Hello ladies and gentlemen. My name is Olga Trofimenko. I'm an Associate Professor of the World Economy Department at St. Petersburg State University. I'm glad to introduce to you the module on activities of foreign companies in the Russian market. This module is a product of a joint work with Associate Professor of the World Economy Department of St. Petersburg State University, Dr. Irina Vorobyeva. The current module consists of three parts. First, we will talk about features of main barriers to trade with Russia, including tariff and non-tariff ones. Then we will cover the issue of Russia in international capital flow within the main focus on foreign investments, influence to the country, key trends, and legislation. Finally, we will address the peculiarities of international marketing in Russia. The first part of the module has the following structure. Institutional framework for trade with Russia, tariff barriers, non-tariff barriers, and trade remedies. While assessing the institutional framework for trade with Russia, it is important to be in mind and answer to the following question, what is influencing Russia's trade policy development? Or in other words, what are the determinants of trade policy and what are the key stakeholders? Economic theories and economic reality provide a critical intellectual foundation. Trade takes place as a result of comparative advantages, but it is complicated by politics. Private companies are the main players in international trade and investment activities, but they have to conduct their business on the domestic and international rules. Therefore, understanding that trade policy development mechanism is of crucial importance. Trade policy involves values, preferences, priorities, and institutional setting, and a social context that can vary from country to country. Russian trade policy addresses peculiarities of its economic system and style of the governance. Regardless, the fact that political relations of Russia with some of its trading partners going through a very tough time, the country is a member of various international economic organizations. Therefore, its trade policy is developed in consistency with the main rules of international economic law. For example, as a member of the WTO, Russia is no longer implementing some trade restrictive policies that are inconsistent with the WTO rules. Activities of national lobbies also have a strong influence on the national trade policy development. Indeed companies normally would like to receive protective and supportive measures, and at the same time would try to force the governments to promote better market access conditions in the international markets. Russian trade policy is a result of the influence on both domestic and international factors. For example, economic and political sanctions imposed on Russia by some countries in 2014 and the later forced national governments to undertake retaliation measures and to introduce so-called anti-sanction actions, including a prohibition on imports of certain products from certain countries and the introduction of the input substitution policies. One of the results of mutual economic sanctions since 2014 was the deterioration of trade with some traditional partners, mainly the European Union. Russia had to find new alias and strengthen economic and political relations with the existing ones. That is why one could observe so-called turn to the east. That means mainly the establishment closer relationship with China. By the way, nowadays, China is the main trading partner of Russia. The European Union moved from the leading position to the second place. In addition, Russia started to pay more attention to intensification of trade with partners that did not have a substantial share in the Russian Foreign Trade, mainly these are other than China, BRICS countries. Due to a large distance and the absence of a common border, it is much more complicated to intensify economic cooperation with for example Brazil or South Africa. At the same time, regular meetings of the BRICS countries representatives at all levels express the interest of the five member countries and feel the cooperation. Gradually, various initiatives are being launched to strengthen trade interaction within this forum. Cooperation with non-BRICS countries is developing as well. Russian Federation joined the WTO in 2012. Before becoming a member, Russia, as all other acceding countries brought its internal legislation into the confirmatory with the WHO principals. Since then, it is a part of the international set of rules. Russia has received certain rights and obligations fixed in the accession documents. In general, the country has no rights to apply more restrictive regime that it stated in trade concession. Russia is developing economic ties within the Eurasian Economic Union, which now consists of Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan. The union provides a free movement of goods, services, capital, and labor, research coordinated, harmonized, and single policy in the sectors determined by the treaty and international agreements within the union. As a member of the Eurasian Economic Customs Union, Russia is no longer able to sign free trade agreements with the south countries. Instead, such negotiations take place at the Customs Union level. If we assess activities of national lobby, we should mention that lobbying is the common instrument of companies all around the globe to influence national trade policy development in favor of national companies. Russian companies are not an exception. To assess the issue, one might use their two level game theory approach introduced by Robert Putnam in 1988, that regards international negotiations between states as simultaneous negotiations at both international or domestic and the international level or between the governments. Indeed, at the national level, governments must address various societal and business concerns and at the same time, reach international deals. The two level approach recognizes the inevitability of domestic conflict about what the national interest requires. It also admits that central decision makers strive to reconcile domestic and international imperative simultaneously. The Analysis of South Trade measures undertaken by the Russian government allow to identify domestic beneficiaries rather easily. For example, when it introduced a ban on European pork or input of Ukrainian railway equipment, Russian companies receive a substantial competitive advantage. At the same time, Russian trade policy is gradually becoming more and more sophisticated in terms of providing benefits for domestic companies without a violation of international obligations. To be fair, it's best to mention that foreign companies operating on the Russian market also have their voice and represent their opinion via chambers of commerce or Business Industries Associations.
