Russia and the international economy
OUTLIINE
1. Russia within the International Trade System ……………………………3
2. Regulation of External Economic Activities………………………………..4
3. Foreign Trade Pattern……………………………………………………….6
1. Russia and the international trade system
According to a medium-term forecast for developments in the area of
the international economy, business revival is cumulating momentum after
the recession it experienced in early 1990s. It had a relevant effect on
the world trade. In 1994 the average international trade turnover showed a
9.5 percent growth being a record figure in the last 20 years and by 3
times exceeding the increase in the international production. In 1995 the
World Trade Organization estimated 8 percent increase in trade turnover as
compared with a 3 percent growth in the world production. World Bank
experts think that in the next 10 years an average increase in foreign
trade will make 6 percent annually.
An economic run-up in most industrialized countries was followed by a
growing demand for many products and a consecutive price hike on
international markets.
Oil markets showed a balance of demand and supply in 1995. Average
prices of Dubai oil were at $ 123 per metric ton, by 14.9 percent exceeding
1994 averages. Owning to small increase in the world oil consumption and
practically unchanged supply situation no perceptible change of prices is
expected.
A trend of natural gas prices on markets in Western Europe was
practically the same as the oil price dynamics. In 1995 average prices were
by 13.4 percent higher as compared with 1994.
Prices of nonferrous metals have risen dramatically. In 1995 average
world prices were as follows: aluminum -- $ 1806 per metric ton (20.3
percent rise in comparison with 1994), copper -- $ 2933 (higher by 23.3
percent), nickel -- $ 8063 (19.3 percent growth).
As a result of the 1994-95 record price surge in the whole period
after the World War II cellulose joined the leaders with a 50 percent price
hike (up to more than $ 1000 per metric ton). According to a middle-range
outlook price stabilization accompanied by a slight price rise is expected.
As market relations develop, process of internal price structure
formation continues in Russia and it gradually closes to the price system
existing on world markets. In 1995 contract prices grew perceptibly,
however, prices of a majority of energy resources lagged behind those on
the world trade markets in terms of rates of increase. The outcome was a
worsening balance between contract and world prices.
An important role in development of the international trade is played
by the GATT/WTO which for 48 years tried to work out the fundamentals of a
future world trade basing on principles of observance of the Agreement's
general regulations aimed to keep up non-discrimination of individual
states and to a gradual elimination of barriers slowing down mutual
exchange of commodities. Since 1950 the world trade turnover has increased
by 13 times and eight rounds of multilateral trade negotiations held under
the GATT's auspices have led to a ten-fold cut of average customs duties.
At present it makes a bit less than 4 percent.
Russia's accession to the WTO will make it possible to tap all
measures existing within the framework of this organization in order to
protect Russia's economic interests. At present direct or concealed
discrimination of Russian producers and traders on markets of certain
countries is among factors affecting Russian exports dynamics. Thus, only
the ban on Russian uranium exports to the USA has led to losses for Russia,
as estimated by some experts, at $170 million a year. The total number of
anti-dumping procedures imposed upon Russia has reached 41. More than a
half of them (22) are qualified as openly discriminatory cases or
unjustified claims by the Ministry of Foreign Economic Relations.
In the summer of 1995 the first round of negotiations between the
Russian delegation and the WTO's Working Group on Russia took place in
Geneva. Members of the Working Group apprised information on foreign trade
regulations stated in the Russian Memorandum as exhaustive enough.
An outcome of the second round taking place from December 4 to 7 of
1995 was the completion of discussion of the Russian Memorandum on the
foreign trade regime as concerns trade in goods. Besides, the first
discussion on special annexes to the Memorandum embracing protection of
intellectual property rights, trade in services and trade-related
investment measures was held. At the same time, the WTO member countries
have reserved the right to revert to a detailed discussion on three key
issues: if state-owned trade organizations exist in Russia (Moscow denies
this); import licensing; subsidizing of external operations. However, even
now they agree in principle that the Russian legislation is in accordance
with the WTO's rules and norms in these areas of the foreign trade
regulation.
There are no apparent opponents to Russia's accession to the WTO,
since the world trade, especially in the area of trade in raw materials,
cannot be regulated without participation of Russia. However, the admission
of Russia may be surrounded by a number of additional obligations not
directly following from the WTO requirements. Bilateral consultations held
in Geneva have shown that Russia will face some complications in the course
of tariff negotiations.
On the whole, the outcome of the second round of Geneva talks has been
successful for Russia.
2. Regulation of External Economic Activities
In 1995 certain changes were introduced to the mechanism of the state
regulation of the foreign trade. In the first half of 1995 the state
regulation of oil exports was substantially amended: quotas and licenses in
oil exports were abolished alongside with preferences (with exclusion of
supply pursuant to intergovernmental agreements) while export duties on oil
and oil products were significantly reduced; certain oil products were
excluded from the list of strategically important commodities. Producers'
access to channels allowing transportation of oil to other countries
(pipelines and terminals in sea ports) became a natural restraint on
exports.
The list of strategically important raw commodities was shortened and
the institution of special exporters was abolished altogether. The system
of contracts' registration became the main instrument of control over
exports. Individual preferences granted to participants of external
economic activities were abolished, excluding those issued in accordance
with the laws of the Russian Federation.
The law "On State Regulation of Foreign Trade" adopted in July came
into force in October. The law stipulated what authority in this area shall
be with the President, the Government and the Ministry of Foreign Economic
Relations. The exclusiveness of the MFER's position was emphasized by the
fact that only it was vested with the right to license import and export
transactions subject to quantitative restrictions or to approval
procedures.
As pursuant to the law, the Russian Government shall submit a program
of foreign trade development together with a draft of the Federal budget
for the Parliament's approval. Alongside with other provisions this program
shall embrace customs tariff rates planned for the year in question as well
as the band of their possible fluctuation, thus making the foreign trade
more predictable. The Government has the right to introduce export and
import quantitative restrictions on national security grounds, to comply
with international agreements or to protect the domestic market, however,
these measures shall be announced not less than 3 months prior to their
actual introduction. The law envisages a possibility to introduce state
monopoly for trade in certain products. In this case a special procedure of
licensing import and export operations exclusively to state-owned
enterprises shall be applied.
As the above mentioned law was effectuated, the Commission of the RF
Government on Safeguard Measures in Foreign Trade became fully legitimate
and in December it received "Procedures of Investigation Prior to
Application of Safeguard Measures" approved by the MFER (Russ.abbr. MVES).
A possibility to apply safeguard measures against competitive imported
products complies with usual practices applicable in the world trade. In
this area Russia is late in working out and application of such measures,
especially taking into account that Russian exports are often and in most
cases unjustifiably subject to discrimination on foreign markets. So, the
RF import regime loses its exceptional liberalism which has been
characteristic of it until recently.
Tariff regulation. From September through December export duties
levels were gradually lowered until their complete abolition since January
1, 1996, with an exception of a small group of goods including oil, natural
gas and some other raw commodities.
In June and in October, 1996 import duty rates were changed. On the
whole, changes were made in direction of an increase in tariffs. Earlier
goods taxable at 1 percent have constituted a rather significant part of
the list, at present this rate is only applicable to certain goods within
