This a widely spread illusion. In fact, the accession of Russia to the WTO will not be followed by any noticeable, let alone dramatic, customs duties on imports. There have been several reductions on customs duties over the last several years though without any detrimental impact on the Russian economy. The tariff proposal forwarded by Russia to the WTO, envisages higher rates of customs duties on actually all categories of imports than currently used.

German Gref, head of the MEDT, commented the situation as follows: “The accession to the WTO is believed to destroy, for example, the domestic automotive industry. This is one of the most frequently presented arguments. Today, the customs duties on imported cars are at a rate of 20-25%. In the proposal we sent to the WTO this tariff rate is 30-35%. So the question is whether this rate of 30% will be acceptable or will have to be reduced for us to access the WTO. And this question is a question of interests in the relevant industry.” A gradual reduction of import tariffs on certain positions till they reach agreed upon values will presumably be effected over a lengthy period of time (5-8 years).

An open market will bring benefits to a wide circle of consumers, i.e. the general population. People will be able to buy more quality products cheaper as a result of competition.

We should not be afraid that all our domestic producers will go bankrupt overnight. Just one very simple example: the quality and range of domestic meat and dairy products have much improved over the last years and it is to them that the majority of Russian families give their preference. Would this improvement be possible without competition with similar foreign or jointly produced goods that have invaded the domestic market? The answer is obviously “no”.

The same is true of the services market, for example, banking services provided to the general population. Their range and quality will also improve after Russia’s accession to the WTO.

Benefits ensuing from the WTO membership can be spelled as follows:

Better than currently and non-discriminatory terms for Russian goods to enter foreign markets;

Access to the international instruments of trade conflict resolution;

More favorable climate for foreign investments as a result of harmonization of the national legislation with the WTO standards;

More possibilities for Russian investors in the WTO member-countries, in the banking sector in particular;

Creation of conditions for improving the quality and competitiveness of domestic products as a result of a growing inflow of foreign goods, services and investments to the Russian market;

Participation in the development of world trade rules with due regard to the national interests;

A better image of Russia in the global arena as a full-fledged world trade stakeholder.

It should also be noted that in the course of negotiations every candidate country works hard to get better terms of accession to the WTO, i.e. to have the most advantageous balance between the WTO membership benefits and concessions such as tariff reductions and opening of domestic markets. This is the objective of the Russian delegation at the negotiations. The degree the domestic markets will be opened can be regarded as a “WTO accession price”.

The WTO does not tell the governments what their trade policy should be since this organization is governed by its members. Agreements at the WTO are reached as a result of negotiations between the governments of the member-countries on the basis of consensus and should be ratified by parliaments.

The enforcement mechanism can be used only when a country fails to honor its commitments or there is a trade conflict that is to be resolved through the WTO mechanism. If this is the case, the Dispute Settlement Body consisting of member-countries, makes its judgement after having examined conclusions drawn by the conflict resolution expert group or the appeal filed.

If a WTO member fails to honor its commitments and is reluctant to do so, certain response actions sanctioned by the WTO can follow.

The WTO, therefore, does not dictate the policy to its members; rather its members shape the policy of the whole organization.

The WTO is among those international organizations that do not necessitate the delegation of a part of the national sovereignty to some supranational international bodies. This is its principal feature that distinguishes it from integration-type organizations such as the European Union.

The WTO does not regulate property relations, macroeconomic, structural and antimonopoly policies, the policy of currency exchange rates, budgetary relations, investment regimen (except investments into the services sector as well as trade measures associated with investments); it does not interfere into defense and security issues.

At the same time, the member-countries assume upon themselves certain commitments under other international economic agreements the majority of which contain certain limiting terms for their signatories.

The World Trade Organization doesn’t order its members how to pursue their trade policy. On the contrary, the WTO is run by the member-countries. All WTO decisions are negotiated by the governments of the member states and are passed by consensus or ratified by the national parliaments.

