Russian Parliament Approves Joining WTO
After an 18-year effort, the Russian Parliament has finally approved the country's entry into the World Trade Organization. While the other nations of the W.T.O. had agreed to Russia's entry in December, the acceptance still required a majority vote in Russia's lower house of Parliament, known as the Duma. What could have been a routine acceptance, since President Vladimir Putin's United Russia party controls the Duma, was interrupted by strong opposition by the unusually vocal Communist Party. As the ratification dragged on, Russia's economic minister Andrei Belousov warned lawmakers that the agreement reached towards the end of 2011 would expire if not ratified by the mid-July deadline. This sparked a vote by the Duma, which voted 238 to 208 in favor of joining, with one abstention.
Russia negotiated longer than any other large country to join the W.T.O., seeing as their journey to ratification began shortly following the fall of communism. For almost two decades, the opposing parties of membership stated that Russia, unlike their Chinese neighbors who joined ten years ago, had little to gain from the international trade group. Their arguments included that membership would require Russia to lower customs duties on imported manufactured goods, such as clothes and consumer electronics, while offering nothing in return.
The World Bank, however, has estimated that the increased exposure to competition for Russian businesses will improve their effectiveness, therefore benefiting the overall Russian economy in as much as an 11 percent raise in gross domestic product. As in other developing markets, agriculture is expected to suffer, but Elena V. Sakhnova, a senior analyst at VTB Capital bank in Moscow, stated that importers and consumers will reap great benefits from the move. Regarding Russian consumers, Sakhnova said that after being deprived of the simplest and nutritious consumer goods during the Soviet period, consumers are now on the cusp of a new era of inexpensive imported products. Joining the W.T.O. will also drag down the prices of consumer goods that have been notoriously high in Russia because of the country's high customs duties.
Investors could also benefit from buying shares in foreign companies that are active in Russians markets, stated Kingsmill Bond, the chief strategist at Citigroup for the Russian Market. These companies include companies like Danone, a French dairy corporation, and Carlsberg, the Danish brewing company. For Americans, however, the Jackson-Vanik amendment allows the Russian government to prohibit American investors from having the same benefits of their foreign investors, and will continue to do so until it is repealed.