ON Aug 22, Russia became the 156th member of the World Trade Organisation (WTO) after almost two decades of negotiations. Russia is now a member of the WTO.
So what?
To answer this question we have to rewind to 1995. In that year, 128 countries, including Malaysia, who were members of the General Agreement on Tariffs and Trade (GATT), signed the Marrakesh Agreement to form the WTO. They did this in the spirit of ensuring global economic growth through a liberalised, transparent and predictable global trading environment.
Towards that end, the member countries agreed to work on ground rules for international commerce. The WTO was to focus on getting members to reduce and eliminate import duties and subsidies in an attempt to create a level playing field for international trade.
These ground rules were framed in agreements. In sum, governments must ensure that their trade policies are consistent with their WTO commitments.Russia’s inclusion provides a boost to the multilateral trading system, one that has been overshadowed for far too long by the impasse in the Doha Development Agenda (DDA) or the Doha Round.
Launched in Doha, Qatar, in November 2001, the DDA was billed as the inclusive initiative to ensure that developing countries are better integrated into the multilateral trading system; specifically, to address the marginalisation of least-developed countries in international trade and to improve their participation in the multilateral trading system.Twelve years on, the WTO has missed almost every deadline it set under the Doha Round; with three collapsed Ministerial meetings in 2003, 2006 and 2008.
Still, the WTO continues to play a key role in discouraging protectionism. The global financial crisis of 2008-2009 proved that a rules-based multilateral trading system serves a purpose.
During the crisis period the monitoring undertaken by the WTO, served in large measure to keep protectionist pressures in check. Governments exercised restraint over the imposition of new trade restrictions.
In fact, if there is one point where there is unanimous agreement it is that the WTO should continue to play a key role in discouraging protectionism.Malaysia, too, views the WTO as the global custodian of multilateral trade, and will continue to support efforts to strengthen its ability to fulfill this institutional duty.With the Russian Federation in its fold, the WTO now encompasses all the major economies, and transactions among WTO Members will account for 98% of global trade.Based on WTO statistics, in 2010, Russia ranked as the globe’s 12th largest exporter and 18th largest importer of merchandise trade, and the 13th largest exporter and 16th largest importer of commercial services.
For WTO members, it means increased transparency in trade with a country of 142 million. As part of the accession accord, Russia is committed to liberalise its trade and investment regime and accelerate its integration into the world economy.
For goods, generally, Russia will lower tariff imports to 7% from about 15% today. For investments and services, Russia’s telecommunications and banking services will also be opened to competition. WTO members will also have recourse to global trade processes for resolving disputes with Russia.
For Malaysia, the increased stability and openness of the Russian business environment will be good for our exporters. As part of its accession process, on Dec 2 , 2005, Russia and Malaysia signed a bilateral agreement for market access on goods.
Under this agreement, Russia will, within a maximum period of seven years, reduce duties on palm oil to 3%; wood products (including furniture) by 10%, and electrical and electronic products by 15%.
These are significant improvements as palm oil and E&E products make up Malaysia’s main exports to Russia. In 2011, Malaysia’s trade with Russia totaled RM3.8bil (exports, RM2.7bil) from RM3.5bil (exports, RM2.2bil) in 2010.For Russia, there will be the immediate benefit of lower costs for a significant portion of its imports.
The World Bank estimates that Russia’s membership will add three percentage points to Russia’s gross domestic product once the new tariffs are phased in. This membership is also expected to see increased investment opportunities in Russia’s services sectors, specifically, in wholesale and retail trade, finance; professional business services; and construction.Russia’s WTO accession, like that of all members of the organisation, is not without its challenges.
And like all of us, Russia will now have to follow through on its commitments, reform its industrial structure, and its industry must face up to competition. But this is a small price to pay for the expanded market access in goods and services, and trade facilitation.
So what?
To answer this question we have to rewind to 1995. In that year, 128 countries, including Malaysia, who were members of the General Agreement on Tariffs and Trade (GATT), signed the Marrakesh Agreement to form the WTO. They did this in the spirit of ensuring global economic growth through a liberalised, transparent and predictable global trading environment.
Towards that end, the member countries agreed to work on ground rules for international commerce. The WTO was to focus on getting members to reduce and eliminate import duties and subsidies in an attempt to create a level playing field for international trade.
These ground rules were framed in agreements. In sum, governments must ensure that their trade policies are consistent with their WTO commitments.Russia’s inclusion provides a boost to the multilateral trading system, one that has been overshadowed for far too long by the impasse in the Doha Development Agenda (DDA) or the Doha Round.
Launched in Doha, Qatar, in November 2001, the DDA was billed as the inclusive initiative to ensure that developing countries are better integrated into the multilateral trading system; specifically, to address the marginalisation of least-developed countries in international trade and to improve their participation in the multilateral trading system.Twelve years on, the WTO has missed almost every deadline it set under the Doha Round; with three collapsed Ministerial meetings in 2003, 2006 and 2008.
Still, the WTO continues to play a key role in discouraging protectionism. The global financial crisis of 2008-2009 proved that a rules-based multilateral trading system serves a purpose.
During the crisis period the monitoring undertaken by the WTO, served in large measure to keep protectionist pressures in check. Governments exercised restraint over the imposition of new trade restrictions.
In fact, if there is one point where there is unanimous agreement it is that the WTO should continue to play a key role in discouraging protectionism.Malaysia, too, views the WTO as the global custodian of multilateral trade, and will continue to support efforts to strengthen its ability to fulfill this institutional duty.With the Russian Federation in its fold, the WTO now encompasses all the major economies, and transactions among WTO Members will account for 98% of global trade.Based on WTO statistics, in 2010, Russia ranked as the globe’s 12th largest exporter and 18th largest importer of merchandise trade, and the 13th largest exporter and 16th largest importer of commercial services.
For WTO members, it means increased transparency in trade with a country of 142 million. As part of the accession accord, Russia is committed to liberalise its trade and investment regime and accelerate its integration into the world economy.
For goods, generally, Russia will lower tariff imports to 7% from about 15% today. For investments and services, Russia’s telecommunications and banking services will also be opened to competition. WTO members will also have recourse to global trade processes for resolving disputes with Russia.
For Malaysia, the increased stability and openness of the Russian business environment will be good for our exporters. As part of its accession process, on Dec 2 , 2005, Russia and Malaysia signed a bilateral agreement for market access on goods.
Under this agreement, Russia will, within a maximum period of seven years, reduce duties on palm oil to 3%; wood products (including furniture) by 10%, and electrical and electronic products by 15%.
These are significant improvements as palm oil and E&E products make up Malaysia’s main exports to Russia. In 2011, Malaysia’s trade with Russia totaled RM3.8bil (exports, RM2.7bil) from RM3.5bil (exports, RM2.2bil) in 2010.For Russia, there will be the immediate benefit of lower costs for a significant portion of its imports.
The World Bank estimates that Russia’s membership will add three percentage points to Russia’s gross domestic product once the new tariffs are phased in. This membership is also expected to see increased investment opportunities in Russia’s services sectors, specifically, in wholesale and retail trade, finance; professional business services; and construction.Russia’s WTO accession, like that of all members of the organisation, is not without its challenges.
And like all of us, Russia will now have to follow through on its commitments, reform its industrial structure, and its industry must face up to competition. But this is a small price to pay for the expanded market access in goods and services, and trade facilitation.
