Russia’s WTO accession effects: Belarus hopes for compensation

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April 22, 2016 18:12

Belarus hopes for compensation for economic losses associated with the anticipated Russia’s accession to the World Trade Organization (WTO). The implication is that the counterparts are to have contentious negotiations about future economic cooperation framework.

In the near future the protocol on Russia’s WTO accession will be submitted to the State Duma. All relevant procedures will be completed in July 2012.

Thus, in early August, Russia will become a full WTO member. Moreover, Kazakhstan’s accession to the WTO is also anticipated before the end of the year.

Russia and Kazakhstan’s accession to the WTO is fraught with a number of negative consequences for the Belarusian economy. Thus, reduction in customs duties will result in cheaper foreign goods, enabling the expansion of Russian and Kazakh markets by international businesses. As a result of increased competition, volumes of Belarusian exports to Russia and Kazakhstan will reduce.

Belarus’ major non-oil exports, which will face the danger of supply reduction to Russia and Kazakhstan include: trucks, tractors, truck tractors, cars, milk and dairy products, meat products, tires, steel products, furniture, sugar, building and construction materials , shoes, and clothing.

In some cases the reduction in Russian customs duties for foreign goods could affect single-company towns, both in the capital and in small and medium Belarusian towns. Moreover, private small and medium businesses may be affected.

At the same time, customs duties on Belarusian goods exported to third countries – WTO members, will remain unchanged. It will be difficult for the Belarusian enterprises to compensate for the losses on the Russian market via increasing the supply of goods to the third countries.

All in all, the average reduction rate of import duties to Russia is as follows: 2011 - 9.6%, 2012 - 9.5%, 2013 - 7.4%, 2014 - 6.9%, 2015 - 5.9% and by 2019 is forecasted to drop down to 5-5.3%.

In addition, within the Customs Union and Common Economic Space Belarus could anticipate an increase in imports of goods from the third countries via Russia and Kazakhstan. Accordingly, Belarusian companies will face with greater competition not only on the Russian and Kazakh markets, but also inside the country.

Ultimately, this could result in reduced production output, employment, incomes and profitability of Belarusian producers. In turn, the reduction in foreign exchange earnings against the backdrop of increasing volumes of imports may result in an increased deficit in the current account of the payments balance, increased demand for foreign currency and reduced Belarusian ruble’s exchange rate against the major currencies.

As a result of the deteriorating financial situation at Belarusian enterprises problems associated with servicing internal and external debt liabilities of Belarusian residents could deteriorate. Simultaneously, reduced number of employees and work places could trigger unemployment growth and increase social tensions in the country.

Finally, Russia and Kazakhstan’s WTO accession would reduce Belarusian investment attractiveness in comparison with its Customs Union partners, because customs duties for Belarusian residents applied by third countries - parties to the WTO, will be maintained at the same level, while reduced for Russian and Kazakh companies.

Certain risks are associated with the implementation of investment projects in Belarusian free and special economic zones. For example, in Russia, preferential conditions in Kaliningrad and Magadan free economic zones and investment agreements in the automobile industry to be completed by 2019, when all benefits that do not meet the WTO standards will be canceled.

However, there is no need to over-dramatize the negative effects on the Belarusian economy associated with Russia’s entry to the WTO. For the most part import duties for Belarusian goods will continue to be lower than those for foreign goods originating from the third countries (even taking into account the expected reduction).

Prime Ministers of Belarus, Russia and Kazakhstan, Mikhail Myasnikovich, Dmitry Medvedev and Karim Masimov on June 15 discussed enhancement of integration cooperation within the CU and the CES at a working meeting and the second business forum “Common Economic Space: New Opportunities for Industrial Development”, which took place in St. Petersburg. During the forum, Medvedev said that Russia will support Belarus and Kazakhstan’s accession to the WTO.

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President ensures continuity of state administration with young middle-level personnel
October 02, 2017 12:08
Image: BRSM.BY

President Lukashenka continues to rotate staff and rejuvenate heads of departments and universities following new appointments in regional administrations. Apparently, new Information Minister Karliukevich could somewhat relax the state policy towards the independent media and introduce technological solutions for retaining control over Belarus’ information space. New rectors could strengthen the trend for soft Belarusization in the regions and tighten the disciplinary and ideological control over the student movement in the capital.

President Lukashenka has appointed new ministers of culture and information, the new rector of the Belarusian State University and heads of three universities, assistants in the Minsk and Vitebsk regions.

The new Information Minister Karliukevich is likely to avoid controversial initiatives similar to those former Minister Ananich was famous for, however, certainly within his capacities. Nevertheless, the appointment of Belarusian-speaking writer Karliukevich could be regarded as the state’s cautious attempt to relax environment in the media field and ensure the sovereignty of national media.

The Belarusian leadership has consolidated the trend for mild Belarusization by appointing a young historian and a ‘reasonable nationalist’, Duk as the rector at the Kuleshov State University in Mogilev. Meanwhile, while choosing the head of the Belarusian State University, the president apparently had in mind the strengthening of the ideological loyalty among the teaching staff and students at the main university in order to keep the youth movement at bay. Previously, Korol was the rector of the Kupala State University in Grodno, where he held purges among the disloyal teaching staff.

The trend for the renewal of mid-ranking executives and their rejuvenation has confirmed. The age of the Culture Minister and three new rectors varies from 39 to 44 years old.

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