Courtesy: US Embassy- Moscow, Russia
INTRODUCTION
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1. RUSSIA'S JANUARY-JUNE 1996 OFFICIALLY REPORTED EXPORTS GREW ONLY 7.3 PERCENT TO USD 39.0. SUCH A SIGNIFICANT SLOWDOWN IN EXPORT GROWTH, AS COMPARED TO 32.1 PERCENT FOR THE SAME PERIOD OF 1994/1995, RESULTED FROM A SHARP DECLINE IN TRADE TURNOVER WITH EUROPE AND AFRICA. RECORDED IMPORTS GREW 5.7 PERCENT TO USD 22.4 BILLION DUE SUBSTANTIALLY TO THE INCREASE IN TRADE WITH COUNTRIES OF THE NEAR ABROAD (OR FORMER SOVIET UNION) AND THE U.S.
2. FOREIGN ECONOMIC ACTIVITY HAS BEEN THE MAIN INSTRUMENT OF STRUCTURAL REORGANIZATION OF THE RUSSIAN ECONOMY. IN THE YEARS OF ECONOMIC REFORM, FOREIGN TRADE HAS CONTINUED TO SHOW A STEADY AND DYNAMIC DEVELOPMENT. IT BECAME, AT THE MOST OIFFICULT MOMENT OF THE REFORMS, THE MAIN INSTRUMENT KEEPING THE COUNTRY'S ECONOMY AFLOAT AND AN IMPORTANT FACTOR IN THE ECONOMY'S INTEGRATION INTO THE WORLD MARKET. ONE THE OTHER HAND, RUSSIA HAS ENCOUNTERED BARRIERS TO ITS EXPORTS IN THE WEST DUE TO HIGHLY DEVELOPED SAFEGUARDS, ANTI-DUMPING, AND COUNTERVAILING DUTY PROCEDURES. IT HAS BEEN DIFFICULT FOR RUSSIAN GOODS TO PENETRATE WEST EUROPEAN MARKETS, PARTICULARLY WHERE RUSSIA HAS A COMPARATIVE ADVANTAGE DUE TO LESS EXPENSIVE FACTORS OF PRODUCTION.
3. THIS HAS ENCOURAGED PROTECTIONIST TENDENCIES IN THE DUMA, WHERE TWO LAWS WERE ADOPTED IN JULY 1996 TO SUPPORT DOMESTIC PRODUCERS. THE FEDERAL LAW "ON MEASURES TO PROTECT THE ECONOMIC INTERESTS OF THE RUSSIAN FEDERATION IN CARRYING OUT FOREIGN TRADE" TOOK THE POSITION THAT THE REPEAL OF QUOTAS AND LICENSE REQUIREMENTS IN FOREIGN TRADE WAS PREMATURE AND PROPOSED THE IMPLEMENTATION OF BARRIERS TO IMPORTS COMPETING WITH DOMESTIC GOODS, INCLUDING PROTECTIVE, ANTIDUMPING AND COMPENSATORY MEASURERS. WHILE THIS LAW WAS VETOED BY THE PRESIDENTIAL APPARATUS, IT IS LIKELY TO REEMERGE IN ANOTHER VARIATION. THE LAW "ON ADDITIONS AND CHANGES TO THE RUSSIAN FEDERATION LAW 'ON CUSTOMS DUTIES'" WAS RECENTLY APPROVED IN THE DUMA AND SENT TO THE FEDERAL COUNCIL FOR ACTION. THIS LAW WILL EXEMPT FROM IMPORT DUTIES OF EQUIPMENT AND MACHINERY, AS WELL AS MATERIALS NEEDED FOR DELIVERY AND INSTALLATION OF SUCH EQUIPMENT AND COMPONENT PARTS, IMPORTED TO ENHANCE DOMESTIC PRODUCTION.
