Academy of Economic Studies Faculty of International Business and Economics

Military shotguns in United States of America And Tariff and non-tariff measures in Russia

Student: Oana-Roxana Olariu Group: 940

A. PRODUCT: Military shotguns HS CODE: 93019060 COUNTRY: United States of America TRADE PARTNER: Afghanistan ANALYZED INTERVAL: 1997-2011 I was particularly interested in searching for military shotguns for the exporting country, Afghanistan and the importing one, United States of America, with the curiosity of discovering how political tensions can influence the trade between 2 countries and the measures taken for protection. Applied tariff 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 65% 65% 65% 2.6% 65% 65% Total ad valorem equivalent tariff 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 65% 65% 65% 2.6% 65% 65%

Year 2011 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997

Tariff regime MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) MFN duties (Applied) GENERAL GENERAL GENERAL MFN GENERAL GENERAL

Source: http://www.macmap.org
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Tariffs applied by United States of America to military shotguns

70.0% 65% 60.0% 50.0% Applied tariff 40.0% 30.0% 20.0% 10.0% 0.0% 1997 65% 65% 65% 65%

2.6% 1999 2001

2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6% 2003 Year 2005 2007 2009 2011

Source: Own representation based on data available at http://www.macmap.org. Currently, Afghanistan is an observer country in World Trade Organization (WTO), meaning that it maintains negotiation regarding its accession to the organization. Even more, Afghanistan started developing stronger international relations, especially with United States of America, during the last decade. But, for these 2 countries the road was not as smooth as others. Political tensions and the lack of sustainability led to certain conflict. I believe that there is a strong correlation between politics and prices or tariffs imposed from one country to another. Starting with 1997 and 1998, the graph shows a 65% on import tariff imposed by USA, in order to control the amount of military weapons entering within its borders. Also, Afghani terrorist attempts led America to the conclusion that is better to keep the distance. By 1999, Osama Bin Laden, America's public enemy number one is reported missing by his Taliban hosts in Afghanistan and they are accused of supporting the Saudi terrorism. After that, for several years, the relations were fierce, because of the terrorist attacks, including the September 11 attack. USA entered into war against the Taliban regime from Afghanistan, supporting the counter party. Therefore, they needed artillery in order to maintain their position, as they entered the Afghani land.

In 2002, President Bush issues proclamation restoring normal trade relations with Afghanistan suspended since 1986. Bush states that restoring nondiscriminatory trade will support US efforts to normalize relations with Afghanistan and facilitate increased trade with the United States. Since 2003, agreements have been concluded, wars ended and Osama Bin Laden captured, which led to a more stable relation, and finally stability regarding the tariffs on imports. Also, very important to mention is the type of tariff regime used related to particular periods of time. Starting with the General regime , which is characterized by higher duty rates applicable to imports from countries that do not enjoy either preferential or most favored nation (MFN) treatment, followed, when relations get stronger, by MFN, which implies equal trade advantages.

B. COUNTRY: Russia The Russian business and trade regime has been liberalized considerably, especially during the process of negotiation for membership in the World Trade Organization (WTO). In contrast to the previous tightly-controlled situation, all enterprises and individuals are now allowed to trade without special registration. They are free to import nearly all products, although there are some restrictions imposed in order to maintain the equilibrium and the safety of the country. Import and export duties are calculated as a percentage of the customs value of the goods (ad valorem) or in euros per unit of measurement of the goods, and/or as a combination of these two rates. In most cases, however, ad valorem customs duties are levied as a percentage of the customs value of the goods. On the other hand, export duties are set for a few commodities like oil products, copper, nickel and goods made of these materials. Looking forward, having secured the final, green light for membership in December 2011, Russias imminent accession to the WTO is expected to have a bearing on its import regime. Among other commitments, Russia is to lower its tariffs on a wide range of products, bringing the overall tariff ceiling (the bound tariff rate or maximum rate of tariff allowed by the WTO to any member state for imports from another member state) down to 7.8% from an average of 10% as from 2011.

