In 1994
Russia applied for the successor of GATT – WTO, which became the main international body dealing with international economic relations and trade. In 1995, formal talks on
Russia's accession had begun. A working group was set up in July 1995, to study the Russian trade regime and work out requirements for the accession. In February 1998,
Russia finalized its tariffs proposals and informed the members of the WTO that it was ready for the market accession negotiations. In October 1999,
Russia formally presented its proposal regarding domestic service-market access to the working group. From 1999,
Russia also started bilateral negotiation with WTO member states. The most problematic issues under discussion were agriculture, the custom system (
CIS), tariffs and trade in services.
During the accession talks at the WTO,
Russia proposes the initial tariffs bindings at levels well above current effective rates while the final bind rate, after the 5-7 years of transition period, would be close to the current effective tariff level. That is, after the transition period, the tariffs proposed by the Russian negotiators would be an average of 7.6 % for industrial goods, 11 % for fishery products and 13% for agricultural products. The change occurred in the issue related to import tariffs on foreign cars. While in the original proposal
Russia insisted that the tariffs level be fixed at 35 %, in 2004 it offers to reduce the level of tariffs to 25% at the beginning of the transitional period, which would be at least 7 years, and the final level of the tariffs on imported cars be fixed at the level of 15%.
The representatives of the different sectors of economy have different position on the issue of Russian accession to the WTO, since the WTO accession, one way or another, will affect the overwhelming majority of Russian industries and enterprises. Thus, the attitude of the sectors can be divided into the three groups: those who will benefit; those who will lose; and those whose interests will not be affected by the country's accession to the WTO.
Naturally, a country's major exporters stand to benefit the most from its accession to the WTO. But, since
Russia's first and second export commodities are crude oil and natural gas (together they account for more than 40% of the total export), whose prices are global, these goods are not to be affected by the WTO membership. The industries, which are pro- quick WTO accession, are those, which are highly competitive in the international market and suffer numerous obstacles while exporting to the WTO members. In
Russia's case, these industries include mostly steel industries.
Russia is the world's largest steel exporter, where steel accounts for almost 7% of the country's export. However, the steel industry was facing numerous obstacles in export worldwide. Each year Russian steel makers are losing billions of dollars as a result of dumping procedures against Russian producers in the EU and USA markets (two of the biggest importers of Russian steel). Thus, the steel industry's representatives believe that
Russia's entry to the WTO would put an end to such discriminative actions by foreign governments and are actively lobbying the government for the quick accession to the WTO. While together those two groups account for the majority of Russian exports, they employed only a quarter of the workforce, whereas the majority of the population is employed in the uncompetitive, backward sectors, representatives of which wish to delay the accession. These sectors include the automobile and aviation industries, some segments of light industries, agriculture and financial sectors. Due to the fact that their outcomes were clearly uncompetitive on the world market, they lobby the government for more protection and a long transition period, claiming that flow of the cheap and high quality goods and services will ruin the domestic
production and, as a consequence of closure of industries, will leave millions of people unemployed.
With regard to the public attitude, the government claimed that the majority of the population supported
Russia's bid. Thus, German Gref stated that, according to the research concluded by the sociological institute of Yurii Levada, 50% of all
Russia's population supported the government in its move toward WTO accession, while 25 % opposed it in. But in reality the situation is quite different. According to the Fund of Public
Opinion, only 47% of respondents showed their support for the WTO entry, while the percentage of the population who are uncertain on the issue increase to 38%. The report further concluded that public awareness on the matter did not increase as it was shown in the report by the institute of Yurii Levada. Thus, 43% of participants replied that they had never heard of WTO, 33% knew something but the uncertain to reply fully and only 18% replied that they knew of the WTO. Out of this 18%, 3 % of the respondents defined ’WTO' as ’Vserosiiskaia Torgovaia Organizatsia' (All-
Russia Trade Organization), and even ’Vsesouznoe Teatral'noe Obzchestvo' (All-Soviet Theater Society), while those who were able to guess the right meaning of the abbreviation, could not answer which benefits
Russia's accession would bring to them. But the part of respondents who believed that the WTO accession would negatively affect them, could easily give the answer to such position. The main concerns raised are about the huge unemployment problem, increase in the cheap none quality imports, mainly from
China as the result of the Russian accession to the WTO.