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Trade between SWEDEN and RUSSIA

Trade between SWEDEN and RUSSIA. Introduction.

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Trade between SWEDEN and RUSSIA

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  1. Trade between SWEDEN and RUSSIA

  2. Introduction Sweden and Russia are close neighbors with a complicated relationship.They have normal political relations with growing economic and cultural exchanges, especially on a regional basis; however, they both foster an age-old distrust, and have diverging attitudes toward democracy and human rights.

  3. Historical background For many centuries Sweden and Russia fought wars over the control of the Baltic Sea region. Since losing the Finnish part of the kingdom in 1809 Sweden has avoided conflict with Russia and the Soviet Union. It stayed out of both world wars, partly due to its policy of self-defined neutrality. Swedish-Russian relations greatly improved in the 1990s when, in cooperation with the West, Russia started its transition to democracy and market economy.

  4. The development of relations Since 2000 Swedish-Russian relations have continued to develop. Both sides describe them as normal and stable and are generally in favor of closer ties. However, a certain imbalance in official exchanges at the top political level can be observed. Former President Vladimir Putin never accepted any of several invitations to pay an official visit to Sweden in response to King Carl Gustaf XVI’s visits in 2001 and (less formally) 2007.

  5. Economic relations Trade relations are an important aspect of Swedish-Russian relations, one which both sides want to develop. In 1991 Sweden started to provide economic aid in order to facilitate Russia’s transition to a market economy. Sweden focused on regional development in Northwest Russia, for example in St. Petersburg and Kaliningrad, and bilateral ties were developed between regions and towns.

  6. Increase in Trade Trade has steadily grown, especially since the turn of the new century. Swedish exports, mainly consisting of telecommunications products, vehicles and chemicals rose by 30 percent in 2007-08, and Russian exports—totally dominated by energy resources—rose by 53 percent, primarily due to rising world oil prices.20 Swedish investments have also grown rapidly, placing Sweden among the top 10-12 foreign investors, mainly in raw materials, services and the stock market. However, it should be noted that only 4.1 percent of Swedish imports originate in Russia and 2.4 percent of exports are destined for Russia, which is less than Sweden’s trade with its small Nordic neighbors or the Netherlands.

  7. Russian bureaucracy In addition, there are several factors restricting trade. Like in other EU states, Swedish businesses, supported by the government, have long complained about Russian bureaucracy, crime and unclear rules. These problems have given rise to calls for Russia to join the World Trade Organization (WTO). In April 2008, Russia suddenly raised tariffs on timber by 50 percent in order to protect its own forest industry, this hit Swedish and Finnish industries especially. The two governments protested that the tariffs violated Russian agreements with the EU on WTO accession and after some discussion—facilitated by the EU—Russia postponed a planned raise.

  8. Survey of Swedish companies in Russia Company Survey participants were asked to answer 35 questions divided into four sections: • Understanding you company’s business in Russia today • The historical development of your business in Russia • The performance of your Russia business • Future needs for your Russia business to grow and prosper

  9. The number of respondents is 28. The companies were chosen from the list provided by the Swedish Trade Council in Moscow. The respondents are companies with Swedish ownership interests or Swedish management and a strong Swedish brand name.

  10. 45% 25% 0% 1990 1991-1995 1996-2000 2001-

  11. Products in Russia Most of the products sold in Russian market are imported. The share of products produced in Russia might increase in the nearest future as several respondents have indicated that they have plans to starting the production.

  12. Growth of Turnover • The company survey respondents’ information witnesses an outstanding growth of turnover in the past and positive outlook for the growth in the nearest future. 73% of the respondents expect the growth to be the same or higher in time period 3-5 years. If companies will actually achieve the growth rates stated in the survey, the turnover from the Russian market will become fairly significant.

  13. Expectations All the respondents believe Russian economic growth is not at its full potential They expect key economic centers in the future, besides Moscow and St. Petersburg, to be Yekaterinburg, southern Russia, Novosibirsk and Kransnoyarsk. But the result will ultimately depend on the success of domestic reforms and policies.

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