By. Sophico Sichinava
On a definite stage of developmenta any country encounters with two issues – acquisition and distribution of wealth.
Wealth is acquired within a country as well as in the territory of other countries. The same concerns its distribution. Private business is a bottom of the development of a country, basis of its currency, defense, economic and social safety because wealth of a country is a basis of the existence of this country’s citizens, source of their economy, demographic reproduction, defense and safety. Proceeding from this, the important issue is the level of the development of country’s economy. There is a phenomenon in economy when one and the same production is produced in different countries. Each country tries to create favourable conditions for its production and defend it. This is called theory of protectionism.
Protectionism is not encouraged in modern world. Moreover, the World Trade Organization is based on the idea of trade equality in all countries. In other words, foreigners and local inhabitants must have equal rights in trade. It is credo of the world. These are purposes and rules of global world capital. In this situation each country defends its interests by means of customs dues. Promoting the development of economy through flexible customs policy brings about wars between countries. Constant protectionism does not produce positive results in countries. Yet, sometimes temporary provocation of production and assistance are necessary.
Economy of America is in recession. There have lately been serious changes, and the index started to grow. At that time, the President takes a serious decision – recover once leading branch of steel production. This branch was considered noncompetitive as compared with steel imported from Russia and Europe. Steel is a basis of engineering and different technologies in America. The USA have increased customs dues with the purpose of protecting the market. Thus, American steelworkers can give employment to vast masses and contribute to the recovery of country’s economy. In response to it, Russia prohibited import of American poultry. The two parties had to seat at negotiating table. Ministry of agriculture in Russia made a statement about it. During the negotiations of veterinary services of the USA and Russia about the prohibition of American poultry import it was decided to create two joint work groups that would work on the issue of meat certification and use of antibiotics and hormones in meat production. The official version of the prohibition was systematic breach of safety requirements of Russian veterinary services by the American party.
Last year Russia spent million tons of approximately 700 million dollars worth American poultry. Mr. Prodi, President of Euro Commission, sent a letter to Bush in which he expressed his discontent about the increase of tariffs. Prodi said that if America increases tariff, Euro Union will have no other way but to express its attitude ” as necessary”. According to Jonathan Faul, secretary of Euro Union Commission, this decision of the USA will damage and deteriorate their relations. Later on, the Euro Union applied to court. Its example was followed by other countries.
Russia does its best to protect local production. On March 14, the Russian Government approved a new edition of bill about special, protective, antidumping and compensation measures of commodity import. This bill protects interests of local production. According to Maxim Medvekov, this bill will substitute for the law of 1996 that contained many errors and mutually exclusive nuances. This law provides for defensive mechanisms in case if import damages national interests of Russian producers. Medvekov said that as soon as the law comes in force, a producer will be able to report to the Ministry of Economic development about import that contradicts his interests. Under the law, investigation procedure will start. As a result of it, prohibitive taxes on imported goods will be established.
Ukraine resorts to the same measures. Inter-departmental Commission of Ukraine started special investigation about the import of new cars with engine capacity of 1-1,5 liters. In this segment Russian “Avtovaz” and Ukraine “Avtovaz-devu” are rivals. Heads of Ukraine Association “Ukravtoprom” approached the Ukranian Government with request to defend them from Russian rivals. Nothing new has been done in this direction in Georgia. We have primitive market policy. We became WTO members and thus, as many critics observed, climbed down. Memorandum approved and signed by our country provides for low customs dues, but we do not even use them. Work in economy is not performed in accordance with branches, i.e. we have not yet determined policy and have not yet decided whether we should establish seasonal, unseasonable or differential customs dues. The ministry of economy took some measures, but they did not bring any results. There are no disputes about this issue in the Parliament. Later on, it was buried in oblivion. Our economy is not yet developed enough to protect its own market. Moreover, we are afraid or protectionism that we think to be a swear-word.
We want to compete in the production of staple foods, wine-making and non-alcohol drinks with world giants who do not only excel us financially, but they also excel us in the level of technology and experience. These attempts or desires look very funny. The market needs serious adjustment, otherwise economy will die. Tea production is a clear example of it. Tea must be liable to maximal customs dues. We let foreign producers of tea penetrate into our own market. They now annex Georgian market. It is an unreasonable customs policy. Yet, America does not feel shy before strict western countries when it takes unpopular steps while we do. Customs policy and the events going on in the world must become an example of the way a country occupies a profitable position and at the same time remains a partner.