Targeted improvements of Russia’s legislation that are linked not only to its WTO entry but also to its potential accession to the Organization for Economic Co-operation and Development (OECD) are essential and will be made.
On July 10, the State Duma ratified the treaty on Russia’s accession to the WTO. Valdaiclub.com interview with Igor Yurgens, Chairman of the Management Board of the Institute for Contemporary Development (ICD)
In the last twenty years Russia’s domestic market has become much more open. Is it fair to say that the Russia that originally applied for WTO entry and the Russia that is about to join the global trade club are two different countries with two different economies?
Indeed, these are two absolutely different countries with different economies. The level of Russia’s integration into the global economy has made its WTO entry a necessary and natural step, which is primarily in the interests of the domestic economy. During the 18 years of negotiations Russia has done much to tailor its legislation to meet WTO standards. Now Russian leaders say that Russia is not going to undertake any new commitments related to its accession to the WTO. Why is this issue being raised? Can Russia’s commitments become insufficient?
I think this is more of an emotional response to the increasingly complicated requirements made on Russia’s WTO entry over a long period of time. Targeted improvements of Russia’s legislation that are linked not only to its WTO entry but also to its potential accession to the Organization for Economic Co-operation and Development (OECD) are essential and will be made. In fact, Russia needs to make these changes not to tailor itself to the WTO but for its own economy – for the sake of improved standards and regulation and to make things better for its producers.
What impact could Russia’s WTO entry have on its economy in the event of another round of the crisis?
These events have nothing to do with each other. Russia’s WTO entry will have an influence on its economy – both on different industries and regions. However, the pluses will prevail over minuses.
Before the vote to ratify Russia’s accession to the WTO, A Just Russia, the Communist Party, and the Liberal-Democratic Party announced their intention to vote no. What do you think are the reasons for these political obstacles?
They are playing on the political feelings of producers in potentially uncompetitive industries that will sustain relative losses from joining the WTO. This is social demagoguery based on the belief that these producers can be persuaded to vote for them and join their parties. This train of thought seems logical because uncompetitive industries usually pay small salaries and form the potential support base of the left-wing parties. But this logic is wrong because our country, its consumers and people as a whole should not and will not be forced to tolerate lack of competition, soaring prices and poor quality.
Deputies demanded that the annual federal support for agriculture should be brought to nine billion dollars – allowed for the transitional period – as soon as this year. This is almost 50% more than planned ($5.6 billion). Do you think industry representatives and deputies will squeeze out of the government all possible measures of support and subsidies?
I think the agricultural lobby in Russia is strong enough. This makes sense, as agriculture employs many people and has great potential, though it still requires reforms. This is why investment and competition risks in the Western and Eastern markets will create a dual incentive for Russia. I believe we should make the most of all subsidies and guarantees and help our agricultural enterprises to refinance debts and consolidate their positions. In this way Russian agriculture will benefit substantially without violating WTO entry rules. This is a very positive and beneficial process.