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. Last Updated: 07/27/2016

Report: WTO to Have Little Effect on GDP

Despite some fears of impending ruin, entry to the World Trade Organization actually will have little overall effect on the economy, according to a report released Wednesday.

Gross domestic product should only drop 1 percent if Russia does not have to lower import tariffs to enter the WTO, said the report, written by the Russian Academy of Sciences and National Investment Council. If the government can negotiate higher tariffs, WTO accession could boost GDP by 0.6 percent.

Deputy Economic Development and Trade Minister Maxim Medvedkov praised the report for "confirming the results of our own investigations."

Negotiated tariffs should not have a major economic impact, he said.

Consumers may reap benefits even if domestic producers suffer from competition, said Ivan Ivanov, deputy director of the Academy of Sciences' Institute of Europe.

In particular, customers should benefit from competition in telecommunications and the financial sector and from higher-quality imported medicines, he said.

Ivanov said that the high-tech sector could benefit with the help of government support, while the competitiveness of the metals and chemicals sectors will depend on restructuring power and transport tariffs.

The furniture industry, on wobbly new legs, needs protection, as do financial services, primarily banks and insurance, to compete with international companies, he said. The auto and aviation industries will survive only with government support.

Producers of export goods stand to benefit from freer access to foreign markets, but WTO entry alone will not boost exports, Ivanov said. A survey of 422 companies included in the report found that most fear their products can't compete on foreign markets.

Losses from trade barriers and anti-dumping, estimated by the Economic Development and Trade Ministry at $3.5 billion per year, could be cut by up to 40 percent, the report said.

Everyone stands to gain from bringing Russia's laws in line with WTO rules, Ivanov said. Legal reforms, as well as WTO accession itself, should boost Russia's image for investors.

Import-dependent regions like Moscow, St. Petersburg and Primorye will feel the effects of WTO entry the most, Ivanov said. These regions have better-than-average industrial or resource bases and stand to gain the most from better access to foreign markets.

Although Russia must accede to the WTO, businesses need to prepare themselves first, said Anatoly Aksakov, deputy chairman of the State Duma's economic policy and business committee. He toured China before the country joined the WTO earlier this year.

"In the regions, they don't know what is waiting for them," he said by telephone. "In China, the middle managers at the plants we visited knew what to do. ... They understood the situation and were not afraid."