Russia has agreed to slash tariffs, get rid of industrial subsidies, and allow foreign companies greater access to its domestic market in a big overhaul of the economy due to follow its entry into the World Trade Organization expected next year. On Friday, Russia and Georgia finally approved the agreement signed in November, clearing the way for Russia to join the WTO after 18 years of negotiations. The deal is expected to get final approval from WTO trade ministers in December, setting Russia up for formal membership by the middle of 2012.

Analysts expect the WTO entry to benefit Russian consumers as import barriers are reduced.

First and foremost, the entry will reduce prices, says the head of the international studies center of the Economics Institute of the Russian Academy of Sciences Leonid Vardomsky.

"There are very high tariffs in Russia, especially on the goods produced in this country. They have to be reduced. There will be a transitional period, of course, but it will be over soon. The prices fall is expected to amount to 15-20 percent."

Vegetables, fruits and nuts that are not grown in Russia will become cheaper. The tariffs for oranges, mandarins, pineapples, mangos, pistachios and peanuts will not be above 5 percent. The tariffs for imported milk, cream powder and condensed milk will be reduced from 25 to 20 percent. The ceiling tariff for medicines from the present 15 percent will slump to 6,5 percent. Wine and beer will become cheaper: tariffs for wine will be decreased from 20 to 12,5 percent, the ones for beer from 60 eurocents to 1,8 eurocents per litre.

Tariffs for household appliances and electronic devices will drop from 15 to 7 percent with tariffs for computers and hardware components to be abolished completely, Russia’s chief WTO negotiator Maksim Medvedkov points out.

"Various tariffs will be applied to various high tech goods. Our tariff for computers and household appliances has always been quite liberal. Now as we are joining the WTO it will amount to zero."

Russia is obliged to change tariffs in three years. In some significant areas the transitional period may last up to 7 years. Nonetheless some industries fear that a serious turmoil is inevitable. Russia’s industry Minister Viktor Khristenko admitted that the farm machinery industry and car industry will be the most vulnerable as this country joins the WTO.

Some are worried that the flow of agricultural production from abroad will kill the arising Russian farm machinery industry. Without any governmental support it will be impossible to compete with foreign manufacturers. Yet the WTO does not prohibit states from protecting certain industries. The main question is how to help, argues Vice President of the Food Grain Union Alexander Korbut.

"The WTO allows countries to support some of its industries, although there is a rule that caps state aid. The budget spending is forbidden for measures that grant competitive edge. If we manage to share funds, there will be other advantages created. For instance, slashing tariffs for rice will give advantages to imported rice. It means that we have to pour some earmarked funds to support the national industry by boosting melioration and rice seedage, and creating more facilities to preserve and process rice. We have got to create some advantages in those industries that are a step back."

The Russians stand to benefit from the WTO entry, not just because they will get access to cheaper goods, but also due to the fact that the emerging infrastructure is to be created to support local industries.

The Voice of Russia