On May 22, an online conference was conducted on "COVID-19 and sanctions: how will political risks for business change?”
As the moderator of the conference, Mr. Suren Vardanyan, the MCCI’s Vice-President, noted, this is the second event held by the Moscow Chamber of Commerce and Industry of the impact of sanctions on economic activity. "We believe," noted Mr. Vardanyan, "that understanding the essence of sanctions and the subtleties of their application can help in building a business strategy for the participants of our events. We do not dramatize the situation, we try to make business processes proceed with minimal risks”.
One of the initiators of the event - the Chairman of the MCCI Commission on Foreign Economic Cooperation with partners from Canada, Mr. Alexei Tarasov, noted that his company has gained experience regarding sanctions throughout the North American continent. "We have two years of experience with sanctions’ regime, and it looks like that we have a long road ahead for us to deal with it.” said the entrepreneur. Therefore, obtaining information from market professionals can contribute to the competent structuring of business processes, even under the conditions of sanctions’ pressure.
The CEO of VladVneshService, Ms. Zhanna Martynova, provided information on foreign economic transactions for the first quarter of this year. She noted that more than 20 years of work in the market showed that it is always possible to find a niche that has good prospects for growth. While Russia's total export volume in 2019 decreased by 6% to $423 billion, the import volume slightly increased - by 2% to $244 billion. At the same time, in some segments of the market there is a notable growth in both exports and imports. In the first quarter of this year, there was an increase in lard and oil exports from Russia.
After the UK removed a number of anti-dumping duties on such goods as aluminum foil, ferrosilicon, seamless metal and cast iron pipes, steel and cast iron pipe fittings in February 2020, exports from Russia increased from $2 to $3.4 billion. At the same time, exports to the EU, in total, fell quite a bit in the first quarter - by 21%. At the same time, according to the speaker, some sectors showed very good results. For example, excellent indicators of exports to Germany of diamonium phosphate (176% growth), pneumatic tires for cars (plus 30%), floor tiles and fireplaces - growth of 16%.
The structure of imports also includes products, whose supplies have increased, such as machinery, equipment and products of organic chemistry. Imports to Russia from such countries as France, the Czech Republic and Spain have also increased slightly. Imports from Canada have vastly increased - by 26%. According to Ms. Zhanna Martynova, the growth of imports in some industries looks quite unexpected: for example, shipments of frozen potatoes to Russia from Germany increased by 415% in the first quarter of this year.
Участникам ВЭД или тем предпринимателям, которые только собираются выйти на новые внешние рынки, эксперт посоветовала искать статистику по свей( СВОЕЙ?) и находить перспективные направления. А для всех участников конференции компания VladVneshService предложила бесплатно обновить знания по своим товарным нишам и получить основные статистические показатели, обратившись к ним.
For participants in foreign economic activity or those entrepreneurs, who are going to enter new foreign markets, the expert advised to look for statistics and find promising areas. And for all participants of the conference, the company VladVneshService offered to update the knowledge on their product niches free of charge and receive the main statistical indicators by contacting them.
The Program Director of the Russian Council on Foreign Affairs (RIAC), Mr. Ivan Timofeev, provided examples of practical cases of getting sanctioned and outlined seven main stereotypes that can provide business owners and management with a dubious, harmful tactics and strategies. The speaker noted that now there is a stabilization of strategic risks of sanctions, as the probability of political crises is less than in any year, starting from 2014. At the same time, according to the expert, one should not expect the cancellation of sanctions in the near future.
The pandemic also has no significant impact on the sanctions’ regime. The only exceptions are narrow commodity market segments (in particular pharmacy and medical products). In the long term, businesses will have to take into account and adapt to an increasing number of various sanctions. Effective risk management should start with American sanctions, as they are most common and global in nature. And also assessing the risks, associated with national jurisdictions in which a business operates.
Ms. Margarita Khomenko, the Project Director of the RBEN company, told about application of the compliance system, as a process allowing to assess and reduce business risks. In May of last year, the Office of Foreign Assets Control of the U.S. Treasury Department (OFAC), issued a "Framework for Compliance with Sanctions", which identified the key elements of the sanctions’ compliance program. These are management commitments, risk assessments, internal controls, systems’ testing, audits, and training. The proposed elements are also found in any compliance program: anticorruption, antitrust, personal data, etc. The proposed elements are also included in the OFAC Compliance Framework.
At the conference, the speaker focused on each of these elements in detail. In addition, an article written by Mr. Timofeev and Ms. Khomenko was distributed to all participants of the event, which they prepared especially for the online meeting. It described in detail all the points that formed the basis of their reports.
Summing up the conference, Mr. Vardanyan thanked the speakers for the useful and relevant information voiced at the event. He also invited the participants to follow-up events, which will be held next week on the online platform of the Chamber of Commerce and Industry and will concern the peculiarities of doing business in different countries. "Follow our announcements."-encouraged all participants the Vice President of the Chamber.