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29 August 2012 | Anna Reynolds
The accession of Russia to the World Trade Organization (WTO) will offer a more transparent and stable environment for UK businesses, but an expert has warned it will take time.
Russia joined the WTO last week, bringing the total membership to 157 countries. Membership will mean lower tariffs on exports, in addition to other trading benefits. Average tariffs on goods will now be 7.8 per cent, compared with 10 per cent in 2011. Tariffs have been reduced on manufactured goods to an average of 7.3 per cent, compared to 9.5 per cent. The nation has also agreed to lower tariffs on automobiles, which will now be set at 12 per cent, down from 15.5 per cent. In addition, it has made commitments on access to services, such as telecoms, transport and distribution.
But according to Alan Thompson, Russia director of the Russo-British Chamber of Commerce, benefits will not be seen overnight. “Russia’s market economy is not at the same level as other WTO countries,” he said. “It wants to safeguard local production and manufacturing, particularly of its automobile industry, which means step-by-step implementation of these new tariffs.”
He added that for selected industries – including Russia’s agriculture sector, which is heavily supported by the state – there will be an integration period of one to two years.
Even so, Thompson said there could be long-term results for UK businesses. “The opportunities in Russia for British companies to do trade are enormous,” he told SM. “The market is open wide, but you have to be brave. The risk is time – you can’t expect to come here and do business overnight. You have to know how to work the system. For SMEs, there is enough growth in Russia to be able to stabilise problems back in the UK.”
The Pacific island nation of Vanuatu also joined the WTO last week. It will apply an average tarriff of 39.7 per cent for goods, while making specific commitments on 10 services sectors, including tourism, architectural services and air transport. The country’s service sector has experienced significant growth, particularly in retail and construction, and now accounts for three quarters of Vanuatu’s GDP.