Russia poised to enter WTO

[chivo]

As anyone who has read my posts over time knows I'm one of the optimistic people about Russia. I always preface my posts by saying that Russia has problems, big problems. But, I also believe the changes that have been happening in this country over the last 20 years have been astounding and things continue to change, sometimes very quickly.
 
I feel at times that I'm living in the middle of a very historic phase of Russian life. That years down the road people will look back at this time, basiclly from 2000 onward as the beginning (or the end  ) when Russia turned the corner and not only re-established its economy, but reaserted itself as a true major player in the world. A world that will have to depend on each other in order to move forward in a way that benefits all people everywhere.
 
Things take time and entry doesn't mean quick changes here in politics or mentality. It's a start and one that has been a long time coming.
 
 
http://www.themoscowtimes.com/business/article/wto-accession-ready-for-last-step/447551.html

[Gator]

I imagine the US had opposed Russia's entry, and that opposition has been dropped? 
 
Will Russia actually take measures to protect intellectual property, e. g. software?
 
Is entry into the EU possible in a few years, once the EU rights the ship?

[chivo]

I imagine the US had opposed Russia's entry, and that opposition has been dropped?

In the past yes. America has always wanted Russia (and the whole world for that matter) to conform to certain specifics that it deems necessary to do business. IOW do as we say not as we do  .
 
Part of Russia's stance has been to have a bigger role in global decision making and this is something I have always thought America has had a problem with. I understand this mentality to some extent, but I have also thought it to be a tad bit paranoid all things considered.
 
Nowadays I think the USA understands that it's in the world's (and America's of course) best interest to allow Russia membership. As you might have read Georgia was the last major hurdle to overcome and I'm sure Georgia was influenced by the US. 

And repealing the Jackson Vanik Amendment will be a nice follow up of good faith between the US and Russia. 

Will Russia actually take measures to protect intellectual property, e. g. software?

They already have. They have pretty much done away with many of the places that sell and have started to impose heavy fines to anyone involved, but there is only so much anyone can do. The way the internet is now any half-ass IT guy can steal pretty much what he/she wants.
 
If you want a place that really pirates software look no further than China. It's much worse there. Just goes to show you about reputation as I'm sure most here, when they think of pirated software as an example, think Russia not China.

Is entry into the EU possible in a few years, once the EU rights the ship?

Well it's interesting because there's already been talk of really easing visa restrictions between the regions.
 
Personally I don't see entry happening anytime in the near future but anything is possible. There still is a lot of distrust among countries within the EU towards Russia and changing this attitude will not be easy. You do have to start somewhere and entry into the WTO is at least a good start. Well see.

[BillyB]

I imagine the US had opposed Russia's entry, and that opposition has been dropped? 
 
Will Russia actually take measures to protect intellectual property, e. g. software?
 

 
America opposed Russia's entry longer than any other country. Protecting intellectual property is always talked about between Russia and USA with little done. The difference now is we need to have Russia to talk to Iran more than ever. Obama and Medvedev just met yesterday.
 
 
Talking to Iran and North Korea is as usual useless. Russia will get a few perks and entry into the WTO in exchange to talking to Iran. As usual success in talking with Iran will be announced and Iran's nukes will be delayed until they start up again and history repeats. It's a matter of "when", not "if" America or Israel will bomb Iran.

[chivo]

Russia has talked and continues to talk to Iran on behalf of many countries because it does have friendly relations with them. Entry into the WTO is not about negotiating with Iran, it's mostly about trade and breaking down restrictions for trade. It stands to benefit the EU almost instantly, which is a much bigger issue at the moment than Iran.

And Russia will get more than a few perks starting with lower prices for consumer goods which has been a long time coming. You think Russians like paying $100 for Levi's or $33,000 for a base model Toyota Camry that cost $16000 in America?

Iran is a problem, and Russia can help with negotiations, but it is not the main reason for Russia's entry into the WTO. Economics is, period.

[Gator]

Dchivo,
 
I agree that participation in the WTO will be good for Russia.  And it will be good for the world.   
 
I know little aboout the politics behind this decision.   There is nothing to be gained from isolating Russia.

[BillyB]

Iran is a problem, and Russia can help with negotiations, but it is not the main reason for Russia's entry into the WTO. Economics is, period.

