Russia – Pacific Rim Countries: Prospects of Trade Liberalization

546
DOI: 10.20542/0131-2227-2017-61-5-67-78

D. Izotov (izotov@ecrin.ru; izotov80@yandex.ru),
Economic Research Institute, Far Eastern Branch of RAS, 153, Tikhookeanskaya Str., Khabarovsk, 680042, Russian Federation 



Abstract

Trade and economic cooperation between Russia and Pacific Rim countries have expanded and deepened in recent years. Russia is guided by long-term interests in determining its place in the Pacific Rim, while continuing to carry out further trade liberalization with the region’s countries in an environment marked by fundamental competition between the US (TPP) and China (RCEP). Despite the negative price dynamics for traditional Russian exports at the global markets, the overall positive dynamics of bilateral economic relations with the Pacific Rim countries provides a framework for continuing cooperation and solving the existing problems in the future. At the same time, the commodity structure of Russian exports in the Pacific Rim countries has been traditionally unbalanced, due to the predominance of primary goods, while the commodity structure of imports has a tendency to convergence thanks to competition among the particular Pacific Rim countries at the Russian market. The author’s analysis confirmed the assumption of the positive bilateral effects of trade liberalization. The trade creation effect is likely to exceed the trade diversion effect and the total trade effect will be higher than the tariff revenues’ losses. These findings indicate the future benefits for the Russian economy under all potential scenarios of trade liberalization in the region. The tariff revenues’ losses for the Russian budget can be partially offset by increasing the export duty fees. The assessment showed that the trade liberalization with the Pacific Rim countries could lead to changes in the geographical structure of Russian trade. Significant changes of Russian exports could occur in the case of cooperation with either the potential participants of TPP (in the enlarged format) or China. Imports from the Pacific Rim can grow across a wide range of product groups, both consumer and investment. Probably, there will be a substantial increase in the supply of vehicles as well as agricultural products from the TPP countries when the restrictive trade barriers are removed. A noticeable change in the commodity structure of imports is likely to happen as a result of the reduction in non-tariff barriers. The benefits for Russia from the comparative convergence with the RCEP or TPP (in the enlarged format) are comparable. As the current trade liberalization process shows, in the near future Russia can create the conditions for signing a FTA with the RCEP if it comes into being. Regarding pure trade effects (trade creation effect and welfare effect), the Russian economy may receive the greatest gains by cooperating with the TPP countries. At the same time, as for a comparable increase in exports and imports, China would be the most preferable trade partner. Russia faces competing choices between the different Pacific Rim trade integration formats. But these choices are contingent due to closely intertwined interests of global, regional and national business entities in the region. The author argues that an increase of Russian exports to the Pacific Rim countries requires a more detailed consideration of costs and benefits, including the lowering of institutional barriers and cooperation between companies. 


Keywords

trade, trade agreement, trade barriers, trade creation effect, trade diversion effect, welfare effect, Russia, Pacific Rim, China, Regional Comprehensive Economic Partnership, Trans-Pacific Partnership 


REFERENCES

1. Ando M. Fragmentation and Vertical Intra-industry Trade in East Asia. North American Journal of Economics and Finance, 2006, vol. 17, no. 3, pp. 257-281. DOI: 10.1016/j.najef.2006.06.005

2. Kaplan M., Kar M. The Empirical Analysis of Economic Integration: A Literature Survey. Marmara Journal of European Studies, 2006, vol. 14, no. 2, pp. 45-75. Available at: http://dosya.marmara.edu.tr/avrupa/mjes%20arsiv/vol%2014%202/3-kaplan_kar.pdf (accessed 15.06.2016).

3. Fergusson I.F., McMinimy M.A., Williams B. R. The Trans-Pacific Partnership (TPP): In Brief. Congressional Research Service. February 9, 2016. Available at: https://www.fas.org/sgp/crs/row/R44278.pdf (accessed 15.06.2016).

4. Regional Comprehensive Economic Partnership (RCEP). Available at: https://aric.adb.org/fta/regional-comprehensive-economic-partnership (accessed 15.06.2016).

5. Williams B. R. The Trans-Pacific Partnership: Strategic Implications. Congressional Research Service, February 3, 2016. Available at: https://www.fas.org/sgp/crs/row/R44361.pdf (accessed 15.06.2016).

6. U. S. Invited Russia & China to Join the TPP (In Russ.) Available at: http://www.gazeta.ru/business/news/2015/11/02/n_7841087.shtml (accessed 15.06.2016).

