Trading is appropriate
[b]Belarus is clearly facilitating its movement towards the World Trade Organisation[/b] as evinced by Minsk receiving a visit from the Chairman of the Working Party on Belarus’ Accession to the WTO, Bozkurt Aran. He negotiated with Belarus’ Deputy Prime Minister, Andrei Kobyakov, and met parliamentarians and representatives of the Foreign Ministry and the Economic Ministry. Afterwards, he proclaimed that the process of Belarus’ joining the WTO won’t take long, “I’m convinced that, of the countries about to join the organisation, Belarus is the most developed.” The recent ‘gas’ conflict with Moscow, alongside difficulties in forming the Customs Union with Russia and Kazakhstan, are pushing Minsk to actively seek out paths of diversification — regarding delivery of energy resources and sales markets. President Alexander Lukashenko recently admitted that the economy’s ‘survival’ and the country’s independence depend on these matters. Accession to the WTO should open up opportunities for Belarusian exporters.
As evinced by Minsk receiving a visit from the Chairman of the Working Party on Belarus’ Accession to the WTO, Bozkurt Aran. He negotiated with Belarus’ Deputy Prime Minister, Andrei Kobyakov, and met parliamentarians and representatives of the Foreign Ministry and the Economic Ministry. Afterwards, he proclaimed that the process of Belarus’ joining the WTO won’t take long, “I’m convinced that, of the countries about to join the organisation, Belarus is the most developed.” The recent ‘gas’ conflict with Moscow, alongside difficulties in forming the Customs Union with Russia and Kazakhstan, are pushing Minsk to actively seek out paths of diversification — regarding delivery of energy resources and sales markets. President Alexander Lukashenko recently admitted that the economy’s ‘survival’ and the country’s independence depend on these matters. Accession to the WTO should open up opportunities for Belarusian exporters.
Headquartered in Geneva, the World Trade Organisation embraces 153 countries and customs territories. Each member-state must provide a regime of ultimate favourable trade to other participants; this is the core policy of WTO membership, which is why export-oriented Belarus is keen to join.
Joining the WTO requires some adjustment of national legislation, to meet rules obligatory for all member-states. The decision on the state’s meeting the organistaion’s norms was made during a sitting of the WTO Working Party on Belarus’ Accession. The Head of this Group has visited Minsk recently — on Geneva’s initiative.
So far, seven formal sittings have already taken place. The process was interrupted in 2005 — due to opposition from some Western countries. It then became impossible to reinitiate negotiations to prepare the final documents envisaging Belarus’ obligations as a WTO member.
Fortunately, in recent years, there has been a ‘thaw’ in relations between Minsk and the EU, with the situation regarding WTO membership changing. “All WTO member-states are interested in Belarus’ accession. The organisation cannot be universal without it. Your country plays an important role in the European region. Stability and security within the European system is a priority and this is why it’s important for Belarus to join the WTO,” stresses Mr. Aran. He added that Belarus should also be interested in accession since the WTO’s trading relations are ‘based on rules and these rules are observed’. “When a state which exports $39bn of goods annually has the chance to raise exports by up to 20 percent a year, accession is a natural step,” he emphasises.
Mr. Aran asserts that the WTO, IMF and World Bank are at the heart of the international economic system. “If you can conclude a multi-billion agreement with the IMF, you can agree with the WTO,” he believes. Mr. Aran notes that the process of Belarus’ joining has been unjustly protracted. “I hope the process will significantly speed up in the near future,” he said. At present, Geneva is waiting for a package of documents from Belarus. These will enable the organisation to assess whether our national legislation meets WTO requirements. The analysis of our trading and investment legislation will be in focus; recently, the latter has been liberalised, orienting towards the experience of developed states (existing members of the WTO).
One for all or all for one?
The process of Belarus’ joining the WTO has been slow (through no fault of its own). However, the announcement of the Customs Union with Russia and Kazakhstan has changed the situation. Now, other states are viewing Belarusian trading legislation and its market with increased interest. Previously, Belarus had a market of just 10m; now, it is the gateway to a population of 170m.
A year ago, the heads of the Belarusian, Kazakh and Russian governments decided to join the WTO as a single block — the Customs Union. Moscow announced that it would stop bilateral talks with Geneva, to begin a three-lateral format. A single negotiating delegation of our three states was even approved. It was an interesting idea, making it easier to reach favourable terms for accession when speaking on behalf of three states simultaneously. It’s no secret that such CIS states as Kyrgyzstan and Moldova (old members of the WTO) agreed to all of Geneva’s terms and have failed to receive the benefits they had hoped from membership. Meanwhile, China has entered the WTO on quite profitable terms.
