Who failed to hide away is in trouble

20 августа 2012, 00:00
Yakov Pappe

he decision to join the WTO is a distinct signal by the country’s government to external and internal counterparties that Russia sticks to a certain economic policy, openness, and a game played according to common rules. Actually, our joining the WTO means, irrespective of any statements and relations with any other countries that are in contradiction to it, that we are ready, in the long run, to comply with the market rules and behave according to globalist trends.

A decision to join the WTO clearly stated in the middle of the 1990s meant for national businesses (or to be exact, for the then directorate) that everyone would have to deal with international competition, sooner or later, and both outside and inside the country, and would have to become competitive. As time was passing, some entrepreneurs and managers prepared themselves for this cold shower while others ignored it. There was plenty of time for that task: 15 years. Now it is too late and those who failed to hide away are in trouble. The joining process was not forced; on the contrary, negotiations were slow as initially no balance of advantages and disadvantages from joining was clear for various industries, regions, and some production sectors and no balance of the relevant groups of interests was known. All of this became obvious. Lobbyists actively shaped the government’s negotiation attitude to the extent of their constructivist position and qualification. For example, they influenced negotiations on the levels and forms of support to the agricultural sector and the food product which Russia managed to preserve practically intact.

At present, the balance of advantages and disadvantages is clearer and, in my opinion, it is positive. I firmly believe that the future of the Russian manufacturing industry is on foreign markets in cooperation with foreign partners. The main way of development of its healthy sector is to be involved in international chains of price formation, although finished goods and systems will be normally assembled by foreign firms and beyond the Russian borders. It is quite clear that joining the WTO will considerably contribute to emergence and implementation of similar projects. This benefit has quite a determined price: manufacture of finished products in many non-raw material related sectors of Russian industries, and primarily the machine engineering sector, will be affected. However, I am not afraid of it as chances of our producers of surviving beyond alliances with foreign sectorial leaders oriented toward the global market were miserable even without joining the WTO.

Yakov Pappe, senior researcher at the RAS National Economic Forecasting Institute