Russia - Market OpportunitiesRussia - Market Opportunities
With a vast landmass, extensive natural resources, more than 142 million consumers, and acute infrastructure needs, Russia remains a major, potential market for U.S. exporters. Russia is the world’s eleventh largest economy by nominal gross domestic product (GDP) and the sixth largest by purchasing power parity (PPP), as cited by the International Monetary Fund (IMF). According to the IMF, 2017 GDP per capita (PPP) was $27,890, the highest of the BRICS countries (Brazil, Russia, India, China, and South Africa). Russia is a high-income country, with an educated, trained workforce and sophisticated, discerning consumers.
A combination of low oil prices, structural limitations, and sanctions pushed Russia into a recession in 2015, with the economy contracting by four percent. The Russian economy then fell by about 0.6 percent in 2016. The Economist estimates that structural weaknesses, low investment and fiscal tightening will keep GDP growth at about 1-2% a year in the medium term.
In terms of trade in goods, Russia was the United States’ 34th largest export market and the 23rd largest exporter to the United States in 2017. Russia was the United States’ 30th largest trading-partner overall. U.S. exports to Russia in 2017 were $6.9 billion, an increase of 20.6% from 2016. Russian exports to the United States in 2017 were $17 billion, an increase of 17% from 2016. Russia’s leading individual trading partners are China, Germany, the Netherlands, Belarus, the United States, Italy, Japan, and Turkey.
In 2015, the latest available data showed that the U.S. direct investment position in Russia was $9.2 billion, a decrease of 0.8% from 2014. The direct investment position of Russia in the United States was $4.6 billion, a decrease of 6.8% from 2014. Given the prevalence of third-country trade and investment channels, U.S.-Russian trade and investment actuals are likely much higher.
Russia joined the World Trade Organization (WTO) in August 2012. Congress also enacted legislation to extend permanent normal trade relations to Russia in the same year. U.S. manufacturers and exporters experienced more certain and predictable access to the Russian market because of Russia’s commitment not to raise tariffs on any products above the negotiated rates.
For American businesses, Russia’s accession to the WTO also provided the following benefits, although Russia has been slow to fulfill many of its WTO obligations:
• More liberal treatment for service exports and service providers;
• Stronger commitments for protection and enforcement of IPR;
• Rules-based treatment of agricultural exports;
• Market access under country-specific tariff-rate quotas;
• Improved transparency in trade-related rule-making; and
• More effective WTO dispute resolution mechanisms.
In some areas, subsequent Russian government actions, such as prohibitions it has placed on imports of most U.S. and European products since August 2014, have effectively negated market-opening measures that resulted from Russia’s entry into the WTO.
Russia Trade Development and Promotion