Russia finally secures WTO membership: is it really worth the efforts?
After almost 20 years of on-off negotiations laden with accusations and counteraccusation of seeking competitive trade benefits at the expense of one another, as well as acceptable and unacceptable concessions, disputable and/or questionable compromises on both sides, Russia has finally secured its long-sought admission into the WTO, moving into a future of globalised free trade, albeit with challenges and uncompetitive advantages.
Without any doubts, this feat should be seen as the great achievement that it is really is, the final, or almost the final, act in the 20-year soap opera of integrating Russia into the free market economy and its complementary institutions, notably WTO, the world’s largest trade organization. With the notable exception of the OECD, Russia, just in a span of less than two full decades, has risen from the self-destructive Soviet seclusion into full integration into a free and globalised economy. In other words, Russia is no longer an observer, standing and watching key global economic affairs from the sidelines, but WTO’s 156th member, giving it an access to the member states markets, where there will be no longer any forms of discriminations against its goods and services. So far; so good.
However, a much closer scrutiny will reveal that both the obvious and hidden negative sides, which are in absolute and overwhelming majority, of Russia’s long awaited WTO membership far outweigh the positive ones, which, as several experts have put it, have yet to be seen, at least, the way the Kremlin had sold the idea to the general populace. At least, the elite should know better. Indeed, it seems Russia was too preoccupied with ending the WTO admission negotiations, which had become internationally embarrassing for its record longevity of almost 20 years at all costs, that it paid much less attention to what the membership actually holds for it, what its competitive advantages are, relative to its new WTO partners, and vice-versa.
This is because, competitively, the only industry, where Russia has explicitly clear advantages, is the raw materials sector, notably, oil, gas, coal, metals and other types of natural products, which it has in absolute abundance. But in the sectors of the global economy and international trade, it has absolutely nothing of note to offer, notably, to consumers in the WTO founding nations – UK, US, Germany, France and other traditional global economic powerhouses.
This is because, WTO, as a globalised international trading platform, is hugely beneficial only for countries that massively produce top quality goods and services that enjoy huge international demand. As a result, industrial global leaders such as Germany, US, Japan, etc. need a free, boundary-less, tariffs-free and/or strictly regulated platform to sell their goods and services to international consumers in conditions similar to those on their domestic markets. This is both the practical and economic essence of the WTO.
Therefore, emerging markets, such as Russia, which do not belong to this elitist industrial group, cannot make full use of all the existing benefits of their WTO membership. These benefits will be akin to mirage for them, visible, but never palpable, but the proximity of this visibility always makes a mirage seem real. This is the situation with countries that cannot fully make use of these advantages, not because of discriminations, but simply because they cannot make these goods and services at the required highest quality level and volumes to be fully competitive among the WTO partners on the international arena.
A few examples will serve to further buttress this view. For instance, Russia cannot sell its watches in Switzerland or other WTO market better the Swiss themselves, cars in Germany better Germans, haute couture in Italy better than Italians, perfumes in France or electronic gadgets in Japan, or financial services than Americans or Britons, etc. Again, this is not because there are discriminatory barriers against it, but because the quality of locally produced goods is comparatively much lower. However, all the above-listed countries can now, thanks to Russia’s WTO membership, sell their goods at new better WTO terms in the country than in the pre-WTO era, and this is detrimental to the local producers of similar goods.
The worst aspect is the fact that, whilst these industrially “disadvantaged countries” cannot make full use of the seemingly abundant benefits of the WTO membership, they are, however, obliged to open their national economies and markets to “an almost free-flow” of imports from the more “industrially developed and other more advantageous WTO members.” In other words, the “disadvantaged countries” have voluntarily rescinded their national sovereignties to independently control and regulate their external trade activities.
In the given circumstances, we are sure that both top Russian government officials and the nation’s business elite were, and are still, fully aware of their country’s inadequacies and had tried over the past 20 years to negotiate the best bargain that was practically achievable with the WTO as a global body, and its individual members on bilateral terms.
This is why it is imperative that Russia see the eventual securing of its long-awaited WTO membership as an opportunity to continue to modernize its economy, production facilities, boost their effectiveness and the overall quality of locally made goods and services so as to make them “fully and really competitive on the international markets in dawn” of its WTO aspirations. If this is the end objective of Russia’s WTO membership, then this choice is justified, at least, because it holds the key to brighter future, but if the goal was just to join the organization simply for membership sake, then it will be difficult for it to avoid the ugly and disappointing fates of its post-Soviet state neighbors, who had gone that route before, and have yet to have anything substantial to show for it.
Such route leads only to a dead-end. In this case, Russia was opportune to see the negative repercussions in a practically online regime in the neighbors’ economies. And as the Kremlin had put it, the Russian negotiators did all that was humanly possible to avoid the mishaps of the post-Soviet neighbors during the last rounds of negotiations. In other words, the current agreement with WTO was the best bargain that Russia was able to get in the current reality of its economy policy
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