Russian WTO accession : what has been accomplished, what can be expected

This paper summarizes the principal reform commitments that Russia has undertaken as part of its World Trade Organization (WTO) accession negotiations, providing detailed assessments in banking, insurance, and agriculture. The paper assesses the gains to the Russian economy from these commitments, based on a summary of several modeling efforts undertaken by the author and his colleagues. The author compares Russian commitments with those of other countries that have recently acceded to the WTO to assess the claim that the demands on Russia are excessive due to political considerations. He explains why Russian WTO accession will result in the elimination of the Jackson-Vanik Amendment against Russia. Finally, he discussesthe remaining issues in the negotiations and the time frame for Russian accession as of the fall of 2007.World Trade Organization,Debt Markets,Emerging Markets,Economic Theory&Research,Free Trade

Export Restraints on Russian Natural Gas and Raw Timber: What are the Economic Impacts?

The paper explains that the Russian gas giant, Gazprom, has failed to invest adequately, resulting in very little development of new gas supplies in Russia. The result has been progressively increasing use by Gazprom of central Asian gas supplies, at progressively higher prices for Russia. The increased prices of gas for Russian consumers have shown that it is crucial for Russian welfare to allow new entrants, and to introduce competition in the Russian domestic market. Competition among multiple gas suppliers from Russia, however, would erode or eliminate the monopoly profits of the Russian Federation on gas exports. Thus, with a more competitive domestic market, the Russian government would be expected to grant exclusive exporting rights to a single entity (as it presently does with Gazprom) or impose export taxes. Thus, Europe should not expect to achieve cheaper Russian gas as a result of structural reforms within the Russian gas market. More promising avenues for European energy diversification are new pipeline construction to open up new sources of supply independent of Russia (especially the Nabucco pipeline) and liquefied natural gas purchases. *

The political, regulatory and market failures that caused the US financial crisis

This paper discusses the key regulatory, market and political failures that led to the 2008-2009 United States financial crisis. While Congress was fixing the Savings and Loan crisis, it failed to give the regulator of Fannie Mae and Freddie Mac normal bank supervisory power. This was a political failure as Congress was appealing to narrow constituencies. In the mid-1990s, to encourage home ownership, the Administration changedenforcement of the Community Reinvestment Act, effectively requiring banks to lower bank mortgage standards to underserved areas. Crucially, the risky mortgage standards then spread to other sectors of the market. Market failure problems ensued as banks, mortgage brokers, securitizers, credit rating agencies, and asset managers were all plagued by problems such as moral hazard or conflicts of interest. The author explains that financial deregulation of the past three decades is unrelated to the financial crisis, and makes several recommendations for regulatory reform.Debt Markets,Access to Finance,Emerging Markets,Banks&Banking Reform,Bankruptcy and Resolution of Financial Distress

Export restraints on russian natural gas and raw timber : what are the economic impacts ?

Export restraints by the Russian Federation on natural gas and timber have been the source of major controversy between the European Union and the Russian Federation. The analysis of this paper suggests that the export restraints in natural gas very substantially benefit Russia. On the other hand, in raw timber the analysis suggests that a substantial reduction of Russian export taxes would increase Russian welfare. The paper explains that Gazprom has failed to invest adequately, resulting in little development of new gas supplies. The result has been progressively increasing use by Gazprom of Central Asian gas supplies, at progressively higher prices for Russia. The increased prices of gas for Russian consumers have shown that it is crucial for Russia to allow new entrants and to introduce competition in the Russian domestic market. Without export restraints, however, competition among multiple gas suppliers from Russia would erode or eliminate the monopoly profits of the Russian Federation on gas exports. Thus, with a more competitive domestic market, the Russian government would be expected to grant exclusive exporting rights to a single entity (as it presently does with Gazprom) or impose export taxes. Thus, Europe should not expect to achieve cheaper Russian gas as a result of structural reforms within the Russian gas market. A more promising avenue for European energy diversification is new pipeline construction to open up new sources of supply independent of Russia (especially the Nabucco pipeline), and liquefied natural gas purchases.Markets and Market Access,Transport Economics Policy&Planning,Energy Production and Transportation,Economic Theory&Research,Oil Refining&Gas Industry

Russian trade and foreign direct investment policy at the crossroads

This paper summarizes the estimates of what Russia will get from World Trade Organization accession and why. A key finding is the estimate that Russia will gain about $53 billion per year in the medium term from World Trade Organization 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 accession negotiations, and compares them with those of other countries that have acceded to the World Trade Organization. It finds that the Russian commitments represent a liberal offer to the members of the World Trade Organization for admission, but they are typical of other transition countries that have acceded to the World Trade Organization. The authors discuss the outstanding issues in the Russian World Trade Organizaiton accession negotiations, and explain why Russian accession will result in the elimination of the Jackson-Vanik Amendment against Russia. They 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 the importance of Russian accession to Russia and to the international trading community, and suggestions for most efficiently meeting the government’s diversification objective.Economic Theory&Research,World Trade Organization,Emerging Markets,Debt Markets,Free Trade

