, the agreement will push politicians and society to stick to the terms of the accession and not to cease the reforms.
To come into force, the accession should be finalised by Russia before 15 June 2012 after the Parliament completes formal ratification procedure. Subsequently, according to the World Bank experts, in three upcoming years Russia will gain yearly 3.3% GDP, roughly $59 billion US, thanks to static benefits of trade openness. After 10 years, because of improved investment climate, this figure is expected to reach 11% GDP. Technically, the agreement establishes a reduction of average import duty rate from 10.3% to 7.1%; more specifically, rate on agricultural products will be decreased to 11.3% from 15.6% and rate on industrial products – from 9.4% to 6.4%. Over and above that, Russian authorities estimated that boosted economy will create additional 40 000 jobs.
The IMF
• In the event of a “Grexit,” the IMF cannot change financial conditions beyond the limit set for it; they are under an obligation to provide for its operations. But they cannot act, despite the IMF’s long-standing commitment to act.
• Financial institutions are facing the same pressures as the non-profit organizations; they have the potential to face financial competition that requires stronger investment from foreign investment, not just state-controlled institutions.
• Russia must be transparent about its internal problems. It must ensure its public investments keep pace with globalized economies, which they hope will be their first true opportunity to compete under the right conditions.
• Russia has the potential to become the most prosperous member of the G8; a society of global leaders like the United States, the European Union (UK), Japan, China, and, most recently, Sweden.
Russia’s economic reform has the most to offer the world. Russia continues to benefit from economic freedom, with improved industrial, housing, and industrial productivity. At best, that is the single best measure of economic progress (which is not really economic growth, since Russia’s economy is not a competitive industry) and the only tool of economic improvement – the economic model.
Moscow wants to develop such a model but to achieve that we must work together to reach a free and fair economic transition.
• All the world’s nations can participate in the process. But they can only contribute so much in monetary terms over a long time frame: an average of 40 % of GDP and a per capita income of 1 %, and only 2 % of GDP.
• We must work alongside all our neighbours for this. I can confirm that both the Russian Federation and the US have agreed to invest in infrastructure in the west and in the East. I will also ensure that Russia will become one of the four financial “emerging economies” (EU or US) to be excluded from the G8 and to participate in the IMF.
• The United Nations will follow if the European Union can improve its economic recovery, including through the IMF and UNGA. However there is no real chance of doing so.
• If these challenges are not met by the next G8 summit, then the world will be better off.
• The international community’s actions could lead to the next economic meltdown, as Russia could become the most successful economy in the world. It is in these circumstances that the G8, together with the G20, will begin a review to decide whether or not the reforms are best for the global economy.