Russia’s accession to the WTO cleared a major hurdle when the WTO Working Party on its accession approved, ad referendum on 10 November 2011, the package spelling out Russia’s terms of entry to the organization. The Working Party will now send its accession recommendation to the 15 —17 December Ministerial Conference, where Ministers are expected to approve the documents and accept Russia as a WTO Member.
On 10 November 2011, the Working Party on Russia’s accession, chaired by Ambassador Stefán Jóhannesson (Iceland), agreed, ad referendum, on the terms of the country’s membership to the WTO by adopting the package containing reforms to Russia’s trade regime, and the commitments that Russia undertook to implement as part of its WTO accession.
“It has been a long journey, but today Russia has taken a big step towards its destination of membership in the WTO. In acceding to the WTO, Russia embraces a series of rules and commitments that are the foundation of an open, transparent and non-discriminatory global trading system. This system provides important guarantees for Russia and for the 153 other Members of our organization. This win-win result will bring Russia more firmly into the global economy and make it a more attractive place to do business. For the WTO, it comes as a most welcome deliverable for the upcoming WTO Ministerial Conference and signals anew the relevance and vibrancy of the WTO as an instrument for international co-operation,” said Director-General Pascal Lamy.
“It is gratifying to see that after 18 years of sometimes uneasy negotiations the process of WTO accession is completed today. The agreement as negotiated brings us into the system of multilateral trading rules, creating new opportunities for our traders and investors and enabling us to protect their commercial interests even more effectively than before,” said Maxim Medvedkov, chief negotiator for the Russian Federation.
“The completion of this Working Party’s activity represents an historic achievement for the WTO. I am convinced that Russia’s accession to the WTO will bring substantial benefits both to Russia and to the Members of this organization. In these difficult economic times, this represents good news and I have no doubt that Russia joining our WTO family will strengthen the multilateral trading system and enhance global economic cooperation,” said Working Party Chairman Ambassador Jóhannesson.
Information about the
Russian Federation’s WTO commitments
As part of the accession accord, Russia has agreed to undertake a series of important commitments to further open its trade regime and accelerate its integration in the world economy. The deal offers a transparent and predictable environment for trade and foreign investment.
From the date of accession, the Russian Federation has committed to fully apply all WTO provisions, with recourse to very few transitional periods (see details below). The Russian Federation’s commitments will include the following:
Market access for goods and services
As part of the accession, Russia concluded 30 bilateral agreements on market access for services and 57 on market access for goods.
Market access for goods — tariff and quota commitments
On average, the final legally binding tariff ceiling for the Russian Federation will be 7.8% compared with a 20111 average of 10% for all products:
- The average tariff ceiling for agriculture products will be 10.8%, lower than the current average of 13.2%
- The ceiling average for manufactured goods will be 7.3% vs. the 9.5% average today on manufactured imports.
Russia has agreed to lower its tariffs on a wide range of products. Average duties after full implementation of tariff reductions will be:
- 14.9% for dairy products (current applied tariff 19.8%)
- 10.0% for cereals (current applied tariff 15.1%)
- 7.1% for oilseeds, fats and oils (current applied tariff 9.0%)
- 5.2% for chemicals (current applied tariff 6.5%)
- 12.0% for automobiles (current applied tariff 15.5%)
- 6.2% for electrical machinery (current applied tariff 8.4%)
- 8.0% for wood and paper (current applied tariff 13.4%)
- US$ 223 per ton for sugar (current applied tariff US$ 243 per ton)
Tariffs will be bound at zero for cotton and information technology (ITA) products (current applied tariff on ITA products is 5.4%).
The final bound rate will be implemented on the date of accession for more than one third of national tariff lines with another quarter of the tariff cuts to be put in place three years later. The longest implementation period is 8 years for poultry, followed by 7 years for motor cars, helicopters and civil aircraft.
Tariff rate quotas (TRQs) would be applied to beef, pork, poultry and some whey products. Imports entering the market within the quota will face lower tariffs while higher duties will be applied to products imported outside the quota.
