The European Union (EU) remains Russia's main trading partner whose share in 2020 accounted for about $192 billion (over 37%) of the country's trade turnover. Russia on the other hand ranks fifth among leading trading partners of the EU (after China, USA, UK, and Switzerland). The emergence and fast spread of the coronavirus pandemic has had a devastating impact on both Russia and the world economy. From imposed restrictions to rising tensions between Russia, European Union, and the United States, these events have largely influenced the internationalization of some Russian small and medium-sized enterprises (SMEs). This chapter therefore seeks to evaluate the trends in EU-Russia trade and identify means by which SMEs can be effectively integrated into the European market. The findings show an unbalanced EU-Russia trade pattern. Also, in integrating SMEs, the Russian Export Center (REC), Russian Agency for Export Credit and Investment Insurance (EXIAR), and the State Specialized Russian Export-Import Bank (EXIMBANK) will be instrumental in this perspective.
TopIntroduction
Trading between EU and Russia is of mutual benefits to both sides. However, the annexation of part of Ukraine (Crimea) by Russia has impacted on their trade relation with EU. Currently, Russia supplies about 26% of EU’s oil as well as 40% of its gas (Eurostat, 2021).
The EU remains to be one of Russia's main trading partners accounting for $ 192.4 billion (38.5% share of total) of Russian trade turnover by the end of 2020. At the same time, the EU's share in Russian exports was $ 113.7 billion (40.6% share of total), and in imports – US$ 78.7 billion (35.0% share of total) (Eurostat, 2021). Russia as of May 2021, ranks fifth among the EU's leading trading partners coming after China, the United States, United Kingdom, and Switzerland.
Some of the main trade products between EU and Russia can be seen in the figure 1 below. The first 10 months of 2021 accounted for an import rise in about 11.9% into Russia from the EU in the sum of $83.4 bn whereas import into the union from Russia grew by 59% ($142,3 bn) according to Eurostat. The relationship between EU and Russia has been forged under the bilateral Partnership and Cooperation Agreement with the aim of promoting trade and investment that will bring mutual economic benefits to both parties. Aside this agreement, Russia joining and becoming a member of the World Trade Organization (WTO) also provided grounds for trade relationships to be fine-tuned by the WTO rules.
Figure 1. Most traded products between EU and Russia in 2020, € billion (Eurostat, 2021).
In 2020, the total amount of trade between the EU and Russia was €174.3 billion. Imports by the EU was mostly dominated by fuel and mining products – especially petroleum and natural gas. Russia mostly imported from the union medicament, medicinal and pharmaceutical products as well as motor vehicle parts as seen from the figure 1 above. The structure of this trade has remained unchanged over the years but is not balanced since Russia’s exports are mostly dominated by mineral products whilst import – medicaments, vehicles, among others
According to the Russian customs statistics, in January-July 2021, Russia's foreign trade turnover amounted to $420.8 billion and increased by 34.3% compared to January-July 2020. Out of this turnover, exports of mineral fuels and energy products, steel among others to the EU alone was worth about $70 billion. Here, the country’s leading export partner is the Netherlands. Germany, Italy, France, Poland to mention a few, also massively trade with the Russian Federation.