At the OPEC conference of June 26, 2002, the member countries decided to maintain oil quotas introduced on January 1, 2002, in the 3rd quarter. Both this decision of OPEC and recovery observed in large industrially developed economies allow to expect that oil prices will remain at a rather high level in the short term. According to the last forecast (June, 2002) of the US Department of Energy, world oil prices defined as the average US oil import price will make about US $ 25.5 per barrel in the second half of 2002, and US $ 26.5 per barrel in 2003 (see Table 5). In the case this forecast is correct, it would mean the persistence of rather favorable external conditions for the Russia’s oil industry and the national economy on the whole.
Table World oil prices in 1999 through 1999 2000 2001 2002 (estimate) (estimate) US import oil price, US $ / barrel 17,22 27,72 22,02 23,66 26,Source: U.S. Department of Energy/Energy Information Administration.
FIG. 1. EXPORT OF OIL AND OIL PRODUCTS IN PHYSICAL AND VALUE TERMS IN 1997 THROUGH 2002, MIL. METRIC TONS, US $.
45 0 mil. metric tons (left axis) mil. US $ (right axis) Source: calculated on the base of RF Goskomstat data.
Yu. Bobylev Foreign trade.
In April of 2002, the Russia’s foreign trade turnover increased by 8.2 % (including exports - by 5.8 % and imports - by 13 %). In April, the amount of exports made US $ 9.0 billion, what is the maximum value registered over the last 9 months. The key factors behind the increase in the export of goods were the gradual recovery of the world economic situation, especially in USA, and a significant improvement of dynamics of prices of Russia’s staple exports, first of all, oil prices.
Although the rates of growth in imports somewhat decelerated in comparison with the figures observed in the last year, they remain rather high. In April, imports made US $ 4.9 billion (imports from countries outside of CIS made US $ 3.9 billion). Machinery, equipment, and means of transportation (36.9 %) and foodstuffs (26.9 %) comprise the major part of imports from countries outside of NIS.
As compared with the figures registered this March, the foreign trade turnover in April of 2002 increased by US $ 611 mil. (4.6 %) at the expense of growth in exports by US $ 432 mil. (5 %) and in imports by US $ 179 mil. (3.8 %). As a result of outpacing growth in exports, in April the balance of trade increased by 6.6 % in comparison with the March figures, however, it remains somewhat below the level observed in April of 2001 due to the outpacing annual rate of growth in imports (US $ 4.1 billion as compared with US $ 4.billion in April of 2001).
In the first two months of 2002, oil prices were rather volatile. However, in March and April the upward trend became stable. Among key factors accounting for a rise in oil prices were OPEC plans to retain restrictions on oil sales in the second quarter at the level set for the preceding quarter, and the fact that other oil extracting countries (including Russia) supported this decision, falling volumes of Iraq oil, and information that stocks of crude oil and oil products in the USA sharply decreased. Besides, the deteriorating political situation in the Middle East, the statement of Iraq about the suspension of oil deliveries for 30 days, and irregular oil supplies from Venezuela also affected oil prices. In April of 2002, the average BRENT price made US $ 25.7 per barrel, what is by 1.6 % above the price registered in the respective period of the preceding year. World URALS (exchange) prices made US $ 18.4 per barrel in January, US $ 18.9 in February, US $ 22.2 in March, and US $ 23.9 in April, as compared with US $ 18.8 in the 4th quarter of 2001.
сен.сен.сен.сен.сен.янв.янв.янв.янв.янв.янв.ноя.ноя.ноя.ноя.ноя.май.май.май.май.май.мар.мар.мар.мар.мар.мар.июл.июл.июл.июл.июл.Main indicators of Russia’s foreign trade (as USD bln.) -1997 г. 1998 г. 1999 г. 2000 г. 2001 г. г.
Balance Export Import Source: RF Goskomstat As compared to January through February, in March and April of 2002 the situation on the world market of ferrous metals was characterized by a certain increase in business activity as the general economic situation improved. In April of 2002, the prices of reinforcing steel and commercial steel remained at the level registered in March, while prices of hot and cold rolled steel in rolls increased (on the average, by 15 % and 10 % respectively). An increase in price was observed on the majority of markets of non-ferrous metals in March, however, in April the prices somewhat decreased. The aluminum and copper prices of the London Metal Exchange decreased by 2.5 % and 0.9 % respectively in comparison with the March figures. However, nickel (an increase by 6.4 %) and tin (an increase by 4.7 %) prices were an exception. A significant rise in nickel prices may be explained mainly by the fact that producers refrained from deliveries at low prices.
The average monthly world prices in April of the respective year 1996 1997 1998 1999 2000 2001 Oil (Brent), USD / metric ton 155,2 125,38 101,36 114,43 167,2 191,2 187,Natural gas, USD / thous. m3 - 70,2 91,0 78,1 109,0 185,7 121,Gasoline, USD / metric ton 252,5 162,4 135,1 139,7 288,5 356,9 290,Copper, USD / metric ton 2574,9 2369,7 1775,3 1539,9 1710,1 1689,4 1620,Aluminum, USD / metric ton 1590,2 1554,0 1413,5 1318,0 1448,0 1493,7 1370,Nickel, USD / metric ton 8053,9 7312,.4 5352,5 5239,5 9657,1 6303,1 6940,Source: calculated in accordance to the data presented by London Metal Exchange (UK) As concerns Russia’s trade with CIS countries, in April there persisted the trend observed in the first quarter of 2002: imports continued to fall (US $ 1.03 billion - a decrease by 11.5 % in comparison with the figures registered in the respective period of 2001), while exports grew by 1.4 % and made US $ 1.26 billion.