Trade and payments arrangements in post-CMEA Eastern and Central Europe

A web of trade and payments arrangements binds countries of Eastern and Central Europe under the Council of Mutual Economic Assistance (CMEA) agreements. However, it is incompatible with these countries recent commitments to move toward liberalized trade and currency convertibility. The importance of trade with other CMEA members, and the apparent desire of the USSR and others to denominate all future mutual trade at international prices poses a number of problems of transition for the countries of Eastern and Central Europe. This paper identifies three broad problems in this connection: (1) the breakdown of the CMEA arrangements has led to a serious breakdown of trade relations and reduced trade volume among former CMEA members; (2) denominating international trade at international prices implies changes in the terms of trade for each country in the system; and (3) all countries may not reach full currency convertibility in the near term, but the continuation of the old CMEA arrangements is also impossible. The purpose of this paper is to discuss the possible interim institutional arrangements for trade of payments among previous CMEA members and how such arrangements can contribute to addressing the emerging payments imbalances.Economic Theory&Research,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Trade Policy,Transport and Trade Logistics

How integration into the Central African Economic and Monetary Community affects Cameroon's economy: general equilibrium estimates

The authors quantify the impact on Cameroon of three aspects of its new regional trade agreement with the Central African Economic and Monetary Community (the CEMAC agreement): i) improved access to markets in CEMAC; ii) preferential tariff reduction; and iii) reduction of its external tariff through implementation of the common external tariff of CEMAC. They estimate that Cameroon will gain from the agreement but show how Cameroon's regional market power greatly affects the magnitude of its gains. They assume that Cameroon has regional market power in both imports and exports despite being small in world markets. They find that better access to partner markets and reduction of the external tariff explain virtually all of Cameroon's welfare gain. In their preferred scenario (Cameroon having regional market power), reduction of the external tariff explains three-quarters of the welfare gain. If Cameroon further reduces tariffs to its regional partners, the effect on its economy is a loss of real income but the impact is negligible. Should Cameroon's partners fail to provide tariff-free access to their markets, the authors estimate that, given Cameroon's regional market power, Cameroon would gain even more from free trade than it would from implementing the CEMAC arrangements.Economic Theory&Research,Trade Policy,Environmental Economics&Policies,Markets and Market Access,Export Competitiveness,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Environmental Economics&Policies,Trade and Regional Integration,Economic Theory&Research,Access to Markets

The structure of import tariffs in the Russian Federation : 2001-05

The Russian tariffstructure contains over 11,000 tariff lines of which about 1,700 use the so-called"combined"tariff rate system. For the combined system tariff lines, the actual tariff applied by Russian customs is the maximum of the ad valorem or specific tariff. The lack of available data and the difficulty in calculating the ad valorem equivalence of the specific tariffs have resulted in some previous efforts that have simply ignored the specific tariffs. This is the first paper to accurately assess the tariff rates. The authors show that ignoring the specific tariffs results in an underestimate of the actual tariff rates by about 1 to 3 percentage points, depending on the year. The average tariff in Russia has increased between 2001 and 2003 from about 11.5 to between 13 and 14.5 percent, but it has held steady in 2004 and 2005. This places Russia's tariffs at a level slightly higher than other middle-income countries and considerably higher than the OECD countries. The trade weighted standard deviation of the tariff approximately doubled from 9.5 percent in 2001 to 18 percent in 2003, but then fell to 15.2 percent by 2005. The food sector and light industry are the aggregate sectors with the highest tariff rates-their tariff rates in 2005 were 23.1 percent and 19.5 percent on a trade-weighted basis, but the increase in their tariffs has not led to an increase in their output.International Trade and Trade Rules,Free Trade,Export Competitiveness,Trade Policy,Contract Law

Regional impacts of Russia's accession to the World Trade Organization

In this paper we develop a computable general equilibrium model of the regions of Russia to assess the impact of accession to the World Trade Organization (WTO) on the regions of Russia. We estimate that the average gain in welfare as a percentage of consumption for the whole country is 7.8 percent (or 4.3 percent of consumption); we estimate that three regions will gain considerably more: Northwest (11.2 percent), St. Petersburg (10.6 percent) and Far East (9.7 percent). We estimate that the Urals will gain only 6.2 percent of consumption, considerably less than the national average. The principal explanation in ourcentral analysis for the differences across regions is the ability of the different regions to benefit from a reduction in barriers against foreign direct investment. The three regions with the largest welfare gains are clearly the regions with the estimated largest shares of multinational investment. But the Urals has attracted relatively little FDI in the service sectors. An additional reason for differences across regions is quantified in our sensitivity analysis: regions may gain more from WTO accession if they can succeed in creating a good investment climate.Economic Theory&Research,ICT Policy and Strategies,Free Trade,Markets and Market Access,Investment and Investment Climate