ALEXANDER KNOBEL: “THE MAIN OBJECTIVE IS CURRENTLY TO MAINTAIN CRITICAL IMPORTS AND REORIENTATE EXPORTS WHERE POSSIBLE”

In his interview with the Nezavisimaya Gazeta daily, Alexander Knobel, Head of the Foreign Trade Department of the Gaidar Institute discussed the similarities and differences of the current restructuring of imports with the processes of the 1990s. In Alexander Knobel’s view, the main objective is currently to maintain critical imports and reorientate exports where possible.

Some peculiarities of the 1990s can be observed again on the domestic consumer market. For example, the auto market reports sharp growth in demand for right-hand cars fr om Asia which are going to be even easier for Far Eastern residents to import to Russia stating from November. Amid economic shifts and uncertainties, the business is developing new logistics, looking for suppliers and seeking new niches. The main difference from the 1990s is that it happens in the established legal environment with trade, customs and technical regulations being in place. However, some factors raise concerns. Alexander Knobel pointed to the risks of counterfeit which are more difficult to counter amid parallel imports.

The consumer market observes a revival of some peculiarities of the 1990s, says Alexander Knobel, but at the same time he notes that it is not a complete return to that period. Alexander Knobel specifies that contrary to numerous predictions the Russian financial sector is coping effectively with problems thanks to the Central Bank of Russia’s adequate and timely measures. For example, capital controls are regarded now as a temporary need, while in the 1990s it was a relic of the planned economy.

“Similarities with the 1990s can be traced in logistics, capital controls, high transaction costs, overall economic uncertainty and gray imports. Logistics routes are changed because of sanctions and this reveals infrastructure constraints,” Alexander Knobel believes.

Speaking, for example, about Turkey, one should remember shuttler traders of the 1990s, Alexander Knobel added. “This mode of delivery of goods is likely to become relevant again. But being ineffective, it is not going to prevail for long,” Alexander Knobel says.

The current situation in foreign trade is far from that of the 1990s. At that time, Russia liberalized foreign trade, foreign companies came to the Russian market expecting its growth and domestic manufacturers became integrated in global chains, while at present the main objective is to maintain critical imports and reorientate exports wh ere possible,” Alexander Knobel reminds.

But according to Alexander Knobel, there is something which raises concerns. “The main problem of grey imports is counterfeit,” Alexander Knobel says. After the decision was made to import to Russia products of a number of companies without relevant permissions and control on the part of proprietors “the government will have to pay a particular attention to the development of mechanisms certifying the originality and safety of goods supplied through parallel imports.”

Wednesday, 02.11.2022