There are no major surprises in the agreed terms. Russia has secured a lengthy compliance period in respect of tariff changes affecting the most sensitive areas, such as auto manufacturing and parts of agriculture. So, as we stated previously, WTO entry will not have any immediate direct impact on the economy or industrial sectors but it does provide a framework and timeline for the government and Russian enterprises to accelerate efforts to improve competitiveness. It is hoped that the government will now use the obligations of membership as the backdrop to its pursuit of a more active reform program. Otherwise, it would not have accelerated efforts to join before the start of the next presidential term.

> Main terms. The average import tariff will be cut from 10.0% to 7.8%. Russia has agreed to lower one third of the tariffs from the date of accession. A quarter will take effect after a three-year lead time, while other tariff changes, e.g. affecting autos and aircraft, will take force after seven years. S ome agricultural tariff changes will have an eight-year concession period.

> Agriculture. For agriculture imports, the average import tariff will be cut from 13.2% to 10.8%. Dairy import tariffs will fall from 19.8% to 14.9% and for cereals from 15.1% to 10.0%. Import tariffs for poultry products will have a concession period of eight years. Total agricultural subsidies will be capped at $9.0 bln in 2012 and cut to $4.4 bln by 2018.

> Manufacturing. For manufactured goods, the average import tariff will be cut from 9.5% to 7.3%.

> Autos. The import tariff will be cut from 15.5% to 12.0%, but the concession period is seven years. Russia will also eliminate preferential tariffs for automakers making large investments in Russian-based production by July 1, 2018.

> Chemicals. The import tariff will fall from 6.5% to 5.2%.

> Gas. Russia agreed to develop market-based pricing for the domestic market but will keep regulating prices for households and non-commercial users.

> Telecoms. The current limit for foreign equity ownership of 49% will be scrapped after four years.

> Banks. 100% foreign-owned banks will be allowed to operate in Russia but with an overall limit on foreign-bank control of the banking market set at 50%.

> Insurance. Foreign insurance companies will be able to open fully-owned branches but only nine years after Russia joins the WTO.

> Services. 100% foreign-owned companies will be able to operate in the wholesale, retail and franchise sectors with immediate effect after membership.

> Aviation. Foreign-made aircraft will qualify for the same leasing benefits as Russia-made aircraft.

> Customs. The maximum custom clearance fee will be cut by two thirds to R30,000 ($970).

> Railways. Transport costs for Russian and foreign-made goods will be equalized by July 1, 2013.

> Privatization. Russia agreed to fully privatize United Grain Company in 2012 and sell 50%+1 share in Rosagroleasing by 2013. Both of these companies are on the previously published list of state companies to be privatized. As part of the entry terms, Russia has also agreed to report regularly to the WTO on progress concerning the larger privatization program. It is hoped that this too will provide a greater incentive for faster progress than seen to date.

Chris Weafer, Chief Strategist Troika Dialogue