Russia in the WTO: Effects on Belarus’ WTO membership prospects are currently unclear, while Russia’s membership in the Organisation poses a real threat to the viability of Belarus’ unstable economic model.

Specifically, changes in the customs tariff rates may cause Belarus to lose some of its exports, which will result in reduced currency receipts from foreign supplies. If the status quo remains in the Belarusian economy (administrative redistribution of resources, subsidies, absence of stimuli to enhance competitiveness, non-transparent investment policy, delays in its WTO accession campaign, etc), the adverse impact of Russia’s membership in the WTO will only become more significant.

Belarus has stepped up its WTO accession efforts, according to reports issued in early 2012 by the Belarusian Foreign Ministry. Yet, this process will be anything but simple amid the current disagreements with the EU and the United States, the instability of the Belarusian economy and the specific nature of Belarusian legislation. Belarus still has some hope of Moscow’s help (at least Russia promised not to make any independent requirements during Belarus’ WTO accession process), but it is also an open question as to whether this assistance will be offered at all, or if there is a technical possibility for providing this help.
Therefore, there is no other way for Belarus but to speed up internal economic reforms. Below are some rational options for Belarus under the circumstances:

1.    Structural analysis of the legislative framework aimed at identifying any provisions that run counter to the WTO standards and rules. It is necessary to carry out a detailed and thorough analysis of regulatory acts leaving out all the unique features of the economic model (targeted privileges, case-by-case support, state subsidies, etc.). They may not be completely abolished during the current phase, but it would be helpful to gauge the real scope of apparent contradictions with a view to working out a strategy to resolve them.
2. Working out a strategy towards the harmonisation of domestic procedures with the WTO rules. Based upon the results of the analysis of the nonconformities of the existing Belarusian model to the rules and standards of the WTO it is necessary to map out an adequate strategy for bringing customs procedures, currency regulations, tax and loan rules, etc. in line with the WTO requirements, while analysing the real losses the national economy will incur from any regulatory harmonisation and taking prompt and extraordinary measures to minimise these losses.

3. Russian market access. One may expect foreign investors to finally come to Belarus, but the reality is that Russia’s accession to the WTO will likely reduce already depressed investment activity in Belarus rather than boost it. At the same time, the Russian market has become more attractive to foreign investors, and on this basis, cooperation projects with Russian (optionally, Western) capital and the creation of companies (including productions) in Russia by Belarusian businesses will enable Belarus to create additional sources of foreign exchange receipts. At best, it may also lead to their eventual return to
the Belarusian market having made use of Russian technologies, production modernisation opportunities, marketing channels and, finally, Russian financial backing.

4. Creation of a consistent, comprehensible, transparent, uniform investment environment. In order to encourage foreign businesses to invest in Belarus, this country needs to adopt a consistent unified procedure for market entry, give up the practice of offering individual terms, and introduce a clear algorithm for investors. The existing system of the custom-tailored approach to every large investor not only fails to comply with international rules and standards, but also promotes case-by-case opportunistic sales, thus reducing the overall investment appeal of the country. Belarus has earned a reputation
for being an economy, in which the system of investment decision-making is personified and depends entirely on the opinion of specific actors. This approach might interest capital coming from certain jurisdictions, but makes the arrival of real investors, in which any economy would be interested – large transnational corporations – hardly possible at all.

The full text of the survey is available in Russian on the BISS website.