4. THE RUSSIAN GOVERNMENT BELIEVES THAT TRADE ACTIVITY MUST CHANGE, AS THEY
FEEL THAT THE OPPORTUNITIES FOR THE FURTHER EXTENSIVE GROWTH OF EXPORTS ARE
ALREADY PRACTICALLY EXHAUSTED. IT IS FOR THIS REASON THAT THE DEVELOPMENT
OF
MANUFACTURED EXPORTS IS SO IMPORTANT -- IT IS ESSENTIAL TO OPEN UP THE FRAMEWORK
OF DOMESTIC DEMAND AND BOOST INVESTMENTS AND PRODUCTION IN MANY SECTORS OF
THE NATIONAL ECONOMY.
5. RUSSIA'S EXPORTS TO NON-NIS COUNTRIES ACCOUNTED FOR 76.8 PERCENT OF TOTAL EXPORTS IN THE FIRST HALF OF 1996 AND WERE DOWN 2.5 PERCENT OVER SAME PERIOD OF 1995. RUSSIA RECEIVED 64.8 PERCENT OF ITS IMPORTS FROM NON-NIS COUNTRIES. THE VALUE OF IMPORTS FROM THESE COUNTRIES DROPPED 9.0 PERCENT IN 1996 OVER 1995. RUSSIA'S TRADE CONTINUES TO BE CONCENTRATED IN WESTERN, CENTRAL AND EASTERN EUROPE WITH UKRAINE AND GERMANY CONTINUING TO TAKE FIRST AND SECOND PLACE RESPECTIVELY. CHINA MOVED INTO THIRD PLACE, FROM TENTH, POSSIBLY DUE TO THE LATE 1995 ANNOUNCEMENT BY THE GOR THAT THE ASIA-PACIFIC REGION WOULD BECOME A PRIORITY AREA. THE U.S. FELL FROM THIRD TO FOURTH PLACE IN BOTH IMPORTS AND EXPORTS.
1996 TRADE STATISTICS, IN DETAIL
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6. BELOW ARE DETAILED TABLES ON RUSSIA'S EXTERNAL TRADE FOR JANUARY THROUGH JUNE 1996, COMPARED TO THE CORRESPONDING PERIOD OF 1995. THE STATISTICS ARE DRAWN FROM RUSSIAN CUSTOMS COMMITTEE DATA. AS USUAL WITH PRELIMINARY TRADE DATA, THEY ARE SUBJECT TO SUBSEQUENT REVISION.
OVERVIEW
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7. RUSSIA'S OFFICIALLY RECORDED EXPORTS INCREASED BY USD 2.6 BILLION TO 39.O BILLION IN THE FIRST HALF OF 1996, A 7.3 PERCENT GROWTH OVER 1995. IMPORTS ROSE BY USD 1.2 BILLION TO USD 22.4 BILLION, A 5.7 PERCENT INCREASE. RUSSIA'S TRADE SURPLUS WIDENED IN THE FIRST HALF OF 1996, RISING FROM USD 15.1 BILLION IN 1995 TO USD 16.6 BILLION DURING THE SAME PERIOD IN 1996.
REGIONAL PATTERNS
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8. WESTERN EUROPE REMAINED RUSSIA'S LARGEST TRADING PARTNER, TAKING 36.8 PERCENT OF EXPORTS (USD 14.4 BILLION) AND SUPPLYING 35.5 PERCENT OF IMPORTS (USD 8 BILLION). IN BILATERAL TRADE, UKRAINE CAPTURED FIRST PLACE WITH 10.6 PERCENT OF RUSSIA'S EXPORTS (USD 4.1 BILLION) AND 16.3 PERCENT OF RUSSIA'S IMPORTS (USD 3.6 BILLION). GERMANY CAME IN SECOND PLACE WITH 7.7 PERCENT OF EXPORTS (USD 3.0 BILLION) AND 11.1 PERCENT OF IMPORTS (USD 2.4 BILLION). CHINA WAS THIRD, BUYING 6.1 PERCENT OF EXPORTS (USD 2.4 BILLION) WHILE KAZAKSTAN CAME IN THIRD SUPPLYING 6.9 PERCENT OF RUSSIA'S IMPORTS (USD 1.5 BILLION).