The decline in imports is primarily related to the decrease in import of foodstuffs due to the increasing consumption of Russia-made foods. For instance, the import of sugar (90 % of which is imported form CIS member countries) fell by 13.5 %. The total sugar imports in the first 4 months of this year made 103 thous.
metric tons at the average price US $ 374.4 per metric ton, what is US $ 18.2 less than in the preceding year.
Besides, the imports of condensed milk and butter also declined more than 2.5 times, while tea imports fell by more than 30 %.
In June, the Council of the Heads of Customs of the Eurasian Economic Community member countries, held in Brest, discussed the issue of unification of the procedure governing the payment of customs duties and taxes.
The RF State Customs Committee had elaborated and presented a special draft of the agreement stipulating that Okt Okt Okt Okt Okt Apr.
customs payments relating to the movement of goods under the customs control among the member countries of EvrAzES should be deposited with the respective customs authority, or guaranteed by banks.
Belorussia is planning to introduce a new customs tariff since July 1. Belorussia will introduce unified import tariffs. In fact, it means that in Belorussia there will be in force the same import tariffs, as in Russia.
Therefore, according to Russian and Belorussian customs authorities, there will be completed the formation of the common customs space.
At present, in spite of the fact that these two countries signed a special bilateral agreement, there are discrepancies with regard to almost 4 thousand items in imports and more than 1 thousand items in exports.
In June, there were successfully completed certain common activities of the RF State Customs Committee and its Ukrainian partners. The customs authorities reached important agreements in the area of control over the Russia’s exports of energy resources and cooperation in the sphere of customs statistics. Thus, at present the discrepancies pertaining to the amount of mutual trade make 5 % on the average, especially significant are discrepancies related to the supplies of ferrous metals, which make over 1/4 of the total Ukrainian exports to Russia.
On June 19 and 20, in Geneva, there was held the 15th meeting of the Working group for Russia’s accession to WTO. The parties failed to reach a compromise with regard to telecommunications, financial services (including insurance, banking, services rendered on stock exchanges), energy resources prices, measures of support for agriculture.
Russia refused to increase RAO UES tariffs to the European level and open markets of banking, insurance, and telecommunication services. Russia intends to introduce a transitional period, i.e. it will be ready to open its markets of financial services and telecommunications in 10 years after its accession to WTO. It is quite apparent, that a sharp increase in tariffs on energy resources will very negatively affect the Russia’s economy.
Besides, the request to open the Russia’s financial market, although this measure is much less dangerous, encounters a firm negative response on the part of Russian bankers and insurers.
The EU representatives find Russia’s proposals unacceptable, especially those limiting the property of foreign companies to 49 % in the sector of telecommunications and to about 25 % in the sector of insurance and broker services. A similar limitation is expected with regard to the sector of banking services.
Already in July, Russia will ready to present its answers to the questions put forward by the EU at the meeting. At the same time, there shall be held negotiations with USA, Canada, and EU. In September and October, it is planned to conduct consultations pertaining to technical barriers to trade, sanitary and phytosanitary standards, agriculture, intellectual property. The results of these negotiations will be used in the process of elaboration of the second version of the report of the Working group for Russia’s accession to WTO.
N. Volovik, N. Leonova On the progress of reforms in June of In spite of the fact that the government considerably intensified its activity in May, not many significant developments were registered in the sphere of economic reforms. At the same time, the State Duma, where the government was very active at the end of the spring session, was a major newsmaker in this regard.
Among the significant developments, there shall be noted the operative reaction of the government to the Presidential address to the Federal Assembly. In June, the government worked on its action plan (approved in March) in order to adjust it to the President’s proposals (in fact, orders). As a result, a number of items was added to the plan.
Among new measures added to the plan, a special attention shall be paid to the elaboration of a law stipulating the list of information the state bodies shall publish under the legal duty. The government has already set up a special working group to elaborate this law. Among other additional measures is the intensification of work on the general principles of local government elaborated in the framework of the Presidential commission for the delimitation of powers among the federal center, RF subjects, and local governments. The Ministry for Economic Development has already started to work on the law on the improvement of control and oversight function of the state.
The elaboration of a law on medical insurance encounters difficulties, since the Ministry for Economic Development, the Finance Ministry, the Labor Ministry, The Ministry for Public Health, Fund of Mandatory Medical Insurance (FMMI), and the Fund of Social Insurance (FSI) can not agree on the concept of the future system of mandatory medical insurance. In the case these agencies fail to reach a consensus, required in the framework of the present administrative system, the law will be delayed again.
The passing of the law on the turnover of farm lands in the third reading on June 26 was a most important economic and political development of the year. The State Duma has made some amendments to the initial version, the most important of which was the ban on the sale of land to foreigners, what was “the prices of the consensus,” necessary to adopt the law.
The government places considerable hopes in the law as concerns the investors, who will be more interested to invest in agriculture and related industries, and the general improvement in business climate on the whole, since the approval of the law, leaving aside its economic content, is even more important as a signal of serious plans of the government to continue reforms.
On June 26, the State Duma passed in the third reading the next law on the pension reform – “On the investment of funds for the financing of the accumulating part of the labor pensions in the Russian Federation,” and in the first reading the law “On principles of technical regulation in the Russian Federation,” which shall considerably decrease the sphere of mandatory certification.
No problems were encountered in the course of passing in the first reading of three laws aimed to reform the railroad transport: “On the railroad transport in the Russian Federation,” “The transport charter of the railroad transport of the Russian Federation,” and “On amendments to the RF federal law ‘On natural monopolies.’” On June 20, the State Duma passed in the second reading a most complex and controversial law – “On insolvency (bankruptcy).” The third reading planned for June 27 was delayed and there is the risk it will be delayed until the autumn session of the Duma.
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