The most important industries benefiting from such protective actions supporting their competitiveness were automotive industry, agricultural engineering, ferrous metallurgy, machine-tool building.
To support Russian agricultural producers the RF Government adopted a number of Resolutions about increasing the import customs duties for a series of agricultural and food products (rice, cheese, dairy products, vegetable oils, etc.). In addition to those measures, dutyfree regime was introduced for importing growing pedigree chicken and eggs for incubators, which allowed for increase of their volumes and had a positive impact on domestic poultry husbandry.
All the Resolutions were introducing measures for the period of 9 months, during which the effect was monitored. At the end of this period decisions were made about extending the respective measures for another 9-month period, as well as about either introducing a permanent import duty or about bringing it back to the previous level.
The performed analysis has shown that for a number of commodity items the enacted measures had certain positive effect, however, it is difficult to say something in terms of improving the demand for those products.
Measures targeted at improving the domestic manufacturers’ competitiveness included not only increasing of import duties, but decreasing them if necessary. In particular, the import rates for certain types of passenger aircrafts and freight carriers which are not produced in Russia were set to nil.
RUSSIAN ECONOMY IN trends and outlooks This measure is part of systemic solutions aimed at supporting Russian air carriers. It will allow domestic companies not to lose their positions and to remain competitive at the global market using foreign planes under the conditions equal with foreign competitors.
Also, to assure favorable conditions for Russian productive sector several decisions were made focused on expanding the resource base, increasing the capacity utilization ratio in the financial crisis environment (canceling import duties for raw materials, parts and process equipment not manufactured in Russia).
Measures to promote television engineering in Russia may be named as an example of integrated approach to developing the competitive positions of domestic manufacturers. In addition to import duties plasma panels and LCD panels, duties for the ready-made plasma and LCD TV sets were reduced to nothing. Also zero rates were introduced for integrated electronics used for TV sets manufacturing. Russian manufacturers’ savings on zero rates for these parts made over 6 mln USD during January-July 2009 providing positive effect on decreasing the production costs and respectively – on improving the competitiveness.
The new economic cycle currently starting in Russia requires additional analysis of approaches to customs tariffs policy department. Immediate and prompt anti-crisis measures focused on protecting the domestic market proved to be positive overall. It is obvious that once setting the course of post-crisis development some re-thinking will be required will be required with regard to rational protection of domestic market.
Considering a real threat of import replacing some of the goods in certain sector of the economy, tariff-based protection mechanisms will still be required. At the same time artificial barriers against imported goods decrease the incentives for improving the competitiveness of Russian manufacturers, infringe the interests of the customers, lead to domestic prices growth. Due to this it is necessary to continue the practices of monitoring the competition at commodity markets which were subject to commercial protection.
Resolving the problem of Russian economy competitiveness the government needs to be based on the fact that decreasing the customs duties is an important but not the only instrument for supporting the competitive position of the domestic manufacturers and should be used in combination with other economic policy measures.
Contrary to developed industrial economies Russia uses a limited set of customs-andtariffs policy measures, which ahs an unfavorable impact on the domestic market environment and decreases the competitiveness of Russian goods. In relation with that a conclusion may be made: fully utilize the practices of other countries in the sphere of domestic markets protection applying a comprehensive set of all legal protective measures traditional for international trade practices recognized by GATT / WTO.
Currently 13 commodity items are included into the list. Russia is building the protection of its domestic market mainly on using tariff and fiscal limitations for importing certain categories of goods. In the meantime, such instruments as quantitative limitations, licensing requirements and variable fees, technical, anti-dumping rules and countervailing measures are being neglected.
The current customs tariff in Russia is focused mainly on the following things: 1) budget revenue additions (up to 50% of federal budget revenues come from customs duties), 2) protection of weaker sectors of the economy (thus increase of import duties for many categories of foreign products), 3) adjustment to WTO requirements (Russia is negotiating ascendance with WTO and is forced to decrease the highest customs tariffs according to the agreed schedule).
Section The Real Sector Special attention should be paid to evaluation of the effectiveness of the customs tariffs policy measures in terms of their impact on the inflation processes. Thus, when it comes to supporting Russian farmers and food products manufacturers in certain cases increase of import duties for the respective kind of goods may lead to retail prices growth and not lead to production growth, it may create the prerequisites for higher level of monopolization.
In 2009 trading partners initiated 4 anti-dumping investigations, 5 revisions of previous anti-dumping measures and 10 specialized protective investigations with regards to Russian goods. As of December 31, 2009, 95 restrictive measures were registered as applied by foreign states, including 41 anti-dumping measures, 7 specialized protective measures and measures of non-tariff regulation of trade including administrative regulation measures. The maximum number of restrictive measures is effective in Belarus (24), in the EU (17), in Ukraine (13) and in the USA (11). The markets with the biggest number of problems (aggressive protectionism against Russian goods) which are at the same time of special interest for Russian exporters are EU, Mexico, Australia, the USA, India, Kazakhstan, Uzbekistan, Belarus and Ukraine. More than half of all anti-dumping measures introduced against Russia are focused on Russian ferrous metals and metal ware. Mineral fertilizers and chemical agents are the second point of focus.
During 2009 trading partners of Russia, especially South-East Asian countries, applied a wide spectrum of anti-crisis measures, mainly – the selective protection measures – to protect their national producing sectors from the global financial crisis. Thus, special protective investigations were initiated in India with regards to Oxon-spirits, flat hot-rolled product; the revision of anti-dumping measure against polytetrafluoroethylene was launched. China simultaneously initiated two anti-dumping investigations with regards to Russian polyamide and transformer steel. Based on the revision results China extended the anti-dumping customs duties with regard to polyvinyl chloride and butadiene-styrene rubber. Turkey extended specialized protective measure to limit the import of flat glass. Pakistan started anti-dumping investigation with regards to Russian hot-rolled products. The Philippines government decided to introduce a specialized protective import duty on unalloyed steel L-bars.
