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State Duma ratifies protocol on Russia’s joining WTO

July 10, 2012, 20:38 UTC+3 Alexandrova Lyudmila

Russia made a decisive step towards joining the World Trade Organization /WTO/ on Tuesday, as the State Duma, the lower house of parliament ratified a protocol on joining the organization in spite of vehement protests on the part of left-wing political opposition.

Monday, the Constitution Court destroyed the last hopes of the opponents of WTO membership to block the accession process -- it declared that the Russian authorities had signed the protocol with the WTO without encroachments on the Constitution of the Russian Federation. Following Tuesday’s approval by the Duma, the protocol is now to be endorsed by the Federation Council, the upper house of parliament, and to be signed by President Vladimir Putin.

A total of 238 MPs voted in favor of ratification, another 208 MPs voted against it and one MP abstained from voting.

In the meantime, experts agree that accession to the WTO will be far from painless for Russia. Still they say benefits of membership of the organization will eventually outweigh the disadvantages. They claim, among other things, that this country will get clear and simple rules of the game.

Arbiters of the Constitution Court, who examined a query filed by131 MPs, came to the conclusion that the protocol does not contravene Russia’s Constitution. Members of A Just Russia party faction and the Communist Party of the Russian Federation expressed displeasure with the contents of the protocol and with the manner, in which it had been submitted for ratification.

The Constitution Court refused to consider procedural complaints, saying that “an inspection of the procedures of ratification would mean interference in the lawmaking process.”

The plaintiffs made special emphasis in their query on the economic aftermath of getting into the WTO. Communist MP Nikolai Kolomiytsev said, on his part, Russia’s Accounting Chamber had arrived at a conclusion earlier “that virtually the entire processing sector of the Russian economy wouldn’t get any benefits while suffering considerable losses, up to a full wiping out of an opportunity to produce just anything.”

The Constitution Court stated in its resolution “the government of the Russian Federation, the Federal Assembly and the President should take account of the economic effects and assess the risks of accession to the WTO, as well as evaluate the sufficiency of measures aimed at protecting the national interests in the course of signing, endorsement and ratification of the protocol.”

However, the opponents of Russia’s membership of the WTO have no plans to lay down arms. Communist MPs held an action of protest in front of the entrance to the State Duma Tuesday morning, saying they would again file a petition with the Constitution Court if the protocol were ratified.

Deputy Chairman of the CPRF, Vladimir Kashin, who made public the party’s position on the problem, dismissed the protocol “a shameful act”. “We’re confident that only multinational corporations and Russian oligarchs will benefit from this accession, while the vast majority of our fellow-countrymen will find themselves in the position of losers.”

Sergei Mironov, the leader of A Just Russia Party, voiced the collective opinion of the party’s Duma faction that Russia is simply unready to join the WTO right now. “We think we could put the ratification off for several years. We don’t oppose the WTO membership in principle because that’s a perfectly instrumental organization for the countries with smoothly functioning economies, while many branches of the industry here are simply uncompetitive.”

Vladimir Zhirinovsky, the leader of the Liberal Democratic Party /LDPR/ said the Liberal Democrats do not see a single possible benefit of WTO membership. “Even if there are some, the number of disadvantages outweighs them clearly.”

“Our economy won’t be developing and won’t have any bright prospects,” Zhirinovsky said. “We’ll be goofing in the last coach of the WTO train where all the best places are occupied by multinationals.”

As a result, only the MPs representing the United Russia Party voted for ratifying the protocol. “We needed eighteen years to be admitted to the club, the presence in which enables the strongest economies to develop and to assure jobs for the people in the countries that put forward well-thought-out objectives for themselves,” said MP Alexei Vorobyov, a deputy chairman of the party’s faction.

“We can’t hide away from competition because we can’t live on the outskirts of civilization,” he said.

Experts admit the processes of joining the WTO won’t be painless, yet they say membership of the organization will have advantages in store for Russia, too.

The World Bank surmises, for instances, that membership of the WTO will make it possible for this country to increase its GDP at an annual rate of about three percentage points. An optimistic version of the Bank’s forecast suggests that the operating expenses of Russian businesses will reduce by $ 15 billion to $ 18 billion in the light of changes in customs regulations.

Economic Development Minister Alexei Belousov admitted in his speech in the State Duma Tuesday that, taken per se, WTO membership does not mean unambiguous gains because “that’s a thing we must work on.”

He indicated along with it that the spectrum of industries, which may gain from accession to the WTO, is broad enough and “it ranges from metallurgy and chemistry to various sections of mechanical engineering.” “Investments will arrive and the export markets will open up,” he said.

Belousov said that after the completion of accession to the WTO, Russia’s immediate budgetary losses may total $ 188 billion in 2013 and $ 257 billion in 2014 /USD 1 is equivalent of RUB 32.7 at the current exchange rate/.

“However, we proceed from the assumption that the real losses of budget money will be smaller thanks to a growth of trade and this means an expansion of the tax base owing to improvements in the collection of fees and duties,” he said adding that the improvements will be directly related to the size of duties.

Joining the WTO is always lucrative for consumers on the domestic market and always gives a headache to producers, says Konstantin Simonov, director of the National Energy Security Foundation. “This will entail a growth of competitiveness in many segments of the Russian economy,” he said in an interview with the Aktualnye Kommentarii news portal.

“Rank-and-file people will feel this in practical terms, as the reduction of import duties will embrace cars, foodstuffs, banking and financial services, and insurance policies,” Simonov said.

“But the manufacturers – primarily in field of mechanical engineering, agriculture, and the services sector – are indignant, since this means definite risks for them,” he said.

Moscow, July 10