Apart from cutting tariffs, Russia has also agreed to enhance its trading and regulatory environment, e.g. on the aspect of intellectual property rights (IPR) protection by implementing the WTO Agreement on trade-related aspects of intellectual property rights (TRIPs). Russia uses the classical instruments (licenses, quotas, exclusive import rights, export control of armaments, weapons and dual-use products, etc.) to control or restrict imports and exports. Since 2011, these restrictions must comply with WTO rules. There is a uniform list of goods prohibited or restricted for import to the Customs, as follows: certain types of products responsible for the depletion of the ozone layer, certain types of hazardous waste, of printed and audiovisual material (pornography, etc.), certain pesticides, timber products, fishing equipment and furs and babies of Greenland seals. Foreign goods enjoy national treatment, which means that they are subject to the same safety requirements (pharmacological, sanitary, phytosanitary, veterinary, ecological and other) and technical standards as those which apply to analogous goods of Russian origin. Application of such specific tool as quotas, in Russia is now predominantly of political nature: import quotas are set for beef, pork, poultry, white sugar and raw sugar. Efficiency of the tool itself and its practical applications (tenders, etc.) is rather dubious and it just confirms that industrial lobbying does exist in Russia a negative but almost inevitable phenomenon. Export quotas are set for products that if exported may endanger economic or environmental security of the country: caviar and some other fish products, raw fuel and some fuel processing products, some metal products, etc. Application of the tool of import/export licensing is also of strategic nature. Licensing requirements are applied to goods listed in the list of goods of strategic importance, which must meet special rules of movement through the customs border of the Russian Federation. The list is frequently updated and covers some other spheres in addition to foreign economic relations (for example in the case of precious metals). At the same time, in some other cases, licensing is of more common nature, e.g. in the case of pharmaceutical goods.

The commodity structure of Russian exports reflects the primary goods orientation of the countrys economy. The absolute exports leader among industries is the mineral raw materials sector, and particularly the energy sector, their positions constantly strengthening and exports volumes going up.

COMMODITY STRUCTURE OF EXPORTS

5.4 2.3 2.2 0.2 6.2 12.8 foodstuffs and agricultural raw materials (excluding textile) mineral products 68.4 chemical products,rubber leather raw materials, fur and articles thereof

2.4 0.1

Source: Own representation based on data available at www.osec.ch. The second largest group of exported Russian goods is metals and metal products. Although many countries restrict the access of Russian metal ware to their markets by placing strong antidumping barriers, it remains highly competitive, even if referred to as goods in process. Thus, the share of processed goods in the structure of Russian imports is very low and, what is more, steadily decreasing. The current trade policy of the Russian state does not focus on promoting deeper processing of natural resources, which is a serious impediment to Russias expansion into overseas markets. It also makes the country highly dependent on global prices for raw materials. In the context of deepening financial crisis and a slump in global oil and metals stock indices, the negative consequences of such policy are quite tangible.

COMMODITY STRUCTURE OF IMPORTS

5% 16% 16% 1% 7% 6% 3% chemical products, rubber leather raw materials, fur and articles thereof 2% foodstuffs and agricultural raw materials (excluding textile) mineral products 44%

Source: Own representation based on data available at www.osec.ch.

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By contrast, the share of processed goods in the commodity structure of Russian imports is quite large. The top import item is machinery and equipment, whose share has been growing at the same pace as world prices for exported oil, gas and metals during the last three years. Like many other exporters of raw materials, Russia spends its respective proceeds on high-technology machinery and equipment (produced mainly by those very countries it sells raw materials to), which can hardly be characterized as a forward-looking strategy from the point of view of the countrys long-term economic development.

Bibliography: 1. Chaplygina, A., Makeeva, A., 2008. Russian Trade Policy. Center for Environment and

Sustainable Development. Available at http://trade.ecoaccord.org/2008/trade_policy_engl.pdf. Accessed on 12/03/2013 2. Swiss Business Hub Russia, 2012. Russia Legal Provisions. Moscow. Available at Accessed on

http://www.osec.ch/de/filefield-private/files/720/field_blog_public_files/11801. 12/03/2013

Websites: 1. http://ec.europa.eu/taxation_customs/dds2/taric/taric_consultation.jsp?Lang=en. Accessed on 13/03/2013. 2. http://wto.org/. Accessed on 12/03/2013. 3. http://www.businessdictionary.com/definition/general-tariff.html#ixzz2NZFbncxQ. Accessed on 12/03/2013. 4. http://www.customs.gov.sg/leftNav/trad/val/Preferential+Tariff.htm. Accessed on 13/03/2013. 5. http://www.gks.ru/bgd/regl/b11_12/ Accessed on 13/03/2013. 6. http://www.macmap.org. Accessed on 13/03/2013. 7. http://www.piie.com/research/topics/sanctions/afghanistan.cfm. Accessed on 12/03/2013. 8. http://www.ustr.gov/. Accessed on 12/03/2013.