7. Knobel’ A. Evraziiskii ekonomicheskii soyuz: perspektivy razvitiya i vozmozhnye prepyatstviya. [Eurasian Economic Union: Prospects and Challenges for Development]. Voprosy Ekonomiki, 2015, no. 3, pp. 87-108.

8. Malokostov A., Turdyeva N. Impacts of Trade ‘Meta-Agreements’ on Russia. The Impact of Mega Agreements on BRICS. 5th BRICS Trade and Economic Research Network (TERN) Meeting. Available at: http://ccgi.fgv.br/sites/ccgi.fgv.br/files/file/Publicacoes/5th%20BRICS-TERN%20ebook.pdf (accessed 15.06.2016).

9. Knobel’ A., Chokaev B. Otsenka posledstvii sozdaniya zon svobodnoi torgovli Rossii s aziatskimi stranami [Assessment of the Effects of Free Trade Zones of Russia with Asian Countries]. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2341353 (accessed 15.06.2016).

10. Kawasaki K. The Relative Significance of EPAs in Asia-Pacific. RIETI Discussion Paper Series 14-E009. January 2014. Available at: http://www.rieti.go.jp/jp/publications/dp/14e009.pdf (accessed 15.06.2016).

11. Petri P.A., Plummer M. G., Zhai F. The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment. East-West Center Working Papers Economic Series 119. Honolulu, 2011. Available at: https://www.usitc.gov/research_and_analysis/documents/petri-plummer-zhai%20EWC%20TPP%20WP%20oct11.pdf (accessed 15.06.2016).

12. Global Economic Prospects. Spillovers amid Weak Growth. International Bank for Reconstruction and Development, 2016. Available at: https://openknowledge.worldbank.org/handle/10986/23435 (accessed 15.06.2016).

13. Lee H., Itakura K. What Might Be a Desirable FTA Path towards Global Free Trade for Asia-Pacific Countries? June 22, 2013. Available at: https://www.gtap.agecon.purdue.edu/resources/download/6575.pdf (accessed 15.06.2016).

14. Sharma S.K., Kallummal M. A GTAP Analysis of the Proposed BRICS Free Trade Agreement. Working Draft. Submitted to 15th Annual Conference on Global Economic Analysis “New Challenges for Global Trade and Sustainable Development”. Geneva, June 27–29, 2012. Available at: https://www.gtap.agecon.purdue.edu/resources/download/5989.pdf (accessed 15.06.2016).

15. Tochitskaya I. Posledstviya vstupleniya Rossii v VTO dlya torgovli Belarusi i ee otraslei. [The consequences of Russia’s accession to the WTO for Belorussia’s trade & branches of economy]. Nemetskaya ekonomicheskaya gruppa. Issledovatel’skii tsentr IPM. Analiticheskie zapiski AZ/01/2012. 15 p. Available at: http://www.research.by/webroot/delivery/files/pp2012r01.pdf (accessed 15.06.2016).

16. Hovhanesian H., Manasyan H. South Caucasus – People’s Republic of China Bilateral Free Trade Agreements: Why it Matters. ADB Working Paper Series on Regional Economic Integration 125. January 2014. 60 p. Available at: https://aric.adb.org/pdf/workingpaper/WP125_South_Caucasus_Hovhanesian_Manasyan.pdf (accessed 15.06.2016).

17. Veeramani C., Saini G. K. Impact of ASEAN-India Preferential Trade Agreement on Plantation Commodities: A Simulation Analysis. Economic& Political Weekly, 2011, vol. XIVI, no. 10, pp. 83-92.

18. The Impacts of TPP and AEC on the Vietnamese Economy: Macroeconomic Aspects and the Livestock Sector. Vietnam Institute for Economic and Policy Research (University of Economics and Business, Vietnam National University). Hanoi, August 2015. Available at: http://www.jica.go.jp/vietnam/english/office/topics/c8h0vm000001sp1a-att/150924_01.pdf (accessed 15.06.2016).

19. UN Comtrade. International Trade Statistics Database. Available at: http://comtrade.un.org/ (accessed 15.06.2016).

20. I-TIP Goods: Integrated Analysis and Retrieval of Notified Non-Tariff Measures. Available at: http://i-tip.wto.org/goods/default.aspx?language=en (accessed 15.06.2016).

21. Whalley J., Xin X. China’s FDI and Non-FDI Economies and the Sustainability of Future High Chinese Growth. China Economic Review, 2010, vol. 21, no. 1, pp. 123-135. DOI: 10.1016/j.chieco.2009.11.004

22. Harmonized System Codes (HS Code). Available at: https://www.foreign-trade.com/reference/hscode.htm (accessed 15.06.2016).

