Pure Façade: How US Continues Buying 'Made in Russia' Goods Despite Sanctions

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Although many people expected a sharp decline in Russia-US trade amid the increase in bilateral tensions between the countries, businesses, against all the odds, seem to have ignored this and maintained economic ties.

Relations between Washington and Moscow have been declining for the last five years due to a number of disagreements on international issues, with the latest US moves being aimed at sanctioning the Russian gas export project Nord Stream 2. Despite this, however, trade between the US and Russia has been reasonably stable since 2015.

"For the first half of 2019 the US imported $10.5 billion and exported $3.3 billion [worth of goods] according to the US census data. Despite current challenges, many in the US and Russia also realise that there is a difference between what a government does and the views of individual people", Carl Fey, a professor of international trade at the School of Business at Aalto University, said.

In light of the negative pressure from anti-Russian sanctions imposed by many Western governments, the role of export-supporting projects like "Made in Russia" by the Russian Export Centre (REC) has significantly increased. While REC is helping Russian companies that work in the non-resource export sector enter foreign markets, the programme "Made in Russia" is working towards promoting an image of reliability and quality when it comes to products made in Russia. The latter is achieved via the voluntary certification of goods being exported by companies in accordance with global standards.

Among REC's clients are companies producing sophisticated medical equipment, electronic devices and related parts, mineral fertilisers, food, alcoholic beverages, cars, many of which have successfully entered the American market on par with Russian "titans" that have long been present there. Among these are companies working in the aerospace and aviation industries.

High-Tech Products and Mineral Fertilisers

While resource exports continue to hold the top position in Russian sales to the US, many non-resource exporting spheres are not lagging far behind. Namely, the sale of mineral fertilisers, valued at around $2 billion, accounts for 42% of all Russian exports to the United States. Another major category of Russia exports is machinery and equipment, such as nuclear reactors.

US companies also continue to import high-tech Russia-made goods, such as optical devices and lasers. Separately, certain models of Russian medical equipment are also enjoying demand on the American market.

Synthetic gemstones is another commodity broadly imported by American firms, namely by Apple, which uses synthetic sapphires, made in the Russian city of Stavropol, in the production of its famous smartphones. The gemstone market accounts for around $395 million in Russia-US trade.

Still Best Engines in Aerospace Industry?

The US continues to import Russian RD-180 engines, which are designed by NPO Energomash for heavy rockets delivering equipment and supplies into Earth’s orbit and to the International Space Station. They are currently facing competition from the SpaceX Falcon 9 rocket, but are still being used in the Atlas V rockets, built by Boeing and Lockheed Martin United Launch Alliance. The latter is developing its own engine, but trials for a new rocket, the Vulkan, are not expected to finish any time soon. Another US aerospace company, Orbital ATK, ordered around 60 RD-180 engines back in December 2014, valued at around $1 billion, for its Antares rockets.

Professor Carl Fey believes that the current US administration's objective to return to the moon might push the US away from cooperation with Russia in space exploration, but he also noted that this could change in the future.

"However, in two-six years there will be a new US administration which may well have other views on space exploration and then there may well be greater opportunities for increased space exploration", he said.

Dmitriy Krichevskiy, an assistant professor of economics at Elizabethtown College, says there are two sides to Russia-US ties in terms of space exploration: cooperation on the one hand and competition, on the other.

"Roscosmos recently acknowledged Space X as a serious challenger in space industries […] Having said this, there are a lot of old relationships that have been inherited from Soviet Union times. Ultimately, there is still a lot of know-how on US/Russia sides, so cooperation would be a natural move", Krichevskiy said.

Major Supplier of Parts for Aviation Industry

Another major area of American imports from Russia is parts for Boeing airplanes produced by the design bureaus Irkut, Gydromash, as well as the factory Avisma. Additionally, the US is seeking a company to provide parts for Russian-made Mi-17 helicopters used by the Afghan Army. While certain East European companies also produce them, Russia remains one of the most reliable suppliers when it comes to fulfilling such orders.

Krichevskiy stressed that despite the economic cooperation between the states suffering a decline, some areas have remain untouched. Namely, Russia continues to be a crucial supplier for the US Boeing Corporation.

"Russia has a lot to offer in the way of human, natural and scientific resources. Aeronautics is one example where Boeing had a long partnership for material science, design, and general aeronautics engineering. I think there is a lot of potential for both sides’ benefits", Krichevskiy said.

Iconic Russian Food and Beverages

Imported foodstuffs and beverages from Russia are also popular in the US among those who enjoy Russian cuisine. Fish, shellfish, caviar, and molluscs from Russia are among the most popular imports alongside vodka – an iconic drink, the best of which is believed by many consumers to be made in Russia.

While US-Russian economic ties have undoubtedly suffered from the exchange of sanctions that started five years ago, American businesses have still retained the most lucrative lines of cooperation with their Russian counterparts. So far, these economic relations are continuing to yield benefits for both sides, regardless of the actions of US politicians.

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