Development of bilateral trade and dynamics of the trade balance between the Russian Federation and the Democratic People’s Republic of Korea, 2004-2018

From the other side the value of import from the DPRK to the Russian Federation is very low in comparison with the value of export to the DPRK from Russia still we can indicate several commodity groups that has occupied the significant share of the total value of import at least for several years in a row. In 2004-2007 there have been three commodity groups occupied more than a half of the total value of import from the DPRK to Russia, that are machinery, mechanical appliances, nuclear reactors, boilers; parts thereof (HS Code 84), electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles (HS Code 85) and plastics and articles thereof (HS Code 39). In 2007 the total value of import from the DPRK to the Russian Federation was the highest throughout observing period of 12 years, however there were signs of slowing down of trade dynamics. And in 2008 the total value of import from the DPRK to Russia experienced sharp decline by 59 % that reflects the consequences of the global financial crisis 2007-2008, then in next year the total value of import from the DPRK to the Russian Federation came back to the levels of2005. Since 2011 the slow shift in commodity groups structure have taken place, two “main” commodity groups (Code 84 and 85) occupied together only 16% of imports value. Starting from 2012 articles of apparel and clothing accessories, not knitted or crocheted (Code 62) became the main commodity group imported by the Russian Federation from the DPRK instead of Code 84 and Code 85 as it had taken place since the middle of 2000s, that highlighted significant shift in import from the products of heavy industry to the products of light industry. The effect of sanctions became clearly visible in 2015, the year with the lowest value of import from the DPRK to the Russian Federation since 2004 when the total value of import declined by 40.7% in comparison with previous 2014 year. Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles (Code 85) have became one of constant commodity groups in the DPRKs import to the Russian Federation during observing period from 2004 till 2018.

The value of imports from North Korea to Russia always has been extremely small. In 2018 Russia was on fourth place after China, Zambia and Germany among the DPRKs main importing partners. Still in 2017 Russia was on 16^th place; 2016 -- 10^th; 2015 -- 24^th and in 2014 -- 16^th. It should be mentioned that Russia appeared in the 4^th place in 2018 not due to increasing of import from the DPRK or bilateral trade turnover, but just because of reduction the total amount of countries imported goods from North Korea. Existing insignificant North Korean import has a very clear downtrend that has become systemic since 2010. As have been mentioned the average yearly value of Russia's exports to the DPRK have exceeded the value of North Korea's imports to Russia by fifteen times for the last 14 years (in 2018 by sixteen times). The total value of imports from the DPRK in 2018 became the smallest for the last 14 years. Today there are no preconditions for increasing of the DPRK's import to Russia in the mid-term. Still the increasing the share of Code 62 commodity group (articles of apparel and clothing accessories) is very important especially taking into consideration that this shift took place at the first year of of Kim Jong-un rule and may indicate an attempt to carry out a kind of industrial reforms with emphasis on the light industry development. At the same time, the complete disappearance of Codes 84 and 85 previously widely presented in the DPRK's import structure is caused by implementation of the UN Security Council sanctions restricted trade operations specifically with these commodity groups among others.

There is no solid reason to assume any important changes in the structure and dynamics of bilateral trade between Russia and North Korea in the nearest years under the current political conditions. With a high degree of confidence it could be argued that the main export commodity group from the Russian Federation to the DPRK will remain Code 27 (mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes) and Russia's only one role in the eyes of North Korean political establishment will be the role of energy supplier. Situation regarding to import from North Korea is even worse, since in 2018 almost all import from the DPRK consisted of a single contract (musical instruments) valued $1.4 min with the total value of imports of $2 min. Moreover, there are no assumptions neither real steps for the development of bilateral trade.

Sources

1. Central Federal district. Available at: http://ctu.customs.ru/ (accessed: 01.02.2020). (In Russian)

2. Northwestern Federal district. Available at: http://sztu.customs.ru/ (accessed: 01.02.2020). (In Russian)

3. Southern Federal district. Available at: http://yutu.customs.ru/ (accessed: 01.02.2020). (In Russian)

4. North Caucasian Federal district. Available at: http://sktu.customs.ru/ (accessed: 01.02.2020). (In Russian)

5. Volga Federal district. Available at: http://ptu.customs.ru/ (accessed: 01.02.2020). (In Russian)

6. Ural Federal district. Available at: http://utu.customs.ru/ (accessed: 01.02.2020). (In Russian)

7. Siberian Federal district. Available at: http://stu.customs.ru/ (accessed: 01.02.2020). (In Russian)

8. Far Eastern Federal district. Available at: http://dvtu.customs.ru/ (accessed: 01.02.2020). (In Russian)

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