#5
Argumenty i Fakty
No. 24
June 2002
[translation from RIA Novosti for personal use only]
WHAT DOES IT MEAN TO BE A MARKET ECONOMY COUNTRY?
The USA followed in the EU footsteps and recently recognised Russia
as a market economy country. Does this mean that "this generation of
Russian people will live in a capitalist country"? Why was it only now that
the USA has "noticed" Russia's progress towards a market economy?
Gherman GREF, Minister of Economic Development and Trade, answers these and
other questions.
Gref: I would not say that the USA has "noticed" this only now. Under US law, the appeal for the recognition of Russia as a market economy country can be filed by a Russian enterprise. The Novolipetsk Mill filed it a year ago.
Question: What will change in Russia now? Will the Americans fling their door open to our steel?
Answer: This will happen no sooner than in two or three months. All enterprises that are suffering from sanctions because Russia was not recognised as a market economy country may file their protests with the US Department of Commerce.
What does this mean? When the USA demanded that an anti-dumping investigation be instituted against a Russian enterprise in the past (the enterprise was accused of keeping export prices deliberately low), nobody took into account the situation at that particular enterprise. Instead, the average production figures of a Latin American company (or any other country with a surrogate economy) were used to establish customs duties for Russian-made commodities. They could vary from 20-30% to 100% and even more. The customs duty for steel amount to 137%, for uranium products to 115% and to 253% for fertilises (in particular ammonium nitrate). Can you imagine how much these fertilisers would cost in the USA? Logically, it was unprofitable to export these commodities. It has been calculated that Russia lost up to 1.5 billion dollars a year from the reduction of our exports to the USA.
Now that Russia has been recognised as a market economy country, each particular enterprise will be inspected in anti-dumping cases. If it is recognised that the said enterprise was operating on the market economy principles, there will be no customs duties. But if it turns out that the enterprise gets privileges or other assistance from the state, the inspectors will calculate the amount of assistance and suggest duties amounting to exact figure of assistance.
Many investors would like to come to Russia in order to produce export commodities, for example cars. They did not do this in the past because somebody in Europe or the USA could file an anti-dumping demand any day and deliveries would be stopped without any negotiations. This barrier to investments has been removed now and the investors can protect their rights.
As for common people in Russia, the main thing for them is that there will be more jobs. Even if only a half of the sanctions are cancelled and if only on the US market, this will mean 70,000 more jobs.
Question: When joining the WTO, Russia will have to assume the obligation to gradually lower customs duties and reduce the funds of state assistance, which are minimal compared to the Western assistance funds. Will imported goods flood the Russian market in this situation?
Answer: Russia's consumers will certainly not suffer from joining the WTO because they will be able to buy cheaper goods. But Russian producers would like to have the same level of tariff protection. I can assure you that the situation will not deteriorate. Today customs duties on imported commodities amount to an average of 10.9% and the Russian application for WTO membership stipulates the average customs duty of 13%. Customs duties on imported cars amount to 25% but we are negotiating a rise to 35%. And maximum customs duties on agricultural commodities equal 30% but we are negotiating a figure of 60%, and so on.
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