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Conditions of Introduction of Russia Into WTO Turned to Be Even Worse Than They Were Expecting to Be

Conditions of Introduction of Russia Into WTO Turned to Be Even Worse Than They Were Expecting to Be
Filin Vladimir 21.11.2006

On November, 19th in Hanoi Minister of Economic Development and Trade of the Russian Federation Herman Gref and ales representative of the USA Susan Shvab signed the agreement about conditions on which the American party agrees to the introduction of Russia into the World trading organization.

As Gref declared, in the agreement signed the parties reached the arrangements dealing with 100 sectors of services. As he said, according to these agreements Russia and the USA incurred certain obligations. In particular, Russia should decrease average oversized rates for industrial products on 3%.

Developing the theme of tariffs, Minister of Finance of the Russian Federation Alexey Kudrin told that "even after seven years after introduction of Russia into WTO the degree of protection of the Russian economy remains at 7 %, that is approximately in 2 times higher than the degree of protection of economy of EU and the USA which are at a level of 3-4 %". Now the degree of this protection in Russia makes up 11 %. Kudrin also noted that after the introduction of Russia into WTO all measures of tariff protection and all rules, basically, would remain the same.

Meanwhile, American "Wall Street Journal" specifying Kudrin’s words informs that average duties for industrial goods will be lowered from present 11.1 % to 8.2 %. It will approach them to a level of duties existing in the USA, the European Union and Japan and it will be lower than in such countries as Brazil and India which together with Russia enter group "BRIC".

"We have agreed about essential decrease of duties for medicines, the medical equipment, electronics, computer techniques", - Gref concretizes. Agreements on conditions of gradual liberalization of automobile sector and on gradual decrease of rates of duties for aviation techniques are also have been reached. The rate for cars will be decreased on average from 25 % to 15 %, for the planes - on average from 20 % up to 10 % during seven years. If to translate what is told into the normal language, the agreement signed means that seven years – is a term after which Russia will finally lose such industrial branches as manufacture of medicine, medical equipment, electronics, automobile industry and civil aircraft industry. Agriculture has no better prospects. The government of the USA "has incurred the obligation to guarantee safety of products delivered to Russia, - Gref noted, - the Russian party premises import of agricultural products from the USA and has the right to check the American enterprises on the basis of the procedures coordinated with the USA. Thus, we have reached the agreement which satisfies both parties and guarantees safety of the products which will be delivered to Russia".

Developing Gref's idea "Wall Street Journal" writes that admission by Russia to America fuller access to its markets is "important step forward". Russia will lower duties and will eliminate other barriers on a way of American agricultural products, in particular meat and products of biotechnologies.

It is easy to guess, that Gref's words that the agreement ostensibly "guarantees safety of the products which will be delivered to Russia" cost little. The agreement means full dismantle of system of the veterinary and fytosanitory control existing in the country. In other words, it will be even easier to deliver to Russia any type of rubbish and poison now. Beside, the state loses last mechanism of regulation of volumes remained and the nomenclature of import of agriculture products, first of all poultry meat, pork and beef.

The Hanoi arrangements confirm the discrimination agreement concluded between Russia and the USA in the summer of 2005 about conditions of quotas of import of meat in our country. As it is known, the Russian poultry breeders and cattle breeders as well as the importers of meat categorically objected to its conclusion.

Executive director of Association of operators of fowl Anton Surikov says: "From the moment of introduction under our initiative of a mode of giving quotas on import of the goods of meat group in 2003 we are being insisting on the mechanism of its perfection in interests of domestic manufacturers and consumers. We supported annual reduction of size of import quota in process of growth of the Russian poultry farming. And we have quite sufficient growth of manufacture here - 15-20 % a year within last five years. We also supported abolition of country divisions of quotas which gives unreasonable preferences to the USA and to the European Union at the expense of such countries as Brazil. At last, we were against the conclusion of the Russian-American agreement on meat in 2005 which made practically impossible an exchange of import licenses from one countries to the others following veterinary reasons. Unfortunately, our government has not heard a voice of the Russian participants of the market and, I shall especially emphasize, both manufacturers and participants of foreign economic activity”.

Let's pass to financial sector. "We agreed about conditions of access on the financial markets", - Gref informed. Besides the parties agreed "about liberalization of access on the financial markets".

"And at the same time we have found the consent on sensitive questions, in particular on bank sector", - Gref noted.

Gref’s colleague Kudrin from his part does not see any danger to the Russian financial system within the nearest 7 years in connection with introduction of the country in WTO: "Seven years – is the period during which our financial system will continue to be attractive to the extend that it would turn into the subject of competition and competition of major world banks”.

Kudrin also noted that "world financial establishments will be including into our financial system gradually". In its turn the American business magazine "Business Week" informs that one of the heaviest negotiations were carried out in sphere of financial services.

"Russia for the long time successfully resisted to the requirement of the USA to permit foreign banks to open branches in Russia - once it even became a brake for negotiations". At the same time western "investors say that restriction to open branches has no big practical sense as many foreign banks already effectively operate in Russia through local branches belonging to them".

Russia confirmed that it will allow foreign companies to possess 100 % of the Russian banks and insurance companies not dealing with life insurance. It also promised to lift a ceiling of the cumulative foreign capital in bank sector from 25 up to 50 %. Now the share of the foreign capital makes about 15 % so the designation of this ceiling has no special practical sense but the new rule gives more space for growth of banks belonging to foreigners.