CIS countries also activated application of their domestic markets protection measures.
Thus, Kazakhstan and Kyrgyzstan started specialized protection investigations with regards to products from absorbent cotton and glass, as well as with regards to flour and sugar. Ukraine started specialized protection investigation with regards to liquid chlorine and и glass plates, as well as revision of anti-dumping duty for wood-fiber boards. Besides, Ukraine introduced a specialized protective customs duty for matches.
Armenia introduced differentiated excise rates for domestic and imported alcohol.
Simultaneously due to active dialogue with the trading partners on preventing or canceling limitations on importing Russian goods some positive results were achieved. For example, in India despite lack of cooperation on behalf of Russian producing stakeholder, the antidumping investigation with regards to potassium carbonate was finished without introducing any measures. Ukraine terminated specialized protective duty for imported Russian abrasive tools and roofing felt. Kazakhstan cancelled the protective measure with regards to confectionery products. The anti-dumping import duty for Russian high-carbon ferrochrome was terminated in Brazil. In Thailand, despite the decision to extend anti-dumping duties for hotrolled steel, the metal ware being of special interest for Russian exporters received the exemption, and the revision of current duties rates was initiated. Kyrgyzstan finished specialized RUSSIAN ECONOMY IN trends and outlooks protective investigation with regards to Russian sugar without suggesting any protective measures.
Brazil cancelled the import limitations introduced by their Ministry of Agriculture, Fishery and Supplies with regards to mandatory double treatment of each batch of Russian wheat grain with methyl bromide. Besides, the prohibition was removed for importing wheat grain from Russia to Brazilian states Parana, Santa-Catrina and Rio-Grande-du-Sul. Kazakhstan cancelled import limitations for the seeds of beans, sunflower, cotton plants and for oilbearing crop.
Free access was provided for Russian wheat to the Chinese markets. The competent authorities of Russia and China achieved an agreement about guarantees for Russian wheat subject to importing into China to be grown in the dwarf bunt - free zones so there is no reason for establishing quarantine in China. It is worth noting that this issue remained outstanding back from 2005.
3.6.7. Government Priorities in the Sphere of Foreign Trade:
Customs Union and WTO The crisis year of 2009 was characterized by significant change of approaches to setting the priorities in Russian foreign trade. For many years accession to WTO had been set as the key priority for Russia, however, in 2009 it was announced that the preparation work on creation оf the Customs Union between Russia, Belarus and Kazakhstan had been completed and the common customs territory was to be launched starting from January 1, 2010. This marked the start of changing Russia’s attitudes towards WTO. In reality, as the beginning of common customs territory functioning has demonstrated, there still are many unresolved issues and frictions between the partners of the Customs Union, so fine-tuning of the mechanisms will at least take quite some time. Meanwhile, the mechanism for Russia approaching the WTO is still pretty vague given the new environment.
The decision to set-up the Customs Union was made by the presidents of the EurAsEC countries in October 2007. At the same time they approved of the Action Plan to create the required legal and organizational framework during the period of 2007–2010.
The Customs Union (CU) assumes cancellation of customs duties for mutual trading of goods originating within the common customs territory or goods from third countries being in free circulation within this customs territory, as well as non-application of economic limitations (except for specialized protective, anti-dumping and compensatory measures). Besides, CU assumes adoption of standard customs tariff for trading with third countries, applying uniform trading policy towards them, developing and application of uniform legislation in the sphere of customs, as well as setting up a common Customs management system.
At the Customs Union meeting in Almaty on September 25, 2009, it was declared about finalizing the work on establishing and standardization of the standard customs tariff.
Forming the common customs territory means cancellation of customs borders between the member countries and transferring all types of government control (except for border management) to the customs border of the Union. It is planned to cancel the border control between Russia and Belarus starting from July 1, 2010, and between Russia and Kazakhstan – starting from July 1, 2011.
The meeting in Almaty approved the draft Uniform Customs Code, as well as draft agreements to be submitted for review and signing by the leaders of the Customs Union member countries.
Section The Real Sector The clauses of the International Convention on Customs Procedures Simplification and Harmonization (the Kyoto Convention of 1973) were laid in the foundation of the Uniform Customs Code and are underpinning all the key innovations.
The Code consists of 8 Sections containing 50 Chapters and 372 Articles of Common and Specialized Parts.
The key innovations of the enacted Customs Code pertain to fixing the clauses about the customs procedures which were understood as customs regimes in Belarus, Kazakhstan and Russia. Such changes are caused by the need to use the terminology of the Kyoto Convention.
Several more novelties in the sphere of customs regulation should be emphasized:
- introducing the concept of “common customs territory of the Customs Union”;
- creating uniform conditions for transit of goods within the Customs Union territory;
- cancellation of customs clearance and customs control of goods originating from the territories of the Customs Union member countries and foreign goods issued for unlimited consumption within the common customs territory of the Customs Union member countries;
- mutual acceptance of measures securing payment of customs payment and taxes across the whole territory of the Customs Union;
- introducing the institute of authorized economic operator, as well as the concept of “Customs representative”.
The Union Customs Code contains clauses about detention of goods and their back-up documents not being subjects of administrative violations or offence for the purposes of customs control. These clauses are new for Russia.
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