TABLE II - RUSSIA'S TRADING PARTNERS, (MILLION USD) --------------------------------------------------
JAN-JUN JAN-JUN JAN-JUN
95 95 95
EXPORT IMPORT BALANCE
------ ------ -------
AFRICA 295.9 107.4 188.5
ASIA (W/O CHINA) 3794.1 940.1 2853.9
CHINA 1446.8 432.0 1014.7
EUR 14235.3 9452.8 4782.4
EUR-EE 3923.5 1881.8 2041.6
MIDDLE EAST 1738.2 888.8 849.4
NIS-ASIA 1598.4 1744.5 - 146.0
NIS-EUR 5913.8 3816.2 2097.5
CANADA 36.5 111.5 - 75.0
S. AMERICA 1297.1 525.8 771.2
S.PACIFIC 10.8 149.2 - 138.3
USA 2131.2 1203.5 927.7
TOTAL 36422.1 21254.1 15168.0
JAN-JUN JAN-JUN JAN-JUN
96 96 96
EXPORT IMPORT BALANCE
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AFRICA 372.5 57.4 315.0
ASIA (W/O CHINA) 3112.2 1056.9 2055.2
CHINA 2412.6 508.7 1903.8
EUR 1441O.2 8000.7 6409.5
EUR-EE 4148.5 1682.7 2449.1
MIDDLE EAST 2019.7 831.3 1189.6
NIS-ASIA 2142.1 2168.3 -26.2
NIS-EUR 6911.8 5725.0 1186.8
CANADA 35.1 149.8 -114.7
S.AMERICA 1349.4 691.0 658.4
S.PACIFIC 5.0 112.4 -107.4
USA 2177.6 1496.8 680.8
TOTAL 39097.3 22481.7 16600.2
NOTE:
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"EUR-EE" CONSISTS OF FORMER CENTRALLY PLANNED ECONOMIES OF EASTERN EUROPE.
"NIS-ASIA" CONSISTS OF NEWLY INDEPENDENT STATES LOCATED WEST OF THE BLACK SEA, I.E., ARMENIA, AZERBAIJAN, GEORGIA, KAZAKSTAN, KYRGZSTAN, TAJIKISTAN, TURKMENISTAN, UZBEKISTAN,
"NIS-EUR" CONSISTS OF BELARUS, ESTONIA, LATVIA, LITHUANIA, MOLDOVA, AND UKRAINE.
TABLE III - REGIONAL PATTERNS, PERCENT CHANGE --------------------------------------------
JAN-JUN JAN-DEC
95-96 95-96
EXPORT IMPORT
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AFRICA 25.8 - 46.4
ASIA (W/O CHINA) - 17.9 12.4
CHINA 66.7 17.7
EUR 1.2 - 15.3
EUR-EE 5.7 - 10.5
MIDDLE EAST 16.1 - 6.4
NIS-ASIA 34.0
24.9
NIS-EUR 16.8 50.0
CANADA - 3.9 34.5
S.AMERICA 4.0 31.4
S.PACIFIC 53.2 - 24.6
USA 2.1 24.3
9. RUSSIAN-CHINESE EXPORT TRADE SURGED DURING THE FIRST HALF OF 1996. HIGH GROWTH EXPORTS TO CHINA INCLUDED IRON AND STEEL PRODUCTS (HARMONIZED SYSTEM CATEGORY 7208, 7209, 7213, AND 2714) AND RADAR EQUIPMENT (8526). AT THE SAME TIME RUSSIAN-NIS-EUR IMPORT TRADE INCREASED DUE TO HIGH GROWTH TRADE IN CANE SUGAR (1701), CORUNDUM (2818), WINE(2204), IRON/STEEL TUBES (7304) AND WHEAT FLOUR (1101).
10. RUSSIA'S EXPORTS TO THE NEWLY INDEPENDENT STATES GREW QUITE RAPIDLY, WHILE ITS IMPORTS REMAINED MORE STABLE. THE MOST RAPIDLY GROWING EXPORTS FROM RUSSIA TO NIS-ASIA AND NIS-EUR IN 1996 INCLUDED ALUMINUM, COAL, WHEAT, TRACTORS, NATURAL GAS AND LIGNITE; IMPORTS INCLUDED RUBBER, CANE SUGAR, PETROLEUM, NATURAL GAS, IRON TUBES AND WHEAT FLOUR.