The in-quota and out of quota rates are listed below with the out of quota rates in parentheses:
- For beef 15% (and 55%)
- For pork zero (and 65%). The TRQ for pork will be replaced by a flat top rate of 25% as of January 2020.
- 25% (and 80%) for some selected poultry products
- 10% (and 15%) for some whey products
- Some of these quotas are also subject to member-specific allocations
Market access for services
The Russian Federation has made specific commitments on 11 services sectors and on 116 sub-sectors.
On telecommunications, the foreign equity limitation (49%) would be eliminated four years after accession. The Russian Federation also agreed to apply the terms of the WTO’s Basic Telecommunications Agreement.
Foreign insurance companies would be allowed to establish branches nine years after Russia accedes.
Foreign banks would be allowed to establish subsidiaries. There would be no cap on foreign equity in individual banking institutions, but the overall foreign capital participation in the banking system of the Russian Federation would be limited to 50% (not including foreign capital invested in potentially privatized banks).
On transport services, the Russian Federation made commitments in maritime and road transport services, including the actual transportation of freight and passengers.
On distribution services, Russia would allow 100% foreign-owned companies to engage in wholesale, retail and franchise sectors upon accession to the WTO.
Export duties would be bound for over 700 tariff lines, including certain products in the sectors of fish and crustaceans, mineral fuels and oils, raw hides and skins, wood, pulp and paper and base metals.
General commitments on market access
Quantitative restrictions on imports, such as quotas, bans, permits, prior authorization requirements, licensing requirements or other requirements or restrictions that could not be justified under the WTO provisions would be eliminated and not (re) introduced.
Railway transportation charges on goods in transit would, by 1 July 2013, be applied in a manner which conforms with the WTO provisions. The Russian Federation would apply the same rail transportation charges to imported products as they do to similar products moving between domestic locations. Regulated railway tariffs for transit of goods would be published before their entry into force.
From the date of accession, importers of alcohol, pharmaceuticals and products with encryption technology would not need import licences.
Upon accession, the Russian Federation would apply the Custom Union Generalised System of Preferences scheme (CU GSP) for developing and least-developed countries. 152 developing countries and least-developed countries benefit from the CU GSP.
Under this scheme, the import duties applicable to products eligible for tariff preferences and originating from developing countries were at the level of 75% of the MFN duty rates and from least-developed countries at the level of 0%.
The Russian Federation would reform its tariff regime for sugar in 2012, with a view to further liberalisation.
By the date of accession, any tariff exemption for space equipment would be provided on a Most Favoured Nation basis.
No licences would be required for imports of more than a dozen encryption technology products (the list includes electronic digital signature devices, personal smart-cards or wireless radio equipment). For those products, any existing import restrictions would be eliminated. No new restrictions, including experts’ evaluations, approvals, and licences, would be adopted or applied. For those encryption technology related products needing an import licence, expert evaluation and approval would only be needed once.
Products including alcohol, wood and meat would be subject to measures requiring their declaration and/or entry at designated customs checkpoints. Any measures contrary to the WTO Agreement would be eliminated as of the date of accession. The Russian Federation would not apply country-specific customs procedures.
The Russian Federation would apply all its laws, regulations and other measures governing transit of goods (including energy) in conformity with GATT and WTO provisions. From accession, all laws and regulations regarding the application and the level of charges and customs fees imposed in connection with transit would be published.
The Russian Federation would review market access requirements for the establishment of direct branches of foreign banks and securities firms in the context of future negotiations on the accession of the Russian Federation to the OECD or within the framework of the next round of WTO multilateral trade negotiations.
In its participation in preferential trade agreements, Russia would observe the provisions of the WTO Agreement without any differentiating between those agreements already in effect upon accession and those which would come into effect in the future.
Government Procurement Agreement
The Russian Federation intends to join the WTO Government Procurement Agreement (GPA) and would notify this intention to the WTO Government Procurement Committee at the time of accession. Russia would become an observer to the GPA and would initiate negotiations for membership within four years of its accession. Russian government agencies would, upon accession, award contracts in a transparent manner.
