The first results of Russia's accession to the World Trade Organization were announced by Russian President Vladimir Putin six months after the ratification of the relevant documents. The main advantage of this step, he said, is the creation of a favorable investment climate in the country.
At the moment, 159 countries of the world are members of the World Trade Organization. The rest, with rare exceptions, strive to join it. The very number of countries that are members of the WTO suggests that membership in this organization is of great benefit to their economies.
Reduced customs duties
It is the obligatory reduction of export and import customs duties on a number of goods that the critics of WTO accession put forward as the main argument. They are certainly not against this decline. But only if we are talking about customs barriers in other countries, and not in their own.
The reduction in import duties directly benefits the end consumer. This inevitably entails an influx of imported goods into the country, increased competition and, as a consequence, a decrease in retail prices.
The reduction in export duties is especially beneficial for the raw materials-extracting sector of the economy. But other exporting enterprises also benefit from this. Prices for exported products automatically decrease, which means they become more competitive.
Creation of a favorable investment climate
Accession to the WTO has a positive effect on the image of the state. This means that it becomes more attractive to foreign investors.
Attracting foreign investment is the main prerogative for the economy of any state. For Russia, for example, the inflow of foreign investments into the economy can amount to five to ten percent of GDP, while on the reduction of duties it will lose less than one percent.
Other advantages of joining the WTO
Undoubtedly, the financial sector of the economy wins. Increased competition in the financial market should lead to a decrease in interest rates on loans.
Also, the modernization of the domestic economy will accelerate. In the face of increased competition, manufacturers will have to look for ways to improve the quality of their products and reduce their production costs.
Opportunities for domestic investors to participate in the economies of the WTO member countries will also expand.
It will become much easier to resolve emerging trade disputes between countries. For this, the WTO has a special dispute settlement commission.
Russia recently joined the WTO and has not yet brought any significant positive or negative results. Therefore, it will be possible to sum up the preliminary results of this entry only in at least five years.
