Austria
The trade turnover between Russia and Austria in 1997 was as follows (in billions of Austrian Schillings, according to Austrian statistics based on the EU statistical accounting systems Intrastat and Extrastat): 21.9 (19.2 in 1996), of which Russian exports accounted for 11.9, and Russian imports for 10.
Austrian export to Russia is increasing in leaps and bounds (after a certain drop in 1996). Characteristically, both throughout 1997 and during the first quarter of 1998, the growth of Austrian exports to Russia (+26.5% and +19%, respectively) was perceptibly higher than Austria’s total export volume (+16.8% and +9.9%, respectively).
The favourable export indices were largely promoted by the steps taken by the Austrian Control Bank at the end of 1996 and in July 1997 to improve the warranties granted to Austrian exporters with respect to deliveries to Russia, as well as counter-warranties from several Russian central and regional commercial banks in support of these deliveries.
Russia exports primarily fuel and energy resources to Austria, with the emphasis on natural gas (more than 55%). In 1997, natural gas, oil, petroleum products and nonferrous metals (including scrap and wastes) accounted for almost 90% of Russia’s exports to Austria. Machinery, industrial equipment and other ready-made items make up the lion’s share of Austrian exports to Russia.
The accumulated volume of Austrian investments in the Russian economy is estimated at US million, whereby most of this investment is in the non-production sphere. Only 15 to 20% go to production.
Approximately 470 joint ventures with Austrian capital have been founded in Russia. Austria is one of the largest foreign investors in the Russian economy, accounting for approximately 5.4% of the total amount of foreign investment.
The prospects for investment cooperation were the subject of discussion at an economic forum held in Salzburg, as well as at an investment forum in Bashkortostan scheduled for September 1998.
The keen interest of Austrian business circles in investment projects in the Russian provinces, as well as the energetic efforts of such regions as Bashkortostan and Tatarstan, the Irkutsk, Novosibirsk, Kemerovo and Tomsk Regions, the Altai Territory and others to expand their presence on the Austrian market and, via Austria, on the markets of other EU countries, demonstrate the current and potential strengthening of the role of Russia’s regions in Russian-Austrian trade and economic relations.
The largest undertakings in which Russian representatives participated include the Centerex Expo and the Siberia Welcomes Europe exhibition/presentation, within the framework of which a Siberia 2000 international congress was held.
More than 200 Russian enterprises and companies took part in the Centerex Expo held in Vienna in February 1995, where they demonstrated their latest achievements and technological innovations.
Nine Siberian regions, Bashkortostan, several regions in the Urals and the North-West of Russia’s European part were represented in the Siberia Welcomes Europe exhibition/presentation held in Linz in October 1995. Visitors to the exhibition were presented with over 500 investment projects and proposals for the foundation of joint ventures.
The total volume of Russian investments in the Austrian economy is estimated at 700 million Austrian Schillings (over US million), which is approximately 1% of the overall amount of direct foreign investments in Austria. Russian capital is primarily invested in commerce, banking, transportation, and the services. In recent years, a large number of agency companies have been set up in Austria with private capital of Russian businessmen. However, many of them have already gone bankrupt.
An analysis shows that Austrian companies and organizations (registered in Austria) with a negligent attitude towards their contract obligations and which at times violate Russian laws are usually those founded by citizens of the former Soviet Union. Such companies do not operate for long, have a minimum amount of authorized capital, and are headed by incompetent managers. Approximately 20 companies with Russian capital are registered in Austria.
The contractual and legal basis for economic and trade relations between Russia and Austria is set forth in the Russian-Austrian Trade and Economic Cooperation Agreement of 8 November 1993, which went into effect on 1 October 1995, and in the Agreement on Partnership and Cooperation between Russia and the EU (APC), in effect since 1 December 1997 (a protocol on applying the provisions of the APC to Austria was ratified by the Austrian parliament in October 1997). Until the APC went into effect, a Provisional Agreement between Russia and the EU on commerce and associated issues were applied.
Pursuant to Article 22 of the Agreement of 8 November 1993, as soon as one of the parties to the Agreement joins the EU, the parties are no longer bound by this Agreement insofar as it does not comply with the status of membership of such party in the EU. Therefore, from the moment Austria became a member of the EU, those provisions of the bilateral Agreement, which did not comply with Austria’s status, as a member of the EU automatically became null and void. At the same time, similar (or broader) provisions of the APC replace the corresponding provisions of the bilateral Agreement.
Russian-Austrian trade relations were duly affected by the regulations imposed on them after Austria joined the EU. Primarily, the terms of importing specially regulated commodities into Austria (textiles, steel) have become stricter, and EU anti-dumping measures are now being applied to Russian goods.
Austria essentially does not share the official EU opinion that Russia belongs to the “non-market” economy countries and, on the whole, is in favour of liberalising the EU’s stance with respect to Russia.
Most of the EU anti-dumping measures used against Russia had been adopted before Austria entered the European Union, and Austria received them “ready-made”. Russian exporters have never been accused of dumping on Austrian territory. Not one anti-dumping procedure has been initiated directly by an Austrian company. The only examples of the indirect participation of Austrian companies in the instigation of anti-dumping procedures involving Russian export goods are the membership of the Fest Alpine Stahlrohr Kindberg company in a group of metallurgical enterprises consisting of German, Italian, French, Spanish and Swedish companies, which initiated the investigation on seamless ferrous pipes in August 1996, as well as the membership of the Funder Industry company in a group of German, French, Italian, Finnish, Swedish and British enterprises that applied for investigation on wood-fiber blocks in November 1997. Furthermore, Austrian companies did not play a leading role in the above-mentioned groups, and Russian suppliers were not accused of dumping on Austrian territory. Austria regards the EU anti-dumping measures not so much as punitive sanctions directed at removing an unwelcome rival from the market, but primarily as a means for exerting pressure on a partner in order to reach a mutually acceptable agreement on the division of spheres of influence on the market. In this respect, Austria is essentially in favour of actively involving the supplier (producer) accused of dumping in cooperation with the EU and encourages any opportunity for the EU to review proposals made by the supplier on his willingness to assume responsibility for delivery volume and price level.
