OREANDA-NEWS. October 24, 2012. The Mercury Club has held a meeting with the theme, “Problems of Russian Participation in the WTO”, at the World Trade Center Moscow on Krasnopresnenskaya Embankment. Club Director Valery Kuznetsov opened the meeting and greeted its participants – representatives of ministries, departments, the State Duma and the Federation Council of the Russian Federal Assembly, scholars, businessmen and politicians. He said the Club would have a new form of its activity: there will be the Mercury Club Sitting Room for meetings with celebrities, politicians and public figures. Valery Kuznetsov invited everyone to the Club Sitting Room.

The discussion of the meeting theme started afterwards.

Club President, Academician of the Russian Academy of Sciences Evgeny Primakov made an introductory speech and chaired the meeting.

A number of essential problems will occur with the Russian entry into the WTO, he said.

The first question is if Russia has had a real alternative to the accession to the WTO? Primakov is confident there is no such alternative: the Russian economy has become a part of the global economy; the return to isolationism is impossible; WTO member countries cover approximately 95% of world trade; the WTO dictates world market rules, and Russia could not have stayed aside of these processes.

The second question is if Russia could defer its entry into the WTO? A long way of 18 years has been covered, Evgeny Primakov said, there have been the most difficult bilateral negotiations; if Russia had slowed down the process and deferred the accession, it would have had to start everything anew and the outcome of new negotiations would have been unclear.

The third question is if Russia has achieved much in the 18-year-long negotiations. Primakov compared original and final terms of the negotiations. Russia achieved unique conditions in certain fields. For instance, the Russian negotiators not only withstood the demand of full market openness to bank and insurance services but also attained a quota on foreign capital in the banking and insurance sectors of the country: foreign banks would have the right to open their subsidiaries but not branches in Russia (bearing in mind the financial might of the biggest credit organizations of the world, they could have curbed down our banks due to their lesser power – that had happened in many countries of the world).

The fourth question is if the admission to the WTO may reduce possibilities of Russia’s economic growth and foreign trade. While answering this question, Primakov recalled the example of China, which had been a WTO member for eleven years. Its GDP has grown by more than four times and foreign trade has grown by seven times.

The fifth question is if protectionism is outlawed in the WTO. In the opinion of Evgeny Primakov, it would have been not quite right to formulate the question this way. Protectionism per se is not outlawed, but its methods are restricted and must be adapted to the organization’s rules.

There is no doubt that competition between domestic and foreign business will grow substantially under WTO conditions as time passes, Evgeny Primakov noted. Whole regions may find themselves in a difficult position if enterprises strategic for a town or a region are affected. Hence, businessmen will have to play by the new rules. They will have less possibility to lobby their interests with the authorities, which so far enables business to gain privileges through purely administrative, bureaucratic decisions. It is necessary to increase labor productivity and to reduce costs: these are regular ways of the regular economy.

We cannot do without a well considered state industrial and agricultural policy, Evgeny Primakov noted. It is also necessary to take full advantage of the transitional period to solve emerging problems.

The Mercury Club President is confident that two problems will grow acute under the WTO conditions: whether the immediate coverage of the budget deficit would be a priority and which part of crude profits should be converted into foreign securities (to replenish the Reserve Fund)? A budget surplus is good, but the world practices show that the majority of countries develop successfully in spite of a certain budget deficit, which makes it a normal phenomenon of the economic life, Evgeny Primakov recalled.

Concerning the Reserve Fund, it is certainly necessary just in the case of the second wave of the crisis. But it is planned to add practically two trillion rubles to the Reserve Fund within three years. If a significant cut of these means is invested by the government, the economy could improve a lot and the structural transformations of the Russian economy could accelerate, which is absolutely necessary under the WTO conditions, if Russia wishes to be a highly developed country with the innovative economy.

Chairman of the Economic Policy, Innovative Development and Entrepreneurship Committee of the Russian Federal Assembly State Duma Igor Rudensky, Russian Presidential Advisor, Academician of the Russian Academy of Sciences Sergey Glazyev, Director of the Trade Negotiations Department of the Russian Economic Development Ministry Maxim Medvedkov, JSC World Trade Center Moscow General Director Vladimir Salamatov, Director of the Europe Institute of the Russian Academy of Sciences, Academician Nikolay Shmelyov, Board Member of the Russian Union of Industrialists and Entrepreneurs, Chairman of the Bioenergia Corporation Board of Directors David Yakobashvili, CCI of the Stavropol Territory President, Member of the Financial Market Committee of the Russian Federal Assembly State Duma Andrei Murga, Director of the JSC All-Russia Market Research Institute (VNIKI), Corresponding Member of the Russian Academy of Sciences Andrey Spartak, Chairman of the Russian Oil and Gas Union Council, Chairman of the CCI of Russia Committee on Energy Strategy and Fuel and Energy Sector Development Yury Shafranik took part in the discussion.

They touched upon such questions as measures, which must be taken for using the transitional period in the interests of Russian manufacturers and services, space for maneuver retained within the WTO framework for protecting the domestic market and problem industries of the Russian economy (machine building, metal working, aircraft and car building, light industry and agriculture), training of Russian specialists in regulation of international trade in commodities, services and intellectual property objects by WTO rules, and corrections the normative and legal framework of the Russian economy needs to undergo due to the accession to the WTO.

The speakers expressed diverse opinions, from critical to optimistic, about Russia’s economic development in the WTO environment. The following questions were discussed: whether Russian industries are able to withstand the pressure of rivals as more than a half of enterprises have been halted over the past two decades and machine tools are worn-out and outdated, when it will be possible to analyze the initial results of WTO membership, how and if it is possible to protect domestic manufacturers, whether Russian enterprises can export anything but resources, whether WTO membership automatically increases foreign investments in the Russian economy, how credits can be made more accessible to domestic small and medium business – an area where Western rivals win a clear victory, and so on.

Basically, the participants in the discussion agreed that the WTO had become a reality and domestic business must bear that in mind; WTO membership is both a chance and a risk for Russian entrepreneurs, and, finally, the admission to the WTO is just the beginning of the road, not the end.