TRADE WITH THE UNITED STATES
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11. THE US PLACED FOURTH IN BILATERAL TRADE WITH RUSSIA BUYING USD 2.1 BILLION AND SELLING USD 1.4 BILLION, UP 2.1 PERCENT AND 24.3 PERCENT OVER 1995 FIRST HALF. THE USD 600 MILLION OF RUSSIA'S HALF- YEAR TRADE SURPLUS IN BILATERAL TRADE WAS DOWN SIGNIFICANTLY FROM THE HALF-YEAR 1995 TRADE SURPLUS OF USD 900 MILLION. LEADING RUSSIAN EXPORTS TO THE U.S DURING QUARTERS ONE AND TWO INCLUDED ALUMINUM PRODUCTS (7601), IRON AND STEEL PRODUCTS (7208 AND 7207), PETROLEUM CRUDE (2709) AND PETROLEUM OTHER (2710). MAJOR IMPORTS FROM THE U.S. INCLUDEO POULTRY MEAT (0207), TOBACCO PRODUCTS (2402), MEDICAL INSTRUMENTS (9018), SAUSAGES ANO SIMILAR MEAT PRODUCTS (1601) ANO ELECTRICAL TELEPHONE APPARATUS (8517).
12. ACCOROING TO THE BUSINESS INFORMATION SERVICE OF THE US COMMERCE DEPARTMENT, THE MAJORITY OF AMERICAN COMPANIES NAME THE ABSENCE OF THE TAX CODE, THE WEAKNESS OF THE ARBITRATION SYSTEM, WHICH IS TO CONSIDER TRADE SUITS, AND THE LACK OF A BILATERAL US-RUSSIAN AGREEMENT ON THE PROTECTION OF INVESTMENTS AS THE MAIN OBSTACLES IN THE WAY OF THE GROWTH OF INVESTMENTS AND TRADE.
PERFORMANCE BY PRODUCT: THE TOP 20
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EXPORTS
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13. NATURAL GAS, CRUDE OIL, OTHER PETROLEUM PRODUCTS AND ALUMINUM WERE THE
LARGEST EXPORT ITEMS FOR 1996. EXPORTS OF THESE PRODUCTS ROSE 15.8, 5.0, 32.6
AND 31.3 PERCENT RESPECTIVELY, IN 1996 .
OVER 1995. EXPORTS OF SHIPS/BOATS FOR TRANSPORT AND IRON/STEEL BARS HAD THE
LARGEST PERCENTAGE OF GROWTH OVER THE 1995 LEVELS. MAJOR MARKETS FOR SHIPS/BOATS
INCLUDE CYPRUS, FINLAND AND ESTONIA AND FOR IRON/STEEL BARS CHINA, TAIWAN
AND SOUTH KOREA. RUSSIA'S 1996 TRADE DATA INDICATE SALES OF NUCLEAR REACTORS
TO UKRAINE, UZBEKISTAN, KAZAKSTAN, CHINA AND INDIA.
14. CYCLIC HYDROCARBONS (29O2), WOOD PULP (4703), IRON/STEEL SEMI-FINISHED (7202) MADE THE 1995 TOP 20 BUT WERE NOT IN THE 1996 LIST. IRON/STEEL PRODUCTS (7213 AND 7214) AND SHIPS/BOATS FOR TRANSPORT (8901) WERE NEWCOMERS TO THE 1995 TOP 20 LIST.