 
I agree with you that WTO benefits Russia and Europe but from America's standpoint, it doesn't benefit us nearly as much.
 
 
If an ace is the most powerful card in the deck, then WTO is an ace and Obama played it. Why?
 
 
1) Obama's wants to maintain his voter base and show he's not likely to use military to negotiate with other countries. The bombing of Iran before elections is bad news for Obama even if Israel does it. Israel can't bomb Iran unless we lgive them to fly freely over Iraq. By letting Russia in the WTO, Russia will talk Iran, as they've done before, and this time they can say Russia likes Obama as president...stay quiet for another year and then you can make as much noise as you want to get us another sweet deal.
 
 
2) Obama wants to generate jobs. Russia will probably buy Boeing planes among other things in the near future. I wouldn't be surprised if Aeroflot announces a purchase of Boeing planes. This is a temporary trade off for letting Russia in the WTO. Europe, our competition, will have significant long term economic benefits compared to USA. American products will continue to be pirated. Anybody seriously believe Russia will put huge effort and money into protecting American Intellectual property?
 
 
Obama, representing America, gave up too much for too little. A waste of an Ace.

[OlgaH]

And Russia will get more than a few perks starting with lower prices for consumer goods which has been a long time coming. You think Russians like paying $100 for Levi's or $33,000 for a base model Toyota Camry that cost $16000 in America?

Russian Federation Custom clearance fees more than 50%. So according to the RF Custom calculator for example if you buy a Toyota Camry (less than 3 y. old, 178 hp, 2,5L) for $10K you will pay $7,392.78 for custom clearance  if you are a dealer, if you are a private owner you will pay $8 596.26. Plus add fees for documentation and transportation expenses and so on.

So the Russian government pretty much  screws its own citizens. 

One of the conditions for Russia to enter WTO is to lower Custom clearance fees. More than 30% of the RF budget depends on the custom fees.

[CanadaMan]

Russian Federation Custom clearance fees more than 50%....
One of the conditions for Russia to enter WTO is to lower Custom clearance fees. More than 30% of the RF budget depends on the custom fees.

Well clearly a decision has to be made by all parties involved.
Is entry into the WTO to benefit the Russian government or its citizens?
If it is to benefit its citizens, then the WTO needs to set up a mechanism to ensure this will be the case.
A mechanism that will ensure the government does not raise a set clearance fee, etc.

[OlgaH]

Well clearly a decision has to be made by all parties involved.
Is entry into the WTO to benefit the Russian government or its citizens?
If it is to benefit its citizens, then the WTO needs to set up a mechanism to ensure this will be the case.
A mechanism that will ensure the government does not raise a set clearance fee, etc.

Question about Russia entering WTO is also a question about timing. Is it a right time for Russia or not? According to the economists Russia has only 7% of competitive production. Russian light and manufacturing industry along with Russian agriculture and farming is not competitive at all. So... Russian market will be full of cheap import, poor Russian industry will have to reduce its production that also means jobs... For example nowadays there is only 20% of Russian footwear on the Russian market...

Russia needs first of all an absolute and total modernization of technologies, Russia needs to develop its industries in all spheres, needs the  professional specialists. It will take about 10 years and tens of billions of dollars and the most important to implement all the modernizations there should be a favorable investment climate. Russia today is simply not ready for WTO standards.

[mendeleyev]

To add to the discussion, from the Mendeleyev Journal:




It was a gutsy move when Russian President Dmitry Medvedev invited the APEC CEO Summit participations to Vladivostok for the September 2012 meeting of the Asia-Pacific Economic Cooperation forum. Don't get us wrong as we like Vladivostok, but frankly, other than water and mountains, when compared side by side with Honolulu the two places might as well be on different planets.

Vladivostok could use the exposure, along with a healthy infusion of infrastructure improvements. The city and region could really become a great tourism opportunity for Russia's Far East, but everything from roads to hotels and sightseeing amenities would need to be brought up to at least European standards, and hopefully someday Western standards, for that kind of tourist opportunities to be realized.

Until September 2012 however, the focus this week was on  Russia's accession to the WTO, the prospects for economic cooperation with Japan, increasing deliveries of Russian gas to China, and measures to stabilize the situation in the Eurozone.

