Permalink : http://hdl.handle.net/2115/39236

After the demise of the Soviet Union, Russia has initiated several plans towards establishing free trade area (FTA) and customs union with other CIS countries. However, more recently, several trade confrontations among CIS countries, such as Russia's antidumping measures on metal pipes imports from Ukraine, have been observed. In order to understand in which direction Russia and other CIS countries are heading -- economic integration or disintegration, it is important to examine the nature of existing CIS intra-bloc trade from two aspects: systemic changes and trade dynamics, bearing in mind some mutual effects between them. However, concerning the trade dynamics between Russia and other CIS countries, only a few studies have been previously conducted. Therefore, the main purpose of this paper is to examine the structural changes in Russia's trade with CIS countries over the past 16 years by comparing its commodity structure and trade patterns with those seen in the trade with non-CIS countries. For this purpose, some indices are calculated using Russia's foreign trade data, classified by the two- or four-digit Harmonized System (HS) categories compiled and issued by the Federal Customs Service of Russia (FTS), the Ministry of Statistics and Analysis of the Republic of Belarus (Minstat) and the United Nations Commodity Trade Statistics database (UN-COMTRADE). Due to the fact that most of these data have been available only since 1994, the analysis made in this paper is mainly for the period 1994 through 2005. The first section is devoted to a brief survey and comparison of commodity structures of Russia's trade with CIS and non-CIS countries in the two years of 1994 and 2005, and basic characteristics of them are pointed out. The commodity structure of Russia's trade with non-CIS countries has been concentrated in a few commodities. To put it simply, Russia has exported fuels (HS 72) and imported manufacturing products like automobiles (HS 87), machines (HS 84) and electronic equipment (HS 85). In contrast, the structure of Russian trade with CIS countries has become more diversified, although energy-related commodities still comprise the main export to both CIS and non-CIS countries. It should be noted here that each of these "concentrated" or "diversified" characteristics have been more apparent between the two years. In section 2, three traditional indices relating to comparative advantage, RCA (Revealed Comparative Advantage), RCD (Revealed Comparative Disadvantage) and RTA (the combination of the former two indices), are calculated. In addition, the corrected-RTA indices designed by the author to reduce the bias from trade imbalances are also calculated. All of these indices show almost similar results. Many more groups of commodities exported from Russia have greater comparative advantages in CIS market than in non-CIS market. Typical commodities with high comparative advantages in both of CIS and non-CIS markets are fuels, fertilizers, and nickel (HS 27, 31, 75) in addition to several manufacturing goods such as machines, electrical equipment, ships and optical apparatus (HS 84, 85, 89, 90) that are found to have comparative advantages in CIS markets. It deserves to be noted that according to the corrected-RTA indices in 2005, 41 groups of commodities out of all 96 groups by HS 2-digits classification have comparative advantages only in CIS markets, and this number has doubled in the past decade. The third section deals with an intensive analysis of the "two-way trade" of the same group of commodities in Russia's CIS and non-CIS trade. Here the author calculates HDLR (Horizontal Division of Labor Rate) indices developed by Uegaki from GLI (Glubel-Lloyd Index). It is found that the HDLR indices for Russia's intra-CIS trade have been much higher than those for non-CIS trade. The author also finds that the main contributors to the high HDLR indices for intra-CIS trade have been such commodities as iron and steel (HS 72), machines (HS 84), automobiles (HS 87), railway locomotives (HS 86). As the background to this tendency, the author indicates that the web of bilateral free trade agreements stipulating the duty-free trade regime among CIS members has been in effect though there have been some exemptions. In addition, the wide-gauge rail system and standard-certification system (GOST) remain unchanged, an important "Soviet legacy" for most CIS countries. The last section analyzes the trade relations between Russia and Ukraine, focusing on iron, steel and products thereof (HS 72, 73), which are the typical goods for two-way trade but are also the very subject of trade confrontations between the two countries. Here the author uses Abd-El-Rahman's way of dividing trade flows into three trade types, OWT (one-way trade), V-TWT (Vertically differentiated two-way trade), and H-TWT (Horizontally differentiated two-way trade), according to the degree of overlap between export and import values (if large, OWT) and to the similarity of export and import unit values (if similar, H-TWT). The outcome leads to the conclusion that the increasing share of H-TWT in iron and steel trade may account for the tension between Russia and Ukraine. In concluding remarks, the results of the analyses above and the tasks that remain to be addressed are briefly summarized.