Soon after Minsk, Astana and Moscow voiced their plans, representatives of western states began to criticise. In particular, on June 17th, the European Parliament adopted a resolution stating that Russia’s conclusion of the Customs Union with Kazakhstan and Belarus ‘could be an additional obstacle to Moscow’s accession to the World Trade Organisation’. The notion of joining as a three state union began to fall into doubt.
As a result of these diplomatic efforts, Russia has changed its initial position. Our block of three states has been substituted by a single negotiating group, with each country acting for itself. In future, this might create certain difficulties — since Belarus, Kazakhstan and Russia plan to live under shared customs rules. None of us can change these rules alone, on agreeing with the WTO.
Russia hopes to join the WTO first. After Dmitry Medvedev’s recent visit to the USA, the two heads of state announced September 30th, 2010 as the day when all talks on Russia’s joining the WTO will finish. The joint declaration by the two presidents shows that the USA is ready to support Russia in all respects and offer advice to aid the completion of the process.
Belarusian producers will face foreign competition on their traditional Russian market once WTO membership is achieved but the Chairman of the Standing Committee for International Affairs at the National Assembly’s House of Representatives, Sergey Maskevich, believes such competition won’t be a real obstacle to trade.
One’s own game
At the moment, all our neighbours — except Russia — are WTO members. Their experience demonstrates that the step leads to exporting success while domestic competition strengths. We can’t help but wonder whether our national firms are ready for the state to join the WTO. Candidate of Economic Sciences Galina Turban, who heads the Belarusian State Economic University’s International Business Department, has been studying the issue and believes that it’s impossible to foresee the exact consequences. Wide-spread opinion is that the major risk is the liberalisation of foreign goods’ access to the Belarusian market, since this will weaken local manufacturers’ positions. Competition is bound to yield positive results eventually but will our enterprises survive long enough to benefit? They could go bankrupt while fighting for custom.
Of 300 respondents questioned, 95 percent believe the major problem is the strengthening of competition from imported goods (both on domestic and foreign markets). Another concern is whether privileges will be abolished regarding taxation and loans and whether our free economic zones will be liquidated. According to Ms. Turban, individual privileges are subject to abolishment, since Belarus’ production and foreign trade will be bound by strict terms of non-discrimination. Companies receiving state support at present will face the most acute social and economic consequences once the country joins the WTO.
Last year, Belarus’ First Deputy Prime Minister, Vladimir Semashko, said that it could take some time for Belarus, Russia and Kazakhstan to join the WTO as a single Customs Union. However, he added that this would be a blessing for us since, in the meantime, we’d have the opportunity to modernise our economy and approach WTO accession able to ‘compete in most branches of industry’.
Ms. Turban notes that the liberalisation of the domestic market (even in case of immediate WTO membership) wouldn’t present acute problems, since the level of customs tariffs wouldn’t change significantly (according to the current negotiating terms). Moreover, a transitory period (usually of six years) will be used; after its completion, tariff levels will remain at a level adequate to protect domestic producers. Import customs tariffs are no longer a basic protective measure for many Belarusian products in any case. To our advantage, after joining the WTO, Belarus will be able to have its trading disputes with other countries regulated, in line with established WTO procedure. At present, our trading partners can behave as they wish without sanctions.
In recent years, the Belarusian economy has come close to achieving WTO norms, so no great dividends or losses are expected once the country joins the organisation. Being outside the WTO, Belarus has integrated into the global economy and adjusted its legislation to WTO norms. The country has reduced its level of import duties, making some even lower than those fixed within the WTO. “Joining the WTO arouses restrained optimism; we should quash our fear of negative consequences,” says Ms. Turban. “Moreover, global practice of doing business demonstrates that financial risk influences trade far more than joining the WTO.”
The Foreign Ministry believes that if it was a goal to yield our Belarusian economy to the WTO, this could have been already achieved. However, the WTO membership is not an ultimate goal for us. “The core is to preserve the country’s economy and ensure its stable growth,” notes Deputy Foreign Minister Andrey Yevdochenko. This is why Minsk plans to facilitate its talks with Geneva but won’t sacrifice its national interests for the sake of joining.
By Igor Kolchenko
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