Opening of the Russian market after joining the World Trade Organization WTO will be gradual, as experience based on China’s entry show.

With the entry of Russia into the World Trade Organisation (WTO), the Slovenian companies on Russian  market expect a gradual transition to a more global business standards and elimination of customs and other barriers. But Russia is opening for all other WTO members, so the competition in this market will be even fiercer.

After eighteen years of negotiations, Russia will be the last of big economies entering the World Trade Organisation (WTO). China has done so since 2001. Protocol on Russia’s WTO membership was ratified by the Russian parliament, on Saturday signed by President Vladimir Putin in what was the last step on the way to Russia to become the 156th WTO member. And opportunities can Slovenian companies expect?

Decline of risks for doing buisness will further increase the interest of foreign companies

Russian market will be, by joining the World Trade Organisation (WTO), more open, which brings with it a more global standards of business in foreign trade, even in the enforcement of contracts, and this is certainly positive for Slovenian companies, says Milan Jurše, Associate Professor of International Economics at the Maribor Faculty of Economics and Business. Of course, this will also mean more international competition, as with the opening of the market and decline of risks, will result in increased interest of foreign companies for operations in Russia.

The decisive factor will be the elimination of barriers for business…

Russia by joining the WTO commited to eliminate more trade barriers. In addition to the elimination of quantitative restrictions on imports, Russia will reduce tariffs on medicines, cosmetics, chemical and various other products. The highest customs duty tariffs for products containing penicillin, which are now at 15% will decrease as far as only 3%. For non-prescription medicines which are now subject to 10 % customs duty tariffs will also decrease to only 3% according to the Slovenian Ministry of Economy. Russia has even committed not to to protect domestic industry through price controls or with different technical regulations, standards or conformity assessment procedures.

But changes can not be expected overnight, since Russia has negotiated transition periods for some customs duty tariffs up until 2016

 Beneficial effects on the Russian GDP

The Russian market is otherwise specific in that it has a relatively large proportion of weakly-developed industries, as the Russian export is mainly based on natural resources. “We can expect from Russia that it will promote their own economic development, while taking advantage of foreign companies bringing new know-how and technology, which means that it will also gradually began to strengthen its competitiveness. But this will be a long process”says Jurše. But we can expect that will also encourage Russian economic growth, as increased market openness brings greater dynamism of economic activity, and this is reflected also in GDP.

What Russia committed to after joining the WTO

Import to Russia

• Reduction in tariff rates for different products such as medicines, cosmetics and chemical products, electrical machinery, automobiles, wood and paper (maximum transitional period ending in 2016)

• Abolition of quantitative restrictions on imports (quotas, import licenses)

Export from Russia

• Reduction or elimination of export duties, particularly for raw materials

Pricing policy

• State control of prices will not be used to protect domestic production

• Manufacturers and distributors of natural gas will be operated in accordance with normal commercial considerations

Customs Procedures

• State will conduct customs procedures in compliance with WTO rules

• Transit procedures will be conducted in compliance with WTO rules

Technical Barriers to Trade

• all technical regulations, standards and conformity assessment procedures will be consistent with WTO rules, particularly the principle of transparency, non-discrimination and national treatment

Intellectual property rights

• State will protect those rights, including the fight against websites that promote illegal distribution of content protected by copyright or related rights