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. Last Updated: 07/27/2016

Russia's Primary Exports Get More State Scrutiny

The Presidential decree of June 12 on the export of "strategically important raw materials" was targeted at exactly those industries where Russia has the biggest export capacity, from oil to minerals and from metals to timber.


The decree, which came into effect on July 1, tried to improve the government's finances by increasing export duties. As compensation to exporters, it changed foreign currency sale rules in a way that has made exporting more attractive.


But one less easily understood aspect of the decree was that it required all exporters of a long list of raw materials to obtain a license from the government.


Applications are processed by the Foreign Economic Relations Committee, which issue a decision within two months.


When the decree was announced, some thought the government wanted to reimpose control over the burgeoning export trade.


Many firms were concerned that the reintroduction of licenses for exporters was a move back towards the old system before trade liberalization, when exports were sold by centralized export agencies controlled by the ministry.


But at a recent press conference, Sergei Glazev, deputy minister of foreign economic relations, claimed the opposite was true. He said 24 percent of exporters to whom


licenses had been issued were ministry agencies. The biggest group, 69 percent of the total, was the regional producers associations.


He added that producers without licenses have a right to sell through registered exporters who charge a commission that varies from 0. 8 percent for oil to 2 percent for metals.


Joint ventures are automatically granted licenses to export whatever goods they actually produce here in Russia.


Glazev said no applications for licenses have yet been refused, although in about 12 percent of cases firms have been limited to exporting fewer categories of goods than they wished. By the end of September, 170 organizations had been issued with licenses and another 72 applications were still being considered.


As justification, Glazev said the government wanted to concentrate exports in the hands of the most efficient traders.


He hinted at another reason, namely that the government wanted to keep a closer eye on exporters, especially those who were taking money abroad illegally.


Glazev commented that "exporting at low prices and partially concealing hard currency profits was a major problem".


In the meantime, Western traders in most exporting industries have noticed little change in the structure of the export industry as a result of licensing.