According to the data from "Business Week", "the American investors lobbied hard reception of Russia in WTO and now are going to use the lowered tariffs". As to the Russian companies" for them is much more difficult to find economic gain from introduction into WTO", informs the authoritative business paper of the USA.

"It is more important from symbolical, not from the economic point of view", - Peter Westin, the chief economist of MDM-bank in Moscow says. He marks that unlike China which exports a lot of industrial products Russia exports mainly energy carriers and raw materials which are not regulated by WTO rules.

In its turn, Swiss "Le Temps" approves that "introduction into WTO should allow Russia to export in the best way its incomes from the sale of oil". The newspaper publishes interview with Anton Hmelnitsky operating fund in 44 million francs investing in Russia and the Ukraine. "The introduction into WTO will allow Russia to export the surpluses of capitals received from sale of raw material with greater ease. We will become witnesses of more active introduction of Russia in the European companies, in particular in the service sector”.

In other words, Russia enters WTO so that it would be easier than now to our oligarches to carry away capitals abroad and to put them not in the Russian economy but in the economy of foreign, first of all the western countries.

How will the Russian authorities explain the benefit from the introduction into WTO? May be in the following way - the basic advantages of the introduction of Russia into this organization Alexey Kudrin sees "all the goods made in our country can be freely exported on the world markets. Besides any goods can be imported on the territory of Russia without any restrictions». What goods will be easier for us to export on the world markets? In fact the Russian power resources – is the basic subject of our export – other exchange goods are well-bought from us anyway.

In reality it is a question of export of products of ferrous metallurgy, mineral fertilizers and two-three more branches. Not for nothing metallurgical oligarch Mordashov is considered to be the main lobbyist of the introduction of the country into WTO. Whether only it’s right to endow the main part of domestic manufacturing industry and agriculture to make Mordashov even richer?

Kudrin's "care" about domestic consumer in whose interests ostensibly now "any goods can be imported on territory of Russia without any restrictions" is also hypocritical. That is, the dumping at first subsidized by the western governments will kill the rests of the Russian industrial and agricultural production, will transform into unemployeds new millions people and then we, deprived of own goods and work, will be dictated exclusively high prices on foreign foodstuffs and consumers goods. In the whole, the decision of the Kremlin to enter WTO no matter how many concessions to the Americans should be made more likely to be named as wrecking. More precisely, this is a logic continuation of an economic rate of last 15 years which is associates with such names as Yeltsin, Gaydar, Chubays, Gref, Kudrin, Putin, directed on transformation of Russia in a raw appendage of the Western countries providing existence of the country due to export of oil and gas and import of all the rest.

Having signed the agreement Gref vigorously declared: "Today is twice important date for us: we not only have signed the report with the USA, with our major partner but it’s also the last report finishing bilateral negotiations". It is necessary to hope only that it’s not absolutely so. Such hopes exist owing to, though being paradoxical, Georgia, Moldova, the Ukraine which, obviously, now nevertheless will enter the members of WTO before Russia and the Democratic party of the USA which won on congressional elections on November, 7th.

There is a probability that the CIS countries entering into WTO having got political support from the American democrats, would block attempts of the Kremlin to get into this organization or will delay this process and then Russia will change its mind itself. It became known that in Tbilisi declared that Georgia was not going to support introduction of Russia into WTO. As the assistant of the state minister of Georgia on the question of coordination of reforms Vakhtang Lezhava said on Sunday, "information in Russian mass-media that Georgia, ostensibly, will support Russia in its introduction into WTO is directed on the local consumer”.

"Without the consent of Georgia Russia cannot join WTO and now there is no consent from the Georgian party", - he added. According to Lezhava, Georgia will give the consent only if the concrete condition namely the solving of a question of illegal customs check points in Abkhazia and South Ossetia will be satisfied.

"Georgia puts a question of legalization of customs-check points in Abkhazia and Tshinvalsky region on principle and if this condition will not be satisfied there will be no consent from our party", - he emphasized. Meanwhile Gref expressed hope that Moscow in the near future would find ways of solving the question connected with position of Tbilisi on the problem of introduction of Russia in WTO: "I hope that in connection to Georgia we will find in the near future ways of settlement of this question". Meanwhile western press is not so optimistic. According to it, hopes of Russia on introduction into WTO in reality “can be clouded by the intension of Georgia to revenge to the Russian government for the blockade”.

Thus, German "Sueddeutsche Zeitung" in the article "Georgia Threatens Russia" informs that the speaker of Georgian parliament Nino Burdzhanadze declared that "Russia breaks principles of WTO". On the other hand, Moldova which wine is forbidden for import into our territory also does not wish to give OK to the introduction of Russia into WTO. Thus Georgia is a member of WTO from 2000 and Moldova since 2001. At last, the Ukraine. If it will enter WTO before Russia and there are all preconditions for it, negotiations with it will be very difficult. Especially if Kiev will get political support in the American Congress. However, in my opinion, it hardly happens. The USA and especially American business have already received everything from the Kremlin what they wished.

So in 2007 Russia, most likely, will all the same officially become a member of WTO. To the pleasure of the West and the Kremlin liberals, to the disappointment of our domestic commodity producers and all patriots of Russia.

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