Russia on Wednesday crowned a tortuous 18-year campaign by becoming the largest country outside the World Trade Organization (WTO) to formally join the world’s premier free trade club.
The Geneva-based institution’s 156th member had spent years harboring deep suspicions about what a flood of better Western products and services might do to the country’s fitful recover from its late Soviet malaise.
President Vladimir Putin signed on July 21 the final accession document approved by all WTO countries – a final step clearing the way for Wednesday’s formal entry – after once saying that the group needed Russia more than the reverse.
Membership came for Russia and its $2 trillion economy on the same day that the remote Pacific island nation of Vanuatu became the latest minnow nation to enter an organization that already enlists almost all of the developed world.
Vanuatu formally grabbed the 157th seat at the trade negotiating table.
“Both accessions show that joining the WTO remains high on the countries’ agendas since trade can bring a predictable and stable basis for economic growth,” WTO Director General Pascal Lamy said in a statement. “Joining the WTO is a sign of confidence in the organisation and in what it can deliver for its members.”
Russia will now finish bringing down trade barriers to levels agreed in the negotiations while gaining broader access to foreign markets and benefiting from a more efficient business environment that should help stimulate growth.
Economists call this a best-case scenario that looks likely to apply to Russia in the years to come.
“This is a great stimulus for developing the economy and competition,” Russia’s veteran former finance minister Alexei Kudrin wrote on his Twitter account.
The more optimistic economists believe membership should finally give Russia the vote of confidence it needs from major investors who now shy away from dealing with its heavy bureaucracy and legacy of corrupt courts.
Moscow’s Renaissance Capital estimated the long-term benefit of WTO membership to Russia’s economy at an 11 percent gain in gross domestic product.
“Accession into international institutions such as the WTO lends Russia the credibility it needs to shore up the country’s investment environment,” it said in a special report.
But Renaissance Capital stressed that it was now up to Russian officials to take the next step of actually cutting through the red tape and keeping businesses’ competitive spirits flowing.
“Big step in the right direction? Yes, but only if Russia makes the most of it,” the bank said.