Russia was admitted into the World Trade Organization on Friday after 18 years of negotiation, finally binding it into the global economy two decades after the Soviet Union collapsed.
Russia’s $1.9-trillion (U.S.) economy was the largest outside the WTO, and accession will help reduce its dependence on energy exports that left it cruelly exposed to the oil price collapse of 2008.
Accession by Russia, with the second-largest nuclear arsenal after that of the United States, into a rules-based club should also help limit dangers of a repeat of regional conflicts like its 2008 war with Georgia. Trade conflicts have repeatedly exacerbated tensions between Moscow and Tbilisi.
“This result of long and complex talks is good both for Russia and for our future partners,” President Dmitry Medvedev said in a message to a WTO ministerial meeting in Geneva that formally approved Russia’s membership.
Russia now has six months to ratify its membership and would become a member 30 days later.
Even by the standards of trade talks, Russia’s negotiations have been tortuous, suffering a series of reverses during the 12-year-old rule of Prime Minister Vladimir Putin, now planning a return to the presidency he held from 2000-08.
Negotiations were close to a result in 2009 when Mr. Putin, frustrated at additional demands from existing members, launched a regional trade bloc that torpedoed the accession process.
Talks resumed in earnest only in late 2010 and achieved a critical breakthrough in October when Russia finalized terms with the United States and the European Union.
Agreement on a Swiss-brokered border monitoring deal for two Georgian regions that broke away after a brief Russian-Georgian war in August 2008 cleared the final stumbling block to a deal.
“I just happen to know a few things about marathons – the last mile is the worst, the toughest,” WTO head Pascal Lamy told a two-hour ceremony. “The best moment in a marathon is where you cross the finishing line.”
China’s entry into the WTO a decade ago unleashed a decade of export-led growth, but with the global economic outlook darkening, Russia is unlikely to enjoy the same sort of uplift, experts say.
Oil, gas and metals account for four-fifths of Russia’s exports and, while bulging trade and current account surpluses have helped Moscow pay down debts and accumulate the world’s third-largest foreign reserves, they have also buoyed the ruble and made it hard for new industries to compete on world markets.
Growth could nonetheless benefit by 3.7 per cent over the medium term and by 11 per cent in the long run, according to a study for the World Bank by economist James Tarr, with consumers and service industries likely to be the biggest winners.
The real benefit will come in the form of a more secure environment for foreign investors in Russia, who have long complained of corruption, insecure property rights and weak rule of law.
WTO accession can provide an anchor for economic reforms that might incur resistance from domestic business interests and political forces.
Mr. Putin, with an eye to the concerns of powerful industrial oligarchs, has avoided publicly promoting the benefits of membership and, although ratification is assured, he still faces objections from a newly invigorated opposition at home.
Mr. Putin faces a tough path to the presidential election next March after the majority of his ruling United Russia party was slashed in a Dec. 4 parliamentary election and the opposition protested against alleged fraud in the vote.
“We have warned for the past five years of the risks of such an unacceptable step as joining the World Trade Organization,” said Vladimir Kashin, deputy leader of the opposition Communist party, which doubled its share of the vote to 20 per cent.
The Communists argue that lowering trade barriers will hurt Russia’s large agricultural sector and make it tough for manufacturers to compete.
The trade deal won by Moscow does buy time for the fast growing auto sector, giving manufacturers seven years to prepare for a reduction of import tariffs in a country that is poised to become Europe’s largest car market.