Group 10 of the External Economic Activity commodity nomenclature (grain)
and 1701 (cane sugar, beet firm sugar and sucrose). A 10 percent tariff is
now applied to medicines which earlier have been exempt from duties while
fish and fish products are subject to a double rise of duties (from 5 to 10
percent) and duties on vegetables were tripled (from 5 to 15 percent). For
foodstuffs earlier exempted from duties new tariffs made 5 percent on
bananas and citrus fruits, 10 percent on tee and coffee, 15 percent on
fresh cucumbers, however, rates of import duties in Russia still remain
considerably lower than in the EU countries (16 percent against 21
percent). There were effectuated provisions stipulating a 30 percent duty
on goods such as luxuries, tobacco products, alcoholic beverages and
weapons.
Tax regulation. As before, close attention was paid to products
subject to excise taxation. In July and in December, 1996 a price
difference between excise stamps and special stamps designated for imported
tobacco and alcohol products were adjusted. There were created equal
conditions for importers of these products both from countries within and
outside of the former Soviet Union (ECU 0.1 per unit of an alcohol beverage
and ECU 0.01 per unit of a tobacco product). In December the rate of excise
tax on tobacco products was increased from ECU 1.2 to ECU 2 per 1000
pieces.
In June the list of products subject to a preferential 10 percent
value added tax was shortened; it was again examined in detail in November
and some new products were added to it. In December works and services,
both produced domestically and purchased, being exported to countries
outside the CIS alongside with services concerning the transit of foreign
cargo through Russian territory were exempted from the value added tax.
Preferences in External Economic Activities. In October, 1996 the
Government abolished previously applicable preferential taxation of
alcoholic beverages imported from abroad by certain legal entities which
were exempt from customs duties (for instance, the National Fund of Sports
and the All-Russian Society of Invalids). Since December, pursuant to the
Presidential Decree "On Customs Preferences" of November 30, 1995, it is
inadmissible for Federal agencies to adopt decisions which would provide
prolongation of preferences in terms of customs duty exempts and receipts
of additional compensations.
In August, 1996 the control mechanism over incoming export proceeds
denominated in foreign exchange was adjusted. All proceeds in foreign
currencies shall be entered into accounts with authorized banks--that
became a requirement of the customs regime. Customs service now enjoys the
right to control all capital flows and apply relevant sanctions if
necessary.
In September, 1996 the control over exports and imports of military-
purposed products, works and services, subject to licensing, was tightened.
In December the set of instruments of the state control mechanism over
imports was supplemented. The system of foreign exchange control over
imports introduced on January 1, 1996, is basing on the same principles as
the export control existing since 1994 and envisages the same chain of
relations: an importer--an authorized bank--customs. The key document
fundamental for the whole control system is a registration certificate for
import transactions.
3. Foreign Trade Pattern
In 1995 Russian foreign trade was influenced by differently directed
factors. A favorable state of the world market and the governmental policy
of stimulating exports via regular lowering of export duties provided for a
further increase in volumes of trade with countries outside the former
Soviet Union and a stable active balance of the foreign trade.
Estimating Russian foreign trade the following adverse factors shall
be taken into account: a decline in production, small amounts of
investment, rather high inflation rates, insufficient level of state
assistance for development of the country's export potential, poor
competitiveness of many Russian-made manufactured products, especially of
machines and equipment, lack of positive shifts in development of Russia's
external relations with countries of the former CMEA, huge external debt,
discriminatory barriers banning a number of Russian-made products from
external markets. In connection with accession of Finland, Sweden and
Austria to the EU Russia automatically became subject to anti-dumping and
quantitative restrictions concerning trade with these countries in steel,
textiles, mineral fertilizers, uranium.
Introduction of the "ruble corridor (fluctuation band)" alongside with
a relatively high internal price dynamics caused deterioration of export
transactions' effectiveness. However, due to liberalization of energy
resources exports, the export sector reacted to the introduction of the
"corridor" slower and not so sharply as critics of a fixed exchange rate
had believed. At the same time, stabilization of ruble exchange rate
created a sufficiently favorable transaction climate for importers allowing
them to compensate a part of the loss inflicted by an increase in import
tariffs.
Goskomstat reports that the Russian foreign trade turnover,
unorganized trade including, made $ 135.7 billion in 1995, or by 16 percent
more in comparison with 1994 figures. Exports were at $ 77.8 billion (a 18
percent increase) and imports at $ 57.9 billion (by 15 percent more).
The results of external economic activities in 1992 through 1995 are
indicative of the fact that Russia re-oriented its trade towards
industrialized countries and that the share of countries outside the former
Soviet Union in the total foreign trade turnover has grown. In 1995
countries outside the former USSR accounted for 78 percent of it. In 1992
through 1995 exports to these countries increased at a record rate in the
last 20 years with exports showing a 25 percent growth ($ 64.3 billion) and
imports (together with unorganized trade) increasing by 12 percent ($ 41.6
billion).
In 1995 growth rates slowed down considerably. Thus, while in the
first quarter exports grew by 45 percent as compared with the same period
in the last year, in the second quarter it made only 29 percent and showed
a modest 15 percent increase in the third quarter. Undoubtedly, export
growth rates were affected by the "currency corridor (fluctuation band)"
introduced in the second half of the year.
As before, the bulk of Russian exports consists of raw materials. Fuel
and energy resources account for the biggest share (41 percent) of exports,
while the Fuel-and-Energy Complex production (oil, natural gas, oil
products) becomes more and more oriented towards external markets.
In 1995 a decline in export growth rates in real terms was observed as
natural gas exports increased by 11 percent (14 percent in 1994), oil
products grew by 8 percent (11 percent), oil--by only 1 percent (11
percent).
Growth of exports as calculated in value terms was primarily caused by
a favorable situation on the world market. Average contract oil prices of
exports in the countries outside the former Soviet Union increased by about
7 percent as compared with 1994 figures, natural gas exports grew by 10
percent while oil products showed a 6.6 percent increase.
Metal exports accounted for a 20 percent share in the Russian exports.
Nickel and ferrous metals exports grew most rapidly at 37 and 26 percent
accordingly. Average export prices of key metals surged, thus, price of
nickel increased by 33.1 percent, of aluminum--by 36.9 percent, of copper--
by 24.2 percent, of ferrous alloys--by 24.7 percent, of pig iron--by 14.6
percent. The pattern of metal exports has somewhat changed. Customs
statistics reveal a growing number of contracts on export of finished metal
articles, however, their share in the total export volumes is still
insignificant. These articles are being made according to designs of
foreign companies (mostly in aircraft and engineering industries) under a
binding condition that they shall be manufactured in accordance with the
West European standards and certified by a foreign firm. It is too early to
suggest the end of an age of raw exports conducted in their most primitive
form, however, the Russian metal industry is given an opportunity to
participate in the international division of labor on equal basis and to
reach a qualitatively new level of production.
The share of chemicals made 9.6 percent. Mineral fertilizers still
remain a key export item in the industry. Export volumes of mineral
fertilizers increased by 14 percent in comparison with 1994 figures.
Simultaneously, average contract prices also grew (by 24 percent).
Export patterns within the forestry and paper industry tended to be
oriented towards raw materials in recent years affecting the structure of
currency proceeds accordingly. A third of foreign exchange proceeds was
derived from raw timber (logs) exports while semi-finished timber (lumber)
accounted for 25 percent of proceeds and processing-intensive products
brought only 32 percent.
A considerable increase in physical volumes of exports in the
countries outside the former Soviet Union as compared with the previous
year figures was reported for logs (37 percent) and cellulose (38 percent).