In this respect, Austrian representatives are pointing to the insufficient, in their opinion, willingness of Russian companies accused of dumping to cooperate with the EU, as well as to their unsatisfactory flexibility and efficiency in responding to the instigation of anti-dumping procedures, and their meager knowledge of EU regulations.
In 1997, Austria supported the Russian proposal to end an anti-dumping procedure regarding deliveries of potassium chloride from Russia under the obligations of the International Potassium Company, and expressed its disagreement with the position of the EU Commission on this issue.
Austria was against introducing a final anti-dumping duty on zinc. During the discussion of this matter, the Austrian side maintained that the Russian suppliers were not manifesting sufficient flexibility and willingness to assume self-restricting obligations, which caused the decision to be made against them. In actual fact, however, the EU countries were divided in their opinion on this issue, and theoretically could have decided not to introduce the final duty. Austrian experts believe that Russian enterprises should be more willing to cooperate with the EU by voluntarily assuming restricting obligations, particularly at the initial stage of anti-dumping investigations, as well as during the period temporary fees are in effect and the term of final duties has expired. Austria would be prepared to support Russia’s corresponding proposals in the EU.
Austria positively assesses the efforts made to reach a new agreement between Russia and the European Coal and Steel Association on trade in steel goods, which went into effect on 1 October 1997 and will be valid for 5 years. According to Austrian experts, the new agreement means a certain liberalisation of trade in these goods. In particular, only about 13% of the entire range of mutually delivered steel goods fall under the quotas of the new agreement, and the other commodities in this group are not subject to any restrictions at all. Moreover, it is emphasised that the quotas set forth in the agreement are mutually transferable: unused quotas for one commodity can be applied to deliveries of another commodity.
During the past few years, attempts have been made to reschedule Russia’s debt to Austria. Following an agreement between the Austrian Club of Commercial Creditors of the USSR and the Russian Prizma Insurance Company, reached in December 1996 in London, and after the financial terms for rescheduling the non-guaranteed commercial debt to Austrian companies were ratified, negotiations with Prizma in 1997 became sluggish and largely focussed on technical issues. A final agreement with Prizma is still to be signed.
Since there are no major disagreements on this issue and its resolution has essentially been postponed due to the absence of any final agreements with the Paris and London Clubs, the Austrian side has not insisted on stepping up the negotiations.
However, the Austrian side believes that rescheduling of the official debt and Russia’s acceptance into the Paris Club, as well as the signing in October 1997 of an agreement between Russia and the London Club, remove the remaining unresolved issues and make it possible in the near future to finalise the accords reached with Prizma and sign a corresponding agreement.
Negotiations have been going on for several years now between the Russian and Austrian Finance Ministries on a draft agreement to avoid double taxation. Nevertheless, no real progress has been made in preparing the already long ratified text of the agreement for signing, which would have a positive effect on bilateral economic cooperation and would help to improve control over the export of capital by Austrian companies from Russia to Austria and ensure an optimal level of remittable profits, dividends, interest, etc.
In January 1998, a Memorandum between the Russian Federation and the Austrian Republic on financial support to joint projects to be implemented in Russia was ratified.
A joint Russian-Austrian Commission for Trade and Economic Cooperation was created pursuant to the Russian-Austrian Trade and Economic Cooperation Agreement of 8 November 1993. In April 1997, Deputy Chairman of the Russian Government and Chairman of the State Property Management Committee Alfred Koch was appointed chairman on the Russian side of the Commission. Since June 1996, Federal Minister of Economic Affairs Johann Farnleitner has been chairman on the Austrian side.
The Russian-Austrian Joint Commission for Trade and Economic Cooperation met twice. The second conference took place in Moscow on 10 and 11 September 1996. In the interim between the Commission conferences, working meetings are held between deputy co-chairmen. Within the framework of the Commission, working groups have been formed to address thorny issues of bilateral cooperation, oil and gas, and standardisation.
In 1998, a mutually acceptable solution was found to the problem of packaging cardboard equipment manufactured by the Voith Company for the Syktyvkar Lumber Combine and not delivered due to the Russian enterprise’s lack of funds. A decision was made to sell the equipment with the proceeds to be used to cover the supplier’s expenses and the rest in repayment of Russia’s official debt to Austria.
Austria’s technical assistance to the Russian Federation is being provided within the framework of the Mutual Agreement on Cooperation for Restructuring, Privatisation and Market Orientation of the Russian Economy signed on 2 April 1992 during an official visit to Russia by Austrian Federal Chancellor Franz Vranitzky.
Under the agreement, technical assistance to the Russian side is to be rendered in the following sectors: conversion of the defence industry, privatisation, agricultural production, banking, development of power engineering, environmental protection, promotion of small and medium business, training and retraining of personnel in jobs required for developing a market economy in Russia.
By January 1997, Austria had rendered Russia gratuitous assistance in the amount of US million, including humanitarian aid amounting to US million. As of late, Austria has been departing from the principle of aid provided within the framework of bilateral relations and expanding its activity in multilateral cooperation, particularly through the European TACIS Programme.
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