The World Trade Organization (WTO) has published comprehensive details of the tax and trade commitments made by Russia as part of its accession bid, due to be deliberated upon at the WTO Ministerial Plenary in December at which Russia is tipped to be granted membership to the global trade body.
Welcoming the conclusion of negotiations, 18 years after they first began, Working Party Chairman Stefán Jóhannesson said: “The completion of this Working Party’s activity represents an historic achievement for the WTO. I am convinced that Russia’s accession to the WTO will bring substantial benefits both to Russia and to the members of this organization. In these difficult economic times, this represents good news and I have no doubt that Russia joining our WTO family will strengthen the multilateral trading system and enhance global economic cooperation.”
Maxim Medvedkov, chief negotiator for the Russian Federation, added: “It is gratifying to see that after 18 years of sometimes uneasy negotiations the process of WTO accession is completed. The agreement as negotiated brings us into the system of multilateral trading rules, creating new opportunities for our traders and investors and enabling us to protect their commercial interests even more effectively than before.”
As part of the accession accord, Russia has agreed to undertake a series of important commitments to further open its trade regime and accelerate its integration into the world economy.
As part of the accession negotiations, Russia concluded 30 bilateral agreements on market access for services and 57 on market access for goods.
On average, the final legally binding tariff ceiling for the Russian Federation will be 7.8% compared with a 2011 average of 10% for all products. The average tariff ceiling will be 10.8% for agriculture products (13.2% currently) and 7.3% for manufactured goods (9.5% currently).
Russia has agreed to lower its tariffs on a wide range of products. Average duties after full implementation of tariff reductions will be:
14.9% for dairy products (current applied tariff 19.8%);
10.0% for cereals (current applied tariff 15.1%);
7.1% for oilseeds, fats and oils (current applied tariff 9.0%);
5.2% for chemicals (current applied tariff 6.5%);
12.0% for automobiles (current applied tariff 15.5%);
6.2% for electrical machinery (current applied tariff 8.4%); and,
8.0% for wood and paper (current applied tariff 13.4%).
Final tariffs will be bound at zero for cotton and information technology (ITA) products (the current applied tariff on ITA products is 5.4%).
The final bound rate will be implemented on the date of accession for more than one third of national tariff lines with another quarter of the tariff cuts to be put in place three years later. The longest implementation period is eight years for pork, followed by seven years for motor cars, helicopters and civil aircraft.
Tariff rate quotas (TRQs) would be applied to beef, pork, poultry and some whey products. Imports entering the market within the quota will face lower tariffs while higher duties will be applied to products imported outside the quota.
The Russian Federation has also made specific commitments on 11 services sectors and on 116 sub-sectors.
On telecommunications, the foreign equity limitation (49%) upon accession would be eliminated four years after accession. Foreign insurance companies would be allowed to establish branches nine years after Russia accedes.
Foreign banks would be allowed to establish subsidiaries. There would be no cap on foreign equity in individual banking institutions, but the overall foreign capital participation in the banking system of the Russian Federation would be limited to 50% (not including foreign capital invested in potentially privatized banks).
On transport services, the Russian Federation made commitments in maritime and road transport services, including the transportation of freight and passengers.
On distribution services, Russia would allow 100% foreign-owned companies to engage in wholesale, retail and franchise sectors upon accession to the WTO.
Also included in the deal, export duties would be fixed for over 700 tariff lines.
The value-added tax exemption applied to certain domestic agricultural products would be eliminated upon accession.
Lastly, on the function of the Customs Union between Russia, Kazakhstan and Belarus, Russia is to publish any Customs Union legislation before adoption and provide a reasonable period of time for WTO members and all stakeholders to comment to the competent Custom Union Body./.