Belarus opens up to Russian goods

Belarus’s market is now open to Russian goods, after the two countries signed on March 23 a new deal to boost trade and economic cooperation. Apart from cigarettes and beers, the agreement also covers seafood, sugar and agricultural machinery.

On April 1 Belarus lifted restrictions on the import of Russian beers. In 1994, domestic beer occupied only 14 percent of the national beer market. The Belarusians used to buy a lot of imported beer. Later, the quality of the Belarusian beer improved and the situation became stable. Economist Leanid Zaika continues:

“In terms of prices, the Russians can supply a cheaper beer than in Belarus. Therefore, we are observing the growth of the niches with the Russian beer. But I think that most of the market segments will still be occupied by domestic producers. Russia will not be able to strike a dangerous attack in this regard. In principle, if the market becomes competitive, prices will go down.”

The new thing now is that the Russian suppliers will not have to submit documents, confirming the legitimacy of the Russian beer. Economist Jaraslau Ramancuk explains how this can affect the situation.

“Such agreements have never been a means of forcing the industry to operate under certain principles. No doubt, there will be fake products and falsifications, because these issues do not get resolved by punitive measures or bureaucratic control.”

The quotas for the Russian cigarettes will also be removed.

“When we look at the tobacco market in Belarus, we can observe that it does not have premium brands like British American Tobacco, Marlboro, Kent and others. The Russians are already making those brands. They will occupy the premium cigarettes niche. The cigarettes, produced for example in Hrodna, will occupy their own segment,” Zaika said.

Tobacco and alcohol are excised goods. It means that a huge part of their cost goes to the country’s budget. A packet of cigarettes can cost Br200, but sold at Br2000. The government does not lose in this situation anyway, so prices are hardly to go down.

What will happen to fish? Today, the average cost of one kilogram of fish is $1. The market price is $5. Will the seafood prices decline after the lifting of quotas for the Russians? Leanid Zaika answers to this question.

“Unfortunately, I am not sure that we will see the prices fall. It is more advantageous for the Russians to sell fish at the Belarusian prices. They will be receiving a super profit or simply a very good profit.”

Belarus has also agreed to Russia’s restrictions for the export of the Belarusian sugar. Experts estimate that the sugar industry is not of paramount importance for this country’s economy. Besides, we will have to buy agricultural machines produced not only in Belarus.

Belarus has also abolished fees for the transit of Russian trucks through our territory.

“I would give an ice-cream and a flower to everyone who crosses our border. Please, come here; buy our fuel, our goods and souvenirs. Come to us as often as possible. Previously, we were doing foolish things,” Zaika said.

While no agreement on subsidies is signed yet, each party has to inform its neighbor about the government funds invested in a certain enterprise. At the same time, several days ago Aliaksandr Lukashenka signed a decree on supporting industrial enterprises.

The left and right hands are signing different decrees. Russia might not like it. If they realize that our subsidized factories cannot compete with the Russian enterprises, Moscow might possibly put forward claims against Belarus.

However, Jaraslau Ramancuk, is not confident that Belarus will meet the conditions set out in the trade agreement with Russia.

“The Belarus government needed to win time in order to remove restrictions for the Belarusian goods in Russia. They will find what to respond. Bureaucrats are always good at thinking up their excuses,” Ramancuk suggests.

But, will those excuses satisfy Russia?

Photo by newsru.com