Industrial and agricultural subsidies
The Russian Federation would eliminate all its industrial subsidies programmes or modify them so that any subsidy provided would not be contingent upon exportation or upon the use of domestic over imported goods. The Russian Federation would notify its subsidies to the WTO and would not invoke any of the provisions of Articles 27 and 28 of the WTO Agreement on Subsidies and Countervailing Measures.
The total trade distorting agricultural support would not exceed USD 9 billion in 2012 and would be gradually reduced to USD 4.4 billion by 2018.
To avoid excessive concentration of support on individual products, from the date of accession to 31 December 2017, the annual agricultural support going to specific products would not exceed 30% of the agriculture support that is not for specific products.
All agricultural export subsidies will be bound at zero.
The VAT exemption applied to certain domestic agricultural products would be eliminated upon accession.
Pricing of energy
Producers and distributors of natural gas in the Russian Federation would operate on the basis of normal commercial considerations, based on recovery of costs and profit.
The Russian Federation would continue to regulate price supplies to households and other non-commercial users, based on domestic social policy considerations.
Sanitary and phytosanitary measures (SPS) and technical barriers to trade (TBT)
All SPS measures would be developed and applied in the Russian Federation and the Custom Union, in accordance with the WTO Agreement.
The Russian Federation would ensure that all legislation related to technical regulations, standards and conformity assessment procedures complies with the WTO TBT Agreement.
The Russian Federation would develop and apply international standards on SPS measures through membership and active participation in the Codex Alimentarius, the World Organization for Animal Health (OIE) and the International Plant Protection Convention.
The reasons for suspension, cancellation, or refusal of an import permit would be consistent with international standards, recommendations, and guidelines as well as the WTO SPS Agreement.
The Russian Federation would negotiate veterinary export certificates that include requirements different from those of the Custom Union if an exporting country made a substantiated request prior to 1 January 2013 to negotiate such a certificate.
Except in case of serious risks of animal or human health, Rosselkhoznadzor, the Federal Service for Veterinary and Phytosanitary Surveillance, would not suspend imports from establishments based on the results of on-site inspection before it had given the exporting country the opportunity to propose corrective measures. Rosselkhoznadzor would send a preliminary report to the competent authority of the exporting country for comments.
The Russian Federation would use international standards for the development of technical regulations unless they were an ineffective or inappropriate means for achieving the pursued objectives.
By the end of 2015, mandatory requirements for telecommunication equipment used in public networks would be limited to the requirements contained in technical regulations adopted consistently with the Eurasian Economic Community and Custom Union agreements.
The Russian Federation would regularly review its lists of products subject to obligatory certification or declaration of conformity, as well as all the technical regulations applied on its territory (Custom Union and Eurasian Economic Community included) to ensure that they remained necessary to achieve the Federation’s objective, in accordance with the WTO TBT Agreement.
Certified accreditation bodies would be replaced by a single national accreditation body no later than 30 June 2012. The name and other information regarding this body would be published on the Rosstandart website and the website of the Custom Union Commission.
Trade-related investment measures
The Russian Federation would ensure that all laws, regulations and other measures related to the Agreement on Trade-Related Investment Measures would be consistent with the WTO provisions.
All WTO-inconsistent measures, including preferential tariffs or tariff exemptions, applied in relation to the investment programmes (including automobile investment programmes) and any agreements concluded under them would be eliminated by 1 July 2018.
Protection of trade-related intellectual property
The Russian Federation would fully apply the provisions of the WTO Agreement on Trade-related Aspects of Intellectual Property Rights including provisions for enforcement, without recourse to any transitional period.
The Russian government would continue to take actions against the operation of websites (with servers located in the Russian Federation) that promote illegal distribution of content protected by copyright or related rights.
The Russian Federation would investigate and prosecute companies that illegally distribute objects of copyright or related rights on the Internet.
By the time of its accession, the Russian Federation would apply all rules of the Berne Convention for the Protection of Literary and Artistic Works.
The provisions of the WTO Agreement would be applied uniformly throughout the Russian Federation territory, including in regions engaging in frontier traffic, special economic zones and other areas where special regimes for tariffs, taxes and regulations could be established.
