Russian Trade and Foreign Direct Investment Policy at the Crossroads

This paper summarizes the estimates of what Russia will get from WTO accession and why. A key finding is the estimate that Russia will gain about $53 billion per year in the medium term from WTO accession and $177 billion per year in the long term, due largely to its own commitments to reform its own business services sectors. The paper summarizes the principal reform commitments that Russia has undertaken as part of its World Trade Organization (WTO) accession negotiations, compares them with those of other countries that have acceded to the WTO. It finds that the Russian commitments represent a liberal offer to the members of the WTO for admission, but they are typical of other Transition countries that have acceded to the WTO. The authors discuss why Russian WTO accession will result in the elimination of the Jackson- Vanik Amendment against Russia. The authors discuss Russian policies to attract foreign direct investment, including an assessment of the impact of the 2008 law on strategic sectors and the increased role of the state in the economy. Finally, the authors assess strategies for most efficiently meeting the Government’s objective of diversifying the Russian economy.