Experts review the impact of export restrictions on competition

20 september 2018

The Analytical Center hosted an expert conference "Impact of export restrictions on competition", during which experts talked about such export restrictions as quotas, bans and appointment of special exporters.

The Analytical Center expert Tatiana Kotova presented a report analyzing the following cases: temporary ban on the exports of semi-finished products from leather and grain, quotes on the exports of some types of conifer lumber and appointment of special exporters of sugar in the Republic of Belarus. According to the experts, the main hypothesis of the study was that artificial restrictions on sales of products may reduce the number of market players and push up the market shares of the companies remaining in the market.

Alexandra Andrunakievich, CEO of the Russian Union of Leather and Footwear Manufacturers, talked about the situation in the leather production industry. "Due to shortage of leather raw materials, impossibility to import raw materials from abroad in large amounts, and the sanctions, temporary bans on exports of semi-finished products from leather should remain in place," the industry expert believes. According to her, the effect of export restrictions on semi-finished leather goods is obvious: sustained utilization of all available capacity, 100% meeting of state order obligations and manufacture of special footwear for law enforcement organizations. "Footwear companies get sustained supply of raw materials; their financial and business performance improves. New types of leather have been engineered: aviation - Aeroflot, Siberia, Ural, automotive - AVTOVAZ, Nissan, UAZ, Renault, VW and furniture leathers," Ms. Andrunakievich said.

"The recycling of waste paper in Russia has evolved into a full-fledged industry. Since 2000, the output has increased 10-fold," said Denis Kondratiev, Deputy CEO of the Self-Regulatory Organization League of Waste Paper Recyclers. The problem is, though, that this industry can only grow as fast as the collection of waste paper and it has not been growing particularly fast lately. "The shortage is exacerbated by the fact that a lot of waste paper is being exported from the country, primarily under various tolling contracts with the Ukrainian companies," the specialist believes. According to him, the shortage is driving up the price of waste paper while measures to increase collection of waste paper will only have an effect several years from now. This means that protectionism is called for: restrictions on exports of waste paper, Mr. Kondratiev, believes. "We need to keep exporting waste paper to Europe and China while reducing exports to Ukraine. In addition, an export tariff on waste paper will make exporting it unprofitable, while a quota on tariff free exports will allow companies to keep exporting from regions that do not have their own waste paper recycling facilities," the expert summed up.

"Quoting exports of conifer lumber is not the main problem of the forest industry. This is a consequence of the lack of any order in the falling of trees," believes Ivan Andropov, Deputy Head of the Institute for Relevant Economics. In his view, this is especially relevant for the Far East where a lot of trees are being chopped illegally. Even the national automated information system, which is supposed to track all the flows of lumber all the way to end consumers, can't deliver the required result, the specialist believes. According to MR Andropov, another problem is when trees are cut and exported by Chinese companies.

Participants in the discussion paid special attention to the situation in the agricultural sector, where, in their view, no export restrictions should be imposed.