Trade-fair agreements are often critisised. Companies fear the competition from foreign markets. If an Asian country is involved, anxiety is often even bigger. Russian Polyplastic is worried about negative consequences of a Russian-South Korean free-trade agreement.
States of the Eurasian Economic Union (EEU) are currently contemplating the possibility of forging a free-trade agreement with South Korea. The Research and Production Enterprise Polyplastic explained in statement that it appreciates efforts of the Ministry of Industry and Trade of Russia to take into consideration opinions from the industry's participants while considering major, even strategic inactions in Russia.
According to the company, a decision to forge a duty-free trade with economically developed states would definitely produce new possibilities for the Russian market to develop and enlarge. Although such a decision contains certain nuances. Just a few industrial sectors will benefit from such an agreement, the company says. Among those for whom such a measure will turn out rather harmful are domestic compounders, Polyplastic for instance, that will definitely lose their advantages before Korean companies. Furthermore, such an Agreement will complicate the company's ties with auto and white goods manufacturers (Hyundai, LG-Electronics, Samsung).
Winners and loosers of internationalisation
Notwithstanding there is a possibility of a more negative result: cooperation with companies mentioned above, which had localized production, will be halted. In this case, the direction of the import substitution programme, declared by the President of Russian Federation, will change to the opposite: creating a possibility for foreign producers of composite materials to supply their goods to Russia, thus increasing capital outflow abroad.
Moreover, to allow Korean compounders of polymer materials to the Russian market by lifting custom regulations will inevitably cause a decrease in technological development, which is recently gaining more traction.
Specialists from Polyplastic opine that a better way will be to forge a free trade for those sectors of the market, products of which have no analogs produced in Russia.
This article was first published on ETMM online.