All legislation affecting trade in goods, services and intellectual property rights would be published promptly, consistent with WTO requirements. The Russian Federation would regularly update its official publications including websites and make these laws readily available to WTO members, individuals and enterprises.
To improve access to official publications, the Russian Federation would establish an enquiry point providing assistance to members and all other stakeholders.
In particular, the Russian Federation would publish all legislation, affecting trade in goods, services, or intellectual property rights, prior to their adoption and would provide a reasonable period of time, no less than 30 days, for members to comment, except for emergency cases, national security, monetary policy, measures whose publication would impede law enforcement, be contrary to the public interest, or prejudice the commercial interest of particular public or private enterprises. No legislation affecting trade in goods, services or intellectual property rights would become effective prior to publication.
The Russian Federation would provide annual reports to WTO members on developments in its on-going privatization programme for as long as it would be in existence.
Lists of goods and services subject to state price controls would be published in the Rossiiyskaya Gazeta from the date of accession. Russia would apply price controls on certain products and services, including natural gas, raw diamonds, vodka, water supply services, gas transportation services, baby food, medical goods, public transport services and railway transportation services. Price control measures would not be used for purposes of protecting domestic products, or services provided.
Functioning of the Custom Union between Russia, Kazakhstan and Belarus
The Custom Union between Russia, Kazakhstan and Belarus was created on 1 January 2010. All customs borders were removed between the three countries on 1 July 2011.
From 1 January 2012, the three states would have a single economic space.
The Russian Federation would publish any Custom Union legislation before adoption and would provide a reasonable period of time for WTO members and all stakeholders to comment to the competent Custom Union Body.
Members agreed to directly forward Russia’s accession package to the 8th Ministerial Conference for adoption by Ministers on 15-17 December 2011.
The Russian Federation will have until 15 June 2012 to ratify its accession package.
Thirty days after the notification to the WTO of the ratification, the Russian Federation will become a fully-fledged member.
Background information on
the Russian Federation accession process
- The Russian Federation applied to the WTO in June 1993.
- The Working Party was created on 16-17 June 1993.
- The first meeting of the Working Party took place in July 1995.
- The Working Party has met formally 31 times since 1995. Numerous informal meetings also took place.
- Three ambassadors chaired the Working Party: Ambassador William Rossier (Switzerland) from 1995 to 2000, Ambassador Kare Bryn (Norway) from 2000 to 2003 and Ambassador Stefán Jóhannesson (Iceland) from 2003 to 2011.
General statistical information about the Russian Federation
(Sources: WTO statistics and World Bank)
- Population (thousands, 2010): 141 750
- GDP (million current US$, 2010): 1 479 819
- Current account balance (million US$, 2010): 71 129
- Trade per capita (US$, 2008-2010): 5 279
- Trade to GDP ratio (2008-2010): 51.5
- Life expectancy at birth, total (years): 69 (2009)
- Poverty headcount ratio at national poverty line (% of population): 11.1% (2006)
- Unemployment, total (% of total labour force): 8.2% (2009)
- CO2 emissions (metric tons per capita): 10.8 (2007)
Rank in world trade (2010)
- Merchandise: 12 (exports) and 18 (imports)
- Commercial services: 23 (exports) and 16 (imports)
Merchandise trade (2010)
- Merchandise exports, f.o.b. (million US$): 400 132
- Merchandise imports, f.o.b. (million US$): 248 738
- Main destination of exports: European Union (52.2%), Ukraine (5.8%), Turkey (5.1%), China (5.1%) and Belarus (4.5%)
- Main origin of imports: European Union (38.3%), China (15.7%), Ukraine (5.6%), United States (4.5%) and Japan (4.1%)
- Principal goods traded (exports and imports): agriculture, fuels and mining products, manufactured products
- Share in world total exports: 2.63%
- Share in world total imports: 1.61%
Commercial services trade (2010)
- Commercial services exports (million US$): 43 961
- Commercial services imports (million US$): 70 223
- Principle services traded (exports and imports): Transportation and travel
- Share in world total exports: 1.19%
- Share in world total imports: 2%