The accession of any country to the WTO is always a time of compromise, mutual benefits and obligations. Russia is no exception, despite joining on quite reasonable terms. However, some branches will benefit while others will lose — such as Customs Union light industry enterprises.
Russia’s tariff obligations within the WTO envisage reduced rates of duty for imported ready-made goods and enhanced rates for imported components. This will bring cheaper goods from abroad into the three states of the Customs Union, with specialists forecasting a 10-15 percent rise in imported light industry goods within three years.
Bellegprom Concern is, naturally, concerned for its future, although the new rates won’t become operational immediately, being introduced gradually over 3-5 years. Belarus’ carpets and carpet goods are certainly threatened, since import duties on these will fall from 1 Euro to 0.38 Euros. “The essence of the problem is that cheaper clothes, footwear and carpets will appear across the whole Single Economic Space,” explains Lyudmila Tyaglova, the Deputy Chair of Bellegprom. “As a result, competition among light industry goods will increase. If the cost of components rises, our competitiveness will suffer even more.”
Nevertheless, some benefits exist, with common rules for all: when China and Vietnam joined the WTO, the volume of investments into light industry sharply rose in their states. As far as Belarus is concerned, the abolishment of import duties on technological equipment will promote modernisation. “In my opinion, this is a way to enhance our competitiveness under new economic conditions,” stresses Ms. Tyaglova. Moreover, Belarusian businesses will acquire a civilised opportunity to counteract possible ‘dumping’ (not yet a problem but providing for the future).
Bellegprom has approved a strategy with the Economy Ministry and Foreign Ministry to tackle the new conditions and a joint project with the UNDP is being implemented, to promote Belarus’ foreign economic activity. This involves various departments, including Bellegprom, which is working to create a single electronic trading venue. “We understand that it is vital to satisfy customer needs — especially in light industry, where trends move rapidly,” explains Ms. Tyaglova. “We need to shift from mass production to small-series production, by restructuring manufacturing facilities. Of course, this is costly.”
At present, many experts, including those in Russia, are concerned about how to compete with Chinese manufacturers. “We need to clearly analyse trade inflow, monitor imports and conduct a more aggressive trade policy,” believes Alexander Kulinkovich, Senior Advisor of the Foreign Ministry’s Foreign Economic Department.
It’s impossible to introduce non-tariff measures against goods from the Heavenly Empire but the WTO doesn’t forbid other protective measures — such as anti-dumping. It’s vital to stop ‘grey imports’ from surfacing via the border with Kazakhstan. “We need to unify conditions so that individual entrepreneurs and legal entities have a single import regime,” explains Mr. Kulinkovich. “In this way, we can struggle against the negative consequences of Russia’s WTO membership.”
Opportunities also exist to support priority branches. According to an agreement on subsidies, targeted assistance for particular branches or enterprises is forbidden. However, WTO rules welcome state assistance of innovative producers. According to Mr. Kulinkovich, Russia is now reforming its support in line with this, simplifying customs procedures to reduce costs for domestic manufacturers — as welcomed by the WTO. “We’re also likely to tackle this issue,” adds Mr. Kulinkovich. “Excessive paperwork and customs point queues cost enterprises money, so we’ll try to improve the situation, aiming to enter the top 30 most attractive countries for doing business.”
The Economy Ministry believes that no real threat to Belarusian manufacturers will be evident until 2015.
