Trade Policy of The Russian Federation Economic Policies

Trade Policy of The Russian Federation Economic Policies Made by Zaliznyuk Ekaterina BABS 2014

Agenda 1. 2. 3. 4. 5. 6. Trade Policy of RF Entry to the WTO Consequences Customs Union Consideration of current situation between Russia and Ukraine Threats to Trade Policy of Russia and Ukraine

Russian Trade Policy is an integral part of the economic policy of the Russian Federation. The purpose of the trade policy of the Russian Federation is to create favorable conditions for Russian exporters, importers, manufacturers and consumers of goods and services.

The main objectives of Trade Policy in the RF transition to permanent External Economic Relations focus on long-term perspective protection of Russian market and stimulating of economy separation of the functions of the foreign economic policy between the Russian Federation as a whole and individual members of the Federation creation of favorable conditions in the world market for Russian exporters and for intensification of effective foreign economic relations

Regulation of Russian Trade Policy Customs tariff regulation Non-tariff regulation Export tariffs ü Import tariffs ü ü Exports and imports are carried out without any quantitative restrictions, excepting: ü the national security of the RF fulfillment of international obligations of the RF ü protection of the domestic market of the RF ü ü Quotas Licensing

Export control system There are several standards and requirements in respect of brought in goods: Ø technical Ø pharmacological Ø sanitary Ø veterinary Ø phytosanitary Ø environmental Moreover there are protective measures against imports of goods, the most vivid manifestation of which are seen in the growing import duties.

The federal program of the Development of Russian exports Aims: to increase the value of Russian exports § to expand of it’s nomenclature § to make a fund of High – tech Exports Development § The program envisages to bring together and organize measures to promote exports of the machinery

Exported goods

Imported Goods

World Trade Organization 22. 08. 2012

According to the head of the IMF, Christine Lagarde, there are no prerequisites for Russia's WTO accession, because it is entirely raw country. Its entry into the WTO is equal to go out in shale at 40 degrees below zero. However, another point of view has the Head of the Ministry of Economic Development Andrei Belousov. In his opinion, the metallurgy, chemicals, raw materials and many branches of engineering will be in advance, cause of investments. (Bagdanov, 2013)

Basic economic reasons • • Russia is a huge country with its powerful economic and resource potential Russia largely determines the course of the world economy Russia is a member of many international economic organizations, part of the World Globalized Economy Joining the WTO Russia offers to World Community the common usage of Russian resource potential for the benefit of all members of the World Community By joining the WTO, Russia has an opportunity to participate in the development of new agreements on the regulation of international trade, the global trading system, and, of course, defend it’s interests in these negotiations Russia will be able to challenge in it’s favor any measure of WTO member undertaken to limit Russian exports WTO eliminates barriers preventing Russian companies in World Innovation Markets, including high-tech markets.

+ and Reduction of fees q Russian good become cheaper q Russian foreign economic activity is stable and predictable q Increasing of foreign investments q Exchange rate of Ruble is less volatile q Fade away of monocities q – Many Russian companies are uncompetitive q It will be difficult to get rid of dependence on raw materials q Growth of budget deficit q Increasing competition by foreign and Russian manufacturers q Russian food security will be threatened q

Real Consequences Exports fell by 3. 8%, while imports rose 4. 4% Russian import of milk and cream increased by 15. 5%, milk powder - 47. 7%, butter - by 12. 5%, cheese and cottage cheese - 10% The price of milk products increased by at least 10% Rose the interest rate of short term loans (on average 1. 52%) Inflow of foreign loans Russian ruble weakened by 10%

Negotiations on Russia's accession to the WTO, lasted for 19 years. Pessimists frightened with the collapse of many sectors of the domestic economy. Optimists, on the contrary, promised mountains of gold and growth of GDP on at least 3%, as well as increasing wages and incomes. Fortunately, predictions of pessimists did not materialize, but the optimistic scenario did not come true too.

Customs Union 01. 2010 This is an interstate association, suggesting the union of territories of States Parties, within which customs borders and barriers are abolished. Custom duties administrative restrictions in mutual trade are not applied. It leads to free movement of goods, services, capital and labor, harmonization of domestic legislation of the participating countries. Moreover it contributes to the stability and growth of national economies.

Objectives creation of a single customs territory within the boundaries of the united countries ü regime that does not allow the tariff and non-tariff restrictions in mutual trade ü complete abolition of customs control ü using of similar mechanisms to regulate the economy and trade ü Functioning of unified government of the customs union Countries outside the customs union: ü application of the common customs tariff ü use of common-tariff regulation measures ü pursuing a common customs policy and application of common customs regimes ü

Participants Russian Federation Belarus Republic Kazakhstan

Versions of appearing the CU Geopolitical Oligarchic Economic and Trade Exotic

Geopolitical Under the conditions of the contracting ring around Russia of integration organizations (EU, NATO) and openly pro-American regimes of neighboring countries, to confront them alone getting harder and harder. Leaders of Russia (it is considered that it was Russia’s idea of creating CU) realized that the further development of the country in such conditions is possible only in case of real allies. The best means for economic integration of countries is a customs union.