The mechanism of compulsion is applied only if a member country diverges from its commitments or in case of a trade dispute that is taken to the WTO dispute settlement body known as the Dispute Settlement Understanding (DSU). The DSU which has the entire WTO membership passes a decision on the basis of the conclusions made by a group of experts who settle disputes or consider the appeals. If a member that has violated the WTO rules doesn’t intend to correct the situation, it may face the WTO-authorized retaliatory measures. As you see, the WTO doesn’t dictate policy to its members; on the contrary, the organization’s policy is formed by its member countries.

The WTO is an organization whose membership doesn’t imply delegating part of the national sovereignty to international bodies. This makes it radically different from integration organizations, such as the European Union, for example. The WTO doesn’t regulate property relations, the macroeconomic, structural or anti-trust policy, a foreign exchange rate policy, budget relations or the investment regime (except for investments in the service sector as well as trade measures linked to investments); it doesn’t interfere in defense or security matters. At the same time, the WTO member countries undertake commitments under other international economic agreements, most of which impose certain limitations on their signatories.

The problem about the harmonization issue it that domestic energy prices in Russia are lower than the export prices for two reasons. Russia is rich in easily accessible energy resources, on the one hand. On the other hand, low domestic prices are also the result of the internal state economic policy.

A requirement to raise internal energy prices to world levels is totally unacceptable for us. The thing is that the WTO doesn’t have convincing grounds for putting up such conditions. Firstly, no one has succeeded in showing us that our system of regulation of energy tariffs doesn’t comply with the WTO norms; secondly, no one has proven that this system is seriously different from the methods that are applied by other WTO members. In this connection, we have a question why Russia should undertake commitments, which other countries have never taken before (the so-called “WTO+” commitments? From the very beginning, Russia’s negotiation stance has been based on an opinion that accession to the WTO should take place according to standard conditions rather than on the “WTO+” requirements.

Domestic energy prices are likely to change as Russia goes ahead with energy reforms. But this process will certainly last longer than one year.

This statement is wrong. The WTO trading system has equal rules for all members. This, in fact, broadens the negotiating abilities of small countries. The developing countries have succeeded in challenging the actions of industrially developed countries within the framework of the WTO Dispute Settlement Understanding (DSU) procedure, without which they would have been absolutely powerless in defending their interests in a dispute with more influential trading partners.

It’s a voluntary choice of any country to join or to stay away from the WTO. Therefore, all countries, small and large, are engaged in negotiations. Even a small country will automatically have the right to enjoy all the guaranteed privileges of a WTO member, if it joins the World Trade Organization.

However, accession to the WTO means that a country should be ready to undertake commitments to reduce tariffs without reciprocity so as to make its contribution to trade liberalization. This requirement is single and compulsory for all new members, and the candidate states are supposed to voluntarily accept it when they join the WTO.

Unlike the European Union, the WTO doesn’t have any strictly written criteria for membership. Each country conducts the WTO accession talks proceeding from its interests and priorities of its national economy. The economies of Russia and Ukraine are larger in size and have a much more complicated structure that the economies of Georgia or Moldova. Consequently, working out conditions of access to the Russian markets of goods and services calls for a harder negotiation effort than in the cases of Georgia or Moldova. The problem can be solved rather quickly if its political aspect – to join the WTO at any cost- is put at the top of the angle. The Russian side has set the task of seeking such accession conditions from its WTO negotiating partners that would contribute to developing business in Russia rather than throw some of its enterprises or entire branches into decay because of tough competition.

It's true that some prominent international officials kept saying in 2002 that Russia's accession to the WTO in 2003 was highly desirable. The Russian side has never made the accession deadline its goal. What we've been talking about is how to do it by certain time. The most important thing for us is the quality of the accession, i.e the conditions of the WTO membership, which is the subject of the ongoing talks. At the same time, Russia doesn't intend to intentionally protract this process because it is not in its interests. At present, the situation at the talks is such that we may hope for finishing the negotiations by late 2004. The date's shift in both directions is possible.