Last week, during the Asia Pacific Economic Cooperation (APEC) meeting in
Of course, WTO membership is not yet guaranteed –
The most important step in the WTO accession process, however, took place months before, when
Few will argue with the fact that the government has extended its reach into the economy. And, if current trends continue, it would be reasonable to ask: Will we see multinational companies which are simply arm of the government participating in the global economy? Will there be any space for small business to compete?
In discussions on the implications and impact of WTO membership on
The auto industry is a prime example of the benefits and challenges WTO membership brings. The country’s auto market is booming, yet, at the same time, the market share of Russian automakers continues to decline. According to a recent report by Ernst & Young, the share of Russian producers has dropped from nearly 60% to 49.6% over the past few years, and the trend is expected to continue.
So, while WTO membership will mean greater selection and lower car prices for Russian consumers, it also makes doing business more difficult for domestic producers that have been sheltered from real competition for years.
Overall, just like in the auto industry, Russians are concerned with two things – getting imports at lower prices and ensuring the survival of companies in the increasingly competitive global economy.
WTO membership helps to achieve the former, yet, at the same time, it also makes it impossible to guarantee the latter the way it has been done for years – through protectionism.
This means that reformers will have to go much further than signing WTO agreement and reducing tariffs – they will have to restructure the domestic economy, build up the financial sector, reduce dependency on natural resources, combat corruption, improve the investment climate, and repeal government’s encroachment into the business of doing business.
WTO accession is not a panacea for development. However, Russian membership in the organization will certainly bring to the forefront issues of competitiveness and local market development that have been brushed aside in recent years.
If the Russian government is able to address those fundamental economic issues, reverse the process of state capitalism, and help Russian companies remain economically efficient and competitive on the global scale, it will be able to ensure that free trade is a win-win situation for all – consumers and producers, employers and employees, and government and society.