During the summit President Medvedev was asked what the WTO would mean for Russia and if he expected the same rapid growth for this country as was the  case when China joined the WTO? Mr. Medvedev replied, "I also hope that this step will represent a very beneficial change for Russia's economy, despite the fact that we have been preparing for it for quite a long time, and that a number of Russian companies have certain difficulties and concerns. However, our policy has remained unchanged. We believe that Russia's accession to the WTO is long overdue. We are ready for it and pleased that, following joint efforts, we will hopefully be able to complete this process in the very near future."



When asked about Russia's economic focus on natural resources at the expense of developing other opportunities for growth, the President answered by stating, "Russia cannot be a country where only one part of the economy functions and naturally the WTO will promote the development of our economy and diversification of our companies. But of course here we must focus and rely on ourselves in the first place, not on membership in international organizations."

Reporters asked if WTO membership would force Russia to create a favourable investment climate and adhere to the rule of law especially in the areas of protectionism and bending the rules in making it hard for non-Russian companies to compete in Russia. Mr. Medvedev admitted the validity of such criticisms, saying "This is accurate criticism. I would even add: other countries do not always comply with the rules either. And in cases where they are not observed, it is usually incumbent on the courts to deal with this. And this is perhaps the most important field where we need to devote our attention."

President Medvedev added that the WTO will help improve the competitiveness of Russian companies and he expects formal membership to take place soon. He also spoke of creating a climate that is more open to outside investment.

[mendeleyev]

Comments:

- Russia has done a lot to improve over the years and one must give Russia her due for having the foresight to bank a significant amount of cash before the crisis began. The country has fared better than others during the downturn because of that planning.

- On the other hand, when it comes to talk about issues about the rule of law, of expanding the economy outside the comfort zone of natural resources, and of allowing small businesses to start and then thrive without the burden of the government as mafia overlord when it comes to big Kremlin-connected businesses "threatened" by competition from new start-ups, talk is cheap but action speaks.

- WTO membership won't mean as much to Russia as it did to boost China's economy. The conditions are so much different today, however it will offer credibility if Russia can think past the Oligarchs and open the businesses climate for Russian startups and competition.

- Frankly, I'm not as worried about allowing other large corporations to come into Russia as that is not always in Russia's best interest--something Medvedev and Putin both recognize. I am hopeful that Russian businesses from new to small and mid-size, those independent of the close knit power structure, will be allowed to play on a level playing field and build a solid middle class for Russia.

[mendeleyev]

More on Russia and the WTO from the Mendeleyev Journal:




Two "lame duck" presidents met at the APEC meetings in Honolulu earlier this week, one having announced that he will not run for reelection and the other just blind to the obvious. No matter how one feels about the former junior Senator from Illinois, at least he brought a chuckle to everyone in attendance by welcoming Russian President Dmitry Medvedev "to my birthplace, Honolulu, Hawaii." Even Medvedev (who understands English) laughed.

When the former junior Senator continued by joking that, "My understanding is that he’s (Medvedev) been spotted in a Hawaiian shirt walking and enjoying the good weather" it got a few smiles but not the same laughter as the birthplace comment. Mr. Medvedev was careful in further references to Hawaii, calling it Mr. Obama's "home state" but he stopped short of addressing Hawaii as the birthplace of his counterpart.



Giving credit where credit is due, at least USA President Obama can pronounce Mr. Medvedev's name correctly. That puts Obama in a league above the likes of Larry King and a host of other CNN and MSNBC reporters who haven't yet managed to master the name. In fact, it sometimes remains a challenge for Secretary of State Hillary Clinton.

In making the announcement regarding the long anticipated WTO membership for Russia, Mr. Obama indicated that "the invitation has been extended to Russia to join the WTO, as a testament to the hard work of President Medvedev and his team. We believe this is going to be good for the United States, for the world, as well as for Russia, because it will provide increased opportunities for markets in which we can sell goods and products and services, as well as purchase good, products and services without some of the traditional barriers." President Obama promised to work closely with Congress to bring to and end the Jackson-Vanik legislation which restricts USA trade with Russia.

Thanking his American counterpart, Mr. Medvedev expressed that "first and foremost, I would like to thank President Obama and his team for their active and interested support of the Russian Federation’s efforts to become a WTO member."
 
