As part of the agreement, within two to three years of accession Russia will reduce import duties on basic polymers from the existing 10% to 6.5%. However, duties on basic polymers including polyethylene, polypropylene and PVC in 2012 will remain at the current level. PET import duties will be reduced from 5% to 4% in 2013.
The duty on plasticised and unplasticised PVC will be reduced from 10% to 6.5% in 2013. In 2015, the same duty cut will apply to polyvinylacetate, copolymers of vinyl acetate and polyurethanes, and in 2016 it will apply to fluoropolymers.
Also, between 2014 and 2018 duties on imports of such polymeric products as pipes, films, plates, sheets and packaging are expected to be reduced from the current 10% to 6.5%.
Russian polymer market experts have divided opinions about the future impact of WTO accession.
Some say a sharp increase in imports will not lead to lower prices, as might be expected, but will instead benefit the profits of sellers. This is what has happened in Georgia and Ukraine, they say.
In addition, it will have a negative impact on domestic production of polymers, the operating costs of which are still high and the quality of which are generally low in comparison with international standards.
Sergei Arbuzov, CEO of Europlastic, one of the largest producers of polymers in Russia and the wider region, says: "At present, only a few Russian polymer producers operate modern and energy efficient production facilities. However the accession into the WTO and the increase of competition will force domestic producers to think about their future. Joining the WTO is a very serious test for both producers and processors."
But Vsevolod Abramov, chairman of the Russian Association of Plastics Processors, says the reduction of custom duties will not have a negative impact on the market, as illegal imports or currency fluctuations have a much stronger effect on the competitiveness of producers.
According to him, there will not be any significant changes in the market for the next
two to three years after the WTO accession. But later, the competitiveness of Russian producers may decline. This will be not only due to an increase of imports, but because of a further increase of production costs, through rises in wages and electricity prices.
On the other hand, the WTO accession is seen by some observers to have benefits for the Russian polymer market, such as increased competition and an improvement in the quality of domestic production.
It might also help accelerate the solution of traditional problems of the industry. Among these are: low levels of per capita consumption of plastic products in Russia (which is three to four times lower than in developed countries); the absence of relevant regulatory and technical documentation, which can stimulate the use of advanced technologies and materials; and a lack of consistent pricing policy between processors and producers of raw materials.
Need to modernize
Another problem is the industry's inefficient use of hydrocarbon raw materials. This might be solved through the construction of pyrolysis and dehydration plants, and a strengthening of the integration of petrochemical plants and oil and gas companies. The majority of existing facilities have small production capacities and were built between the 1960s and 1980s and so need modernisation.
Membership of the WTO may also help Russian polymer producers to become more competitive in export markets. Many new facilities are being built with the intention of exporting their products, and participation in the WTO can directly contribute to improving their economic efficiency.
Alex Zavialov, director-general of Russian polymer producer Centralpolimer, says that joining the WTO "will increase the competitiveness of Russian polymer plants, and raise the effectiveness of activities of domestic technologists and marketers.
"At present Russian producers cannot offer competitive production for the market. Maybe the WTO accession will help them to respond more quickly to market changes."
The Russian polymer production and processing industry comprises more than 6,000 enterprises, which employ more than 100,000 people. Around 30% of these enterprises are concentrated in the Moscow region.
The republic of Tatarstan is the second largest centre of polymer production and processing in Russia. In recent years, nine major polymer-based facilities have been established in Tatarstan. One of these is the Nuran project, which will produce nano-sized polymeric composite materials for the cable and pipe industry. Its total cost is estimated at more than 1bn roubles (Û23.9m).
The size of the Russian polymers market in 2010 was 4.5 million tonnes, of which imports accounted for 1.5 million tonnes. In 2011 the market was expected to grow by 11%.
However, despite such growth, Russia is still far behind the majority of developed and even developing countries in terms of volume of production and consumption of polymers. The outlook for Russia is unpromising in comparison with other countries.
According to analysts' forecasts, by 2015 China will account for up to 25% of the global polymer market and North America will account for 19%. The share of Russia and CIS countries will not exceed 4%.
The imbalance of supply and demand due to limited production capacity in Russia means domestic companies are not yet able to meet the needs of the market, in terms of volume and product range. Despite the launch of new production in recent years, Russia is still in the list of the world's leading importers of polymers including PE, PP, PVC, PS and PET, occupying fifth position on the list.
But much can change in the near future, as some leading producers have announced plans to expand their production volumes from 2013. These companies include JSC Caustic, Sterlitamak, Polief, Sayanskkhimplast and several others.
Tamara Khazova, director of Alliance Analyst, a leading Russian consultancy in the field of polymers, also says domestic processors have started to diversify into production of siding, roofing, geogrids, non-woven materials, and other products not previously manufactured in Russia.
Some Russian processors have strong positions in market niches, for example BOPP film where domestic production is significantly higher than imports.
Russia's accession to the WTO is expected to contribute to the further expansion of the domestic range of polymer products and will speed the development of the polymer processing sector. Along with this, it will accelerate the adoption of certain international standards, which regulate the use of polymeric materials in different segments of the Russian producton industry.