23. Resolution of the Government of Russia no. 778, August 7, 2014 (In Russ.) Available at: http://rg.ru/2014/08/08/postanovlenie-dok.html (accessed 15.06.2016).

24. Stawowy W. Calculation of Ad Valorem Equivalents of Non-Ad Valorem Tariffs – Methodology Notes. UNCTAD. 2001. October. 11 p. Available at: http://wits.worldbank.org/WITS/docs/AVEmeth.doc (accessed 15.06.2016).

25.  Allen M. Review of the IMF’s Trade Restrictiveness Index. Prepared by the Policy Development and Review Department. 2005. February 14. 20 p. Available at: http://www.imf.org/external/np/pp/eng/2005/021405r.pdf (accessed 15.06.2016).

26. Viner J. The Customs Union Issue. Oxford University Press, 2014. 256 p. 


Registered in system SCIENCE INDEX

For citation:
Izotov D. Russia – Pacific Rim Countries: Prospects of Trade Liberalization. Mirovaya ekonomika i mezhdunarodnye otnosheniya, 2017, vol. 61, No 5, pp. 67-78. https://doi.org/10.20542/0131-2227-2017-61-5-67-78



Comments (0)

No comments

Add comment







Indexed
 
Current Issue
2019, vol. 63, No. 11
Topical Themes of the Issue:
• Dreams and Realities of Arms Control
• Influence of Exchange Rate on Foreign Trade Indicators: Methodological Issues
• External Challenges as Domestic Modernization’s Driving Force: World Experience
• Chinese Investments in the Russian Far East
View This Issue (2019, vol. 63, No. 11)
Send article

Dear readers!
Please note that free access to full-text issues of the Journal is being opened at our WEB-site after 6 months of the date of publications. Currently, the releases of 2015–2018 are available for free. The work on deepening the open archive of full-text issues will be continued.

Dear readers!
This is to inform the researchers of the Institute of World Economy and International Relations that electronic version of the 3-nd issue of 2019 of French magazine Politique étrangère is now available. Those who are interested, please personally address to the editorial staff of MEMO Journal (room 18-17) with an electronic media (e-mailing is not possible because of technical reasons).

NEW SECTION

In response to the challenges of our time the Editorial board continues to open new thematic rubrics:

“The Common Spaces”. The XX century was marked by the process of active development of the so-called common spaces, namely the World ocean, outer space and the Internet which, due to various reasons, were previously perceived as peripheral for the mankind and were not used at all or less intensively. Since then, the degree of their development and usage is constantly increasing. Even though the prospects of obtaining material dividends from their use are often extremely remote, the level of competition there is steadily increasing, resulting in growing inter-state conflicts’ potential.

“Silk Road and prospects of Great Eurasia”. It is planned to publish materials concerning the Chinese project of Silk Road and its impact on the socio-economic development of various countries in Eurasia and the integration processes in this mega-region.

“Africa today and tomorrow”The rubric devoted to contemporary issues of Africa which is attracting growing interest of the world's leading actors. We plan to publish the articles analyzing the status of statehood, socio-economic and political development of the countries of Black continent, as well as the integration processes between them.

“Civilization processes of modern development” is a new rubric opened by MEMO Journal in 2020. It will be devoted to the analysis of the influence of civilizational factors and inter-civilizational interactions on the political and socio-economic development of the world at whole, regions and countries.

Dear colleagues, authors and readers!

We kindly request you to turn to editor-in-chief and executive secretary directly concerning reviewing scientific publications in our journal. Only editor-in-chief takes decision on order and publication the reviews!

CONTEST!

"World Eсonomy and International Relations" announces a contest for the best joint academic publications of domestic and foreign researchers and experts in topical issues of the world economy and international relations. The winners will be selected according to the results of peer reviewing and discussion at the Editorial Board. The articles will be published in priority order.

SUBSCRIBE TO THE JOURNAL

The print version of “World Economy and International Relations” journal is distributed by advance subscription only, and is not offered for retail sale. To subscribe please address to any post office in Russia by referring to the Federal Postal Service Union Catalogue, section “ARSMI”, the journal index is 70542. The subscription may be made for the whole subscription period or starting from any nearest available month for desired number of issues.

To purchase the full-text electronic version of the journal’s issue/article please address to the WEB portal of Scientific electronic library eLIBRARY.ru or URL: https://press.gaugn.ru/.

In journal
WORLD ECONOMY AND INTERNATIONAL RELATIONS
                     Archive
                     Subjects
                     Authors
                     Articles for the year
                     Authors for the year
Years
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999 | 1998 | 1997 |

The author’s opinions may not coincide with the position of editorial