As the World Trade Organization (WTO) awaits the Russian government’s approval of an accession package to make the country the group’s 155th member, an article published by the World Textile Information Network examines the pros and cons of an effort that was started in 1993.
Broadly speaking, the multi-lateral agreement shared by member states ensures trade on equal ground, which is a substantial benefit to developing economies. However, as new members have realized, accession to the ranks of the WTO often means giving up tariffs higher than allowed between members and the dismantling of trade barriers that have been erected to help less efficient industries survive in the global marketplace.
Russia’s textile industry is among those that will likely face a difficult period of adjustment once the country joins the WTO. The duty on textiles, apparel and footwear imported from the United States, for instance, will have to be lowered to a range of 5 percent to 7 percent, compared the 10 percent to 20 percent duty that currently prevails.
Moreover, Russian manufactures will witness strong competition from other outside markets. Relatively low-cost goods from Asia and the Indian sub-continent will be the stiffest challenge, forcing a realignment of prices for domestically-produced goods.
The entire article may be found here.
Questions: It may be difficult to judge whether the benefits of WTO membership outweigh the initial detriments, but how long should it take Russia to begin realizing more benefits than detriments?
Considering membership in the trade organization affects Russia’s entire economy and may threaten the livelihood of many of the country’s textile and apparel manufactures, how long should it take learn which will survive global competition on an even playing field?
In 10 to 20 years, what stands to be the size of Russia’s textile and apparel industry? Will it have shrunken, expanded, or be about the same after only the most efficient have survived?