TABLE IV - TOP 2O EXPORT COMMODITIES
FOR JAN-JUN 1996 BY VALUE (USD 1,000)
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PERCENT
COMMODITY 1995 1996 CHANGE
--------- ---- ---- -------
2701-COAL 495895 500919 LO.L
27O9-PETROLEUM, CRUDE 6214657 6529884 5.0
2710-PETROLEUM, OTHER 2368913 3141978 32.6
271121000-NATURAL GAS 6034727 6989143 15.8
31O2-FERT, NITROGENOUS 423049 533366 26.0
3105-FERT, OTHER 263240 272297 3.4
40O2-SYNTHETIC RUBBER 250987 273514 8.9
4403-WOOD IN ROUGH 581820 474006 -18.5
4407-WOOD, SAWN/CHOPPED 338389 271027 -19.9
48OL-NEWSPRINT 250241 230303 - 7.9
7207-IRON/STEEL SEMI-FIN. 987626 1095906 10.9 7208-IRON/STEEL FLAT HOT 722586
786265 8.8 72O9-IRON/STEEL
FLAT COLD 234875 294864 25.5
7213-IRON/STEEL BARS COILED 192633 259259 34.5 7214-IRON/STEEL BARS 147375
196568 33.3
74O3-COPPER 509563 589793 15.7
75O2-NICKEL 576881 543703 - 5.7
76OL-ALUMINUM 1523O93 2000111 31.3
87O3-MOTOR CARS 365242 346556 5.1
8901-SHIPS/BOATS-TRANSPORT 74778 249961 234.2
IMPORTS
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15. OF THE TOP TWENTY IMPORTS, COAL, MEDICAMENTS (ALTHOUGH DOWN 8.0 PERCENT ON 1995), AND CANE SUGAR WERE THE THREE LARGEST IMPORT ITEMS FOR 1996. COAL, WHEAT AND WHEAT FLOUR WERE LEADING GROWTH ITEMS, WHILE MEDICAL INSTRUMENTS, FRESH APPLES/PEARS AND POULTRY IMPORTS WERE THE BIG LOSERS ON THE TOP 20 LIST. MAJOR SUPPLIERS OF COAL WERE KAZAKHSTAN AND POLAND; OF MEDICAMENTS, GERMANY, POLAND AND INDIA; AND OF CANE SUGAR, CUBA, BRAZIL AND GUATEMALA.
16. BUTTER (0405), PREPARED MEATS (1602), CHOCOLATE (1806), MANGANESE ORES (2602), COTTON (5201), OATA PROCESSING MACHINES (8471), TELEVISION RECEIVERS (8528) AND MOTOR VEHICLES (8703) MADE THE 1995 TOP 20 BUT WERE NOT IN THE 1996 LIST. WHEAT CEREAL (1001), WHEAT FLOUR (110100000), TOBACCO PRODUCTS (2402), COAL (2701), PETROLEUM CRUOE (2709), RUBBER TIRES(4011), FERROUS SCRAP (7204), AND LIQUID PUMPS (8413) WERE NEWCOMERS TO THE TOP 20 LIST.
TABLE V - TOP 20 IMPORT COMMODITIES
FOR JAN-JUN 1996 BY VALUE (USD 1,000)
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PERCENT
COMMODITY 1995 1996 CHANGE
--------- ---- ---- -------
0202-MEAT BOVINE 274281 270173 - 1.4
0203-MEAT SWINE 258996 238828 - 7.7
0207-MEAT POULTRY 328260 287903 -12.2
0808-APPLES/PEARS,FRESH 215408 168180 -21.9 1001-WHEAT, CEREAL 61214 254299
315.4
110100000-WHEAT, FLOUR 6980 157156 215.1
170111-CANE SUGAR 238289 476973 100.1
17019910-WHITE SUGAR 244132 450790 84.6
2204-WINE 171429 177207 3.3
2402-TOBACCO 128908 172122 33.5
2701-COAL 163100 6082654 362.9
2709-PETROLEUM, CRUDE 155750 349806 124.5 2710-PETROLEUM, OTHER 211373 217485
2.8
3004-MEDICAMENTS 526579 484038 - 8.0
4011-TIRES, RUBBER 105785 162911 54.0
7202-FERRO-ALLOYS 121133 152219 25.6
7304-IRON/STEEL TUBES 184909 307864 66.4 8413-LIQUID PUMPS 143035 159341 11.4
8438-FOOD PROC MACHINE 333323 175522 47.3 9018-MEDICAL INSTRUMENTS 361521
257978 - 28.6