Oligarchic With the onset of the economic crisis, the largest business, bearing losses, faced with the need to find new markets. Moreover, these markets should differ with unhindered movement of goods produced in the Russian Federation, without any "customs plugging. " This idea of "capture markets" is impossible without the support of the state elite and the realization of the idea of the customs union.

Economic and Trade For 17 years WTO refused Russia to enter the WTO. Leaders of Russia came to the conclusion to create a trading bloc, an alternative to WTO. It was assumed that trade benefits of the new block will allow to be selfsufficient in the production and trading of goods and do not suffer any hardship from not being WTO members. Later in the case of WTO accession, it will be easier for “three countries“ to enter, and may become an additional argument to accelerate this process.

Exotic Tandem "Putin-Medvedev" more and more looked like there were two leaders and the president (Medvedev at those times) claimed to be the leader for the second term. Putin did not seem to be satisfied. Realizing this, the Prime Minister of Russia to become a leader of a state superstructure of three countries - Russia, Belarus, Kazakhstan, agreeing it with the leaders of states.

Positive aspects of the Customs Union reducing the cost of creating, processing, handling, transportation of goods within the customs union reduction of time and finance costs, associated with administrative restrictions and barriers reduction in the number of customs procedures simplification of customs legislation because of its unification The trade turnover between Russia, Belarus and Kazakhstan increased by 25 -30 % The GDP increased by 5%

Ukraine and Russian Prime Minister Vladimir Putin has invited Ukraine to join the Customs Union of Russia, Kazakhstan and Belarus. Ukraine, as a WTO member may participate in any customs union only in so far as it is not contrary to WTO rules. Russia was not a members of the WTO at those period. Ukrainian President refused. But it was agreed with Russia on Ukraine's accession to the Common Economic Space (CES) in exchange for reduction in gas prices.

Policy towards Ukraine In case of refusal of association with the European Union, Ukraine will be able to obtain substantial economic preferences from Russia, which it could not get so far. Such as: Ø decrease in gas prices from the current $ 450 to $ 270 Ø granting preferential loan to Kiev in size of $ 15 billion Ø expanding cooperation with Ukraine in nuclear energy, aviation and missilery Ø Moscow is ready to create a co-production of AN-124, AN-140 and AN-148 Ø provide technology to create a closed nuclear fuel cycle Ø cancellation of sanitary control and customs duties

The President of Russian Federation Vladimir Putin has warned Kiev that Russia will protect its market from cheap Ukrainian goods which can pour on the market after the creation of a free trade area between Ukraine and EU. “ We believe that if Ukraine first joined the CU, then we could have coordinated our united efforts and lead the negotiations with the Europeans - we would have had more chances to deal with the best conditions for trade and economic relations with Europe, which remains our major trading partner”. The President also mentioned, that in case of integration of Ukraine and EU, the Customs Union will have to think about taking protecting measures.

Already taken Measures Official ban on the import of chocolates “Roshen” Russian gas giant "Gazprom" starting from April 2014 will abolish the privileges for the supply of gas to Ukraine

Trade Blockade State Secretary of USA, John Kerry, convicted actions of Russia in Crimea, threatened to Russian authorities with international sanctions: visa ban on Russian officials freezing their foreign accounts Russian Business isolation

Depending on the decision of Ukraine, it will be clear on the situation of relations between two neighbor countries. However the Russian Federation and Ukraine have common manufacturing factories, more than 400. It is impossible to stop the cooperation at one moment, but according to words of the President of Russia – “we will accept any decision of our neighbor country with respect”.

References Belyaninov, A (2009). Customs Union of Belarus, Russia and Kazakhstan. Speech at the international conference. [Online]. Available at: http: //www. ifcg. ru/actualno/tamozhennyisoyuz. html (Accessed: October, 2009) Jukovski, V (2013). On the consequences of Russia's WTO accession. Russian folk line. [Online]. Available at: http: //ruskline. ru/analitika/2013/09/06/o_posledstviyah_vstupleniya_rossii_v_vto/ (Accessed: November, 2013) Bogdanov, A. S (2013). Economical Reason of Russian Federation to enter WTO. [Online]. Available at: http: //www. scienceforum. ru/2013/331/6414 (Accessed: February, 2013) Ushakov, I. A, Kiselyova, P. S (2012). Russian Trade Policy and entrance to WTO. [Online]. Available at: http: //arbir. ru/articles/a_3187. htm (Accessed: September, 2012) Svargaman (2013). Negative consequences of EU membership for Ukraine. [Online]. Available at: http: //www. pravda. ru/news/world/30 -11 -2013/ (Accessed: October, 2013) Gazeta. ru (2013). Putin has warned Ukraine about the consequences of joining the EU. [Online]. Available at: http: //www. gazeta. ru/business/news/2013/09/19/n_3195797. shtml (Accessed: September, 2013). RBK – Ukraine (2014). U. S. threatens with Russian trade blockade for aggression against Ukraine. [Online]. Available at: http: //hvylya. org/news/exclusive/ (Accessed: March, 2014) Tarr, D. G (2006). Trade policy and the entry into the WTO for the development of Russia and CIS countries. ISBN 5 -7777 -0344 -5. “All World” Publish. Federal Law from 22. 08. 04 N – 122 FL