Russia supports domestic producers

Some Belarusian industrial enterprises face with unequal conditions for Russian and Belarusian producers on the Russian market.

Ongoing crisis developments in the Russian economy have affected Russia’s attitude towards Belarusian goods. Some Belarusian manufacturers faced with administrative measures aimed at promoting Russian goods. Russia demonstrates how the situation might develop if Belarus fails to privatize in favour of Russian business.

Russia’s industrial production index in the first half of 2013 was 100.1%. But machinery and equipment manufacturing, vehicles production – show decline in production compared with 2012. In late 2012 in order to support domestic manufacturers, Russian government issued a decree number 1432 “Subsidies to manufacturers of agricultural machinery”, which envisaged subsidies to agricultural machinery manufacturers (15% of the production cost). Belarusian manufacturers are not entitled to these subsidies.

Other Belarusian industries face with other restrictions: Russian engineering plants were ‘advised’ to buy domestically produced tires (unfortunate for Belshina); Tractor factory said there were production subsidies for Russian producers – regardless of CES recommendation to hold additional consultations. De facto, Belarusian companies face the same situation as Russian companies in the Belarusian market (Rostselmash harvesters supply to Belarus).

The aforementioned examples were meant to demonstrate to Belarus what consequences might be if the latter disagreed to privatize its enterprises. Regardless of the declared Common Economic Space, countries retain existing preferences for domestic manufacturers, and might extend them to joint ventures.

Thus, during the crisis, Russia and Belarus provide support to domestic producers, regardless of the agreements within the CES. This factor may become an additional pressure lever when countries continue talks about joint ventures and privatization in Belarus.