The two men also discussed a range of other issues, including European missile defense and Iran's nuclear programme.

[OlgaH]

I am hopeful that Russian businesses from new to small and mid-size, those independent of the close knit power structure, will be allowed to play on a level playing field and build a solid middle class for Russia.

God help! Amen!

[chivo]

Russian Federation Custom clearance fees more than 50%. So according to the RF Custom calculator for example if you buy a Toyota Camry (less than 3 y. old, 178 hp, 2,5L) for $10K you will pay $7,392.78 for custom clearance  if you are a dealer, if you are a private owner you will pay $8 596.26. Plus add fees for documentation and transportation expenses and so on.

So the Russian government pretty much  screws its own citizens. 

One of the conditions for Russia to enter WTO is to lower Custom clearance fees. More than 30% of the RF budget depends on the custom fees.

True Olga. They even doubled the duties on foreign used cars imported in country back in 2007
(3yrs or older, under 2.5L). They wanted to spur the dometic market or so it was said  . 
 
 

2) Obama wants to generate jobs. Russia will probably buy Boeing planes among other things in the near future. I wouldn't be surprised if Aeroflot announces a purchase of Boeing planes. This is a temporary trade off for letting Russia in the WTO. Europe, our competition, will have significant long term economic benefits compared to USA. American products will continue to be pirated. Anybody seriously believe Russia will put huge effort and money into protecting American Intellectual property?
 
 
Obama, representing America, gave up too much for too little. A waste of an Ace.

The near future was last March.
http://www.reuters.com/article/2011/03/09/us-aeroflot-boeing-idUSTRE7283GP20110309
 
It might surprise you to know that Boeing has been in Russia for years.
 
Another note on Russia's relationship with Iran. America has been worried for years about Iran purchasing weapons from other countries, most notably Russia. Nuclear related weapons. I suspect this is also one of the main reasons to cooperate with Russia. Keep your friends close, but keep your enemies closer.
 

[chivo]

Comments:

- Russia has done a lot to improve over the years and one must give Russia her due for having the foresight to bank a significant amount of cash before the crisis began. The country has fared better than others during the downturn because of that planning.

Low domestic credit debt was another important factor.

- On the other hand, when it comes to talk about issues about the rule of law, of expanding the economy outside the comfort zone of natural resources, and of allowing small businesses to start and then thrive without the burden of the government as mafia overlord when it comes to big Kremlin-connected businesses "threatened" by competition from new start-ups, talk is cheap but action speaks.

As I mentioned in another thread it has already begun to happen. Believe it or not Putin has tried to control where he spends his budget. Thing is, even if he's on the up and up with his investments back into the country he can't be everywhere and the system of corruption here is too entrenched at this moment. Russia/Russians is/are lucky to see 10% of the money allocated to growth and investment actually reach its intended target.
 
It has started to change but will take years to change until "old school" Soviets start to die off and leave the system. New generations think differently and eventually they will start to take control. It might take another generation or two for everyone to really feel the change.

- WTO membership won't mean as much to Russia as it did to boost China's economy. The conditions are so much different today, however it will offer credibility if Russia can think past the Oligarchs and open the businesses climate for Russian startups and competition.

China despite all its economic glory the past decade is still poor as hell. While they've been able to lift 300 million people out of deep poverty, they still have 700 million to go  . But, yes it won't be the same, why should it be? Different country. It will still have overall positive affects nevertheless.
 
And if anyone thinks Russia is corrupt, it has nothing on China or India for that matter.
 
 

- Frankly, I'm not as worried about allowing other large corporations to come into Russia as that is not always in Russia's best interest--something Medvedev and Putin both recognize. I am hopeful that Russian businesses from new to small and mid-size, those independent of the close knit power structure, will be allowed to play on a level playing field and build a solid middle class for Russia.

Again already happening.
 
Many foreign companies are now able to operate under their own terms. No "roof" unless they so choose. As it stands now it's not always in the company's best interest "NOT" to have a Russia pulling strings for a price. More companies than even are operating without a "roof" and I suspect more will in the future as more enter and competition increases.
 
And I could also say the same about the close knit power structure of the American Corporations and the dying middle class there if we're talking about playing on a level playing field  .