Interaction of the Russian Far East and Asia-Pacific Countries: Assessment of Institutional and Tariff Barriers to Trade

Abstract: Due to the considerable distances from the major sales markets of Russia, the Far East has close ties with markets of the countries in the Asian-Pacific region (APR). The current expansion of trade and economic interactions with these countries has a positive effect on the economic development of the Far East. Reducing various barriers to trade with the APR countries can increase the scale of bilateral trade, acting as a source of growth and development for the economy of the Far East. To determine the ranges for increasing trade, the potential for trade interactions arising from the leveling of various barriers was quantified. It is shown that for the Far East a gradual change in the intensity of foreign trade relations was observed in favor of geographically close foreign markets, the Asia-Pacific countries. Based on the constructed gravity dependence, trade barriers for interactions between the Far East and Asia-Pacific countries were estimated and decomposed into the ad valorem equivalent. It was determined that the major source of tariff barriers was the tariff burden on exports and imports, formed by the Russian side. The decomposition assessment showed that the comparative institutional barriers between the Far East and the Asia-Pacific countries were significantly greater than the comparative tariff barriers. This circumstance indicated the insufficiency of reducing tariff barriers for intensifying the bilateral trade between the Far East and the Asia-Pacific countries. The analysis made it possible to assume that the introduction of various types of weakly motivated trade restrictions by the Russian side led to a shift in the customs burden from tariff barriers to institutional ones. In addition to the Republic of Korea, a general vector of intensification of trade between the Far East and the Asia-Pacific countries was observed for China. The estimates obtained suggest that the comparative institutional barriers between the Far Eastern regions and China will continue to decline. It is shown that the leveling of comparative institutional barriers between the Far East and Japan can significantly increase trade interactions between the Russian macroregion and the APR market. © 2020, Pleiades Publishing, Ltd.