Russia allowed “gray import”. But what about import substitution?
- Anastasia Stogney
- BBC
The Russian government has allowed “parallel imports” – companies now need to bring goods into the country to sell without the permission of the copyright holder. Experts believe that this could harm both import substitution and the investment climate in Russia.
The decree, signed by Prime Minister Mikhail Mishustin on Wednesday, does not refer to all, but only to “demanded” goods. Their list is to be decided by the Ministry of Industry and Trade on the basis of proposals from federal departments.
At the same time, goods that are imported without the permission of the copyright holder (we are talking about the original product, the manufacturer of which did not give permission to import into Russia), will undergo all control and customs procedures. Counterfeits are still being imported flawlessly, but it is now unclear what their properties are.
Imported such formed goods will also be serviced under warranty, a statement on the agreements website. How this will be implemented is still unknown.
There may be cases of an offense that causes compensation for the importer up to 5 million rubles or twice the cost of imported goods, as well as compensation for losses.
What does it mean
As the head of the Cabinet of Ministers, Mikhail Mishustin, explained, the goal of legalizing “parallel imports” is the specifics of the demand “for goods containing the results of intellectual activity.”
According to Mishustin, this is the ultimate reach of goods in Russia (“despite the unfriendly actions of foreign politicians”) and “to stabilize prices.” The legalization of gray imports is included in the “fourth package of measures” for the Russian economy and business support.
There are questions in this logic. On the one hand, the government is talking about import substitution and support for Russian business. On the other hand, it allows “gray imports”, it will be very difficult to compete with the presence of manufacturers’ flesh: the cost of components and raw materials for them has increased, while they pay all taxes and fees in Russia, says INFOLine agency CEO Ivan Fedyakov.
He recalls that the weekly budget also increased the threshold for the population for duty-free importation of goods from foreign online stores from 200 to 1000 euros. “This is necessary for Russians who buy products, but have nothing to do with supporting domestic production,” says Fedyakov.
In the long term, the legalization of “grey imports” is one of the factors threatening the investment climate in Russia. “This is the destruction of market institutions. It will take years to restore them,” says Konstantin Sonin, professor at the Chicago School.