West Virginia Officials Should Look At Eastern Eruope and Russia For Opportunities

Russia Joins World Trade Organization

From the Los Angeles Times

Russia's formal entry into the WTO on Wednesday also made it the biggest economy to become a member of the Geneva-based trade body since China joined in late 2001.

China's entry paved the way for a rapid acceleration of exports of manufactured goods to the U.S., contributing to a sharp increase in America's trade deficit. But Russia's entry to the WTO isn't likely to have such a dramatic effect as far as U.S. economic relations are concerned.

For one thing, U.S. lawmakers have yet to grant Russia permanent normal trade relations, partly because of concerns about the country's questionable human rights and foreign relations records.

Analysts expect Congress to change Russia's trade status, possibly next month, which is needed for the U.S. to benefit fully from the lowered barriers that come with the WTO membership.

U.S. exports of industrial equipment and other goods and services to Russia totaled about $11 billion last year, a figure that could double in five or six years, said Anders Aslund, a Russia economy expert at the Peterson Institute for International Economics.

U.S. imports from Russia consist primarily of oil and uranium — resources that won't be affected by the WTO status. As such, unlike the situation with China, the U.S. stands to narrow its current trade deficit with Russia, Aslund said, and the bilateral trade relations are more compatible.

"It has a big positive effect on U.S. trade," he said.

It is impossible to predict the total impact that the addition of Russia will have on world and American trade.  One can easily, however, consider the potential.

The Russian Federation has almost 140 million people.  Although its population is not growing quickly naturally, it does have an immigrant friendly policy since it needs to populate its resource producing areas.

Some experts fear that joining the WTO will not help Russia's economy continue to expand, since it is strongly tied to the quickly weakening Chinese economy.  It could potentially, however, compete strongly with European industry, which has stronger regulatory and tax burdens to face.

Inevitably, the long term economic axis of influence in Europe will continue to shift eastward, away from the bloated welfare states of Western Europe towards the free markets of the eastern states and resource rich Russia.  Currently West Virginia's state government is looking at new locations for the European development and trade office now in Munich.  State officials would be wise to note the changes in Europe's economic balance of power and do a reverse of Horace Greeley's advice.  Go East, maybe not all the way to Russia, but certainly out of Old Europe.  Opening an office in Warsaw would likely be cheaper and help to connect West Virginia's economy with emerging, youthful markets in addition to the already well-developed and well-traveled ones of Western Europe.