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US-Russia Trade Relations: Alliance Between Two Powerful Nations
How the Trade Began

Russia, also known as the Russian Federation is considered as the largest country in the world. Apparently, this significant fact makes it one of the strongest nations in terms of world trade. Stretching from Europe to the Pacific Ocean, it borders on Norway, Estonia, Finland, Latvia, Belarus and Ukraine in the west. On the south of Russia lies the Black and the Caspian Sea together with Georgia, Azerbaijan, Kazakhstan, Mongolia, North Korea and China. The Arctic Ocean is found on its north while the Sea of Okhotsk and the Bering Sea flunk its eastern portion.

Russia's topography is composed of four regions namely the Russian plain of European Russia, the Caucasus Mountains, the Ural Mountains , the vast West Siberian plain and the uplands of East Siberia and the Russian Far East. The climate of the country is very continental with very cold winters and hot summers. The coldest part in the Northern Hemisphere is the northeast Siberia.

Russia's important mineral resources are coal, petroleum, natural gas, iron ore and other metals. It is also considered as a major industrial power. Agriculture primarily focuses both on grain growing and cattle raising. In the 1990's, the Russian Economy was in a state of upheaval due to the attempt to transform from the centrally planned socialist system of the Union of Soviet Socialist Republics (USSR) to a western-style market system.

Russia, being the eighth largest economy in the world, is now planning to join the World Trade Organization (WTO). This is a part of its effort to convert for better opportunities in international trade. This is part of its willingness to take its stand on international obligations, thus joining forces with other countries in the global trade scenario.

The ties between the United States and Russia are being supported by the so-called Coalition for US-Russia Trade. This could even help enhance the businesses of both countries by protecting each other within the grounds of their territorial jurisdiction. The Russian plan of joining the WTO strengthens the bond between these two countries as well as Russia's trade relations with other countries as well.

Major Trade for US and Russia

As Russian economy is diversifying, it had opened its doors to a better and more dynamic financial structure. In fact, its Gross Domestic Product (GDP) and various income levels have been growing through the years, thus its bilateral trade with the United States increased significantly. To date, around 50% of Russian exports to use come from petroleum products while a major portion of the US exports to US come from iron, steel and railway equipment.

For the fist seven months of 2008, that is for the period ending July, the United Census Bureau recorded the facts and found out that the total US exports to Russia amounted to $6.44 billion while Russian imports totaled to $19.26 billion. For the year 2006, the following statistics were tracked in the major trade between the two countries:

  • Russian Exports to US. Out of the $19.8 billion exports of Russia to the US, oil and other petroleum products ranked first at $10 billion or an equivalent of 50.5%, which was up by 25.2% from 2005. Other products in the list include: aluminum; semi-finished iron and metal products; nuclear fuels; finished metal products other than steel; precious metals; nickel; steelmaking materials; fertilizers, pesticides and insecticides; and fish and shellfish. The last product in the top ten list comprised 2.0% of the total equal to $375.3 million.
  • Russian Imports from US. Total imports of Russia from the US amounted to $10.1 billion. Of this amount, $636.7 million or 13.5% went to meat including poultry. Completing the list are: passenger cars; civilian aircraft; oil field drilling equipment; excavating machinery; computer accessories; agricultural machinery; service industry machinery; trucks, buses and special purpose vehicles; and materials handling equipment. The materials handling equipment garnered an income of $98.6 million or 2.1%.
  • Fastest-Growing US Exports to Russia. Notable products in terms of sales were also tracked. Topping the list for US exports to Russia were iron and steel products soaring to a remarkable increase of 482% equivalent to $2.9 million. Part of the top six products are: railway transportation equipment; engines and parts; coal; civilian aircraft; and synthetic rubber. Synthetic rubber gained high marks as well at 217% or $3 million.
  • Fastest-Growing US Imports from Russia. Russian goods to America also gained a commendable increase from 2005. On top of the charts are military aircraft and parts which earned an increase of $10.4 million or 677.6%. Other prime commodities are: railway transportation equipment; civilian aircraft parts; soft beverages and processed coffee; and generators, transformers and accessories. The last products earned $8 million in total which is equivalent to 166.3% increase from 2005.
Trade Agreements Between US and Russia

Big nations as they were, it is always necessary to form trade agreements which will support the welfare of not only both governments but their populace as well. These pacts were made to furthermore provide a proper way of facilitating the entire trading system. They targeted on the flaws and the benefits that US and Russia could gain from each other. Among the trade agreements entered into by these two nations were:

  • Pork, Beef and Poultry Export Agreement. In 2003, the United States and Russia agreed to lower the tariff on large quantities of meat and other poultry products from the United States. Their Trade Representative Robert Zoellick had all praises for this particular pact especially that the benefits will surely go to the government and its people. American meat products had found its way to abundant trading terms. This was also regarded as one of Russia's stepping stones in its wanting to be part of WTO. The treaty was known to pave the way to some other agricultural issues which are always predominant in any trade.
  • Bilateral Market Access Agreement. In 2006, the agricultural trade agreement between the two nations was further enhanced in the Bilateral Market Access Agreement. This provided for inspection of all pork and poultry facilities. The entire process was responsible for elimination of trade from new plants and those which needed remedy. The US Department of Agriculture - Food Safety and Inspection Service (FSIS) was assigned to do the inspection of the said facilities. Furthermore, a new process was introduced as to these inspection schemes. The bilateral agreement specifically had provisions for beef as well. Russia was made to agree on opening its market for de-boned beef, bone-in beef as well as beef by-products. Biotechnology matters were also improvised under the charter.
Trade Conflicts Between the Two Nations

Strong nations as they are, the United States and Russia had their share of erring conflicts. This was always part of any industry especially when both have established quite a name in the entire world economy. They may have shared an agreement on nuclear weapons but at some points, some disparities needed to be conquered. Some of the roots of their disputes came from:

  • Nuclear Trade. The terms of the nuclear trade for both nations was a bit shaky in the sense that there were still elements which the two countries refuse to trade in the future. The pact was supposed to focus on the prevention of the wide-spread of nuclear weapons. In contrast with this, Russia is building a nuclear power plant in Iran. This could aggravate the situation knowing that despite their being the leaders in atomic resources, they came up with a trade that would prohibit expansion of nuclear trade. Russia had also expressed itself of not renewing the uranium agreement after its close in 2013 thus forcing the US to slow down its sales on this element.
  • War against Iraq. In some conferences with the Russian government, America was not able to get approval from Russia to form part of its war against Iraq. Unexpectedly, Russia expressed its opposition on this matter and in fact, they have warned that another Persian Gulf War could ruin the foundations of world trade. On the point of view of several people, this clash could have been brought about by vested interests from both sides. Some feel that this is a matter of power grabbing.
The Future that Awaits Both Nations

Apparently, these two strong nations would want to remain the highest stance in terms of international business. It is too sad to note that some people in government may have manipulated the minds of others in order to continue the dispute that these countries had several years ago. With this way of thinking, a future Free Trade Agreement between the US and Russia may be impossible.

However, since Russia had committed itself to become a member of the WTO, the only thing they could do for now is to join hands with the US. Definitely, this would lead to a more favorable outcome. Positive results are yet to be seen and only when they move the ship together, could Russia and US reach the peak of their success. There should always be that desire for the future to benefit from these powerful countries.

US-Russia Trade References

Note: Trade statistics, industry links, economic projections and global business resources on this page have been compiled from hundreds of trade related websites, government guides and resources on the Internet. We provide this valuable information for industrial suppliers, manufacturers, exporters and importers seeking to enter or expland business opportunities in Russia.

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