Over the past two years, Russia has obtained a fairly stable place in Estonia's foreign trade. The share of Russia in the foreign trade turnover and the total volume of export and import separately was practically the same in 1993 and 1994 (see Table 1). In 1994, Estonia's export to Russia were 1.6 times greater than the previous year, while import increased even more Ä 1.8 times (see Figure 1). Foreign trade balance with Russia was in surplus both in 1993 and 1994 (see Figure 2). The share of positive trade balance, however, decreased since the overall turnover increased: in 1993, it accounted for 8.4% of the turnover and in 1994, for 4.1%.
The most important group of goods in Estonian-Russian trade turnover is mineral products (mostly fuels), and in 1994, the role of this group increased further (see Table 2). The share of foodstuffs in the total trade turnover increased up to 25%. The biggest change was the decrease in the share of transport vehicles, from 20.6% in 1993 to 14.2% in 1994. The share of timber, paper and products thereof nearly doubled last year, which was the most rapid increase, but the importance of this group remained small in the overall trade turnover.
Analyzing the balance of exports and imports of different groups of goods, we can see that Estonia earned its highest profits from trading foodstuffs with Russia, while the highest expenditures involved mineral products. Other profitable articles of trade included transport vehicles (the imports of transport vehicles considerably outstrips exports in Estonia's overall trade balance), furniture, machinery and equipment and various manufactured goods. Besides fuels, the trade balance was in deficit for chemical products and plastics, timber and paper products (timber is an article with the biggest surplus in Estonia's overall trade balance), and metals and metal products.
Today, the structure of Estonia's export to Russia has changed considerably compared to the Soviet period (see Table 3). Back then, foodstuffs and clothes, footwear and headgear both accounted for 25% of total exports, plus chemical products and plastics, machinery and equipment, of which each accounted for 10-15%. Foodstuffs have remained important in exports to Russia, and their share has even increased over the past two years, amounting to 42.1% of total export in 1994. The share of clothes, footwear and headgear, furniture, machinery and equipment has been on a constant decrease. At the same time, the share of transport vehicles in export has increased immensely since 1991.
The 1994 decline in the exports of cars was characteristic not only of export to Russia, being a general tendency. The boom in car trade (particularly trade in used cars) seems to be coming to an end in Estonian foreign trade. Compared to 1993, the share of mineral products, chemical products and plastics, and timber products increased somewhat in Estonia's export last year. The increase in the share of mineral products can be attributed to the fact that in 1994 Estonia had a barter deal with Russia, selling electricity in exchange for coal.
As foodstuffs occupy an important place in Estonia's export to Russia, let us analyze them separately.
Exports of foodstuffs to Russia developed quickly last year and showed some interesting features. The imposition of high import tariffs on Estonian foodstuffs by Russia had a certain influence on export. The tariffs were first introduced in mid-March, only to be abandoned two weeks later. The tariffs were re-introduced on July 1. As a result, Estonian foodstuffs exports increased significantly prior to these deadlines, particularly in June. In July there was a sharp decrease in foodstuffs exports (it was less noticeable in April) but export increased in the following months and reached the usual level by the last months of the year (see Figure 3). It is possible that Russia's customs policy was one reason why the share of food products increased in Estonia's export to Russia last year.
The bulk of foodstuffs exported to Russia formed milk and dairy products (90% of it butter and cheese), and meat and fish products (sausages, preserves, etc.; see Table 4).
In 1994, the share of dairy products decreased while the share of meat and fish products increased. The share of cheese in dairy exports increased to 30% and the share of butter decreased to 60%. In the category of meat and fish products the share of sausages and meat preserves decreased while the share of fish preserves increased: in 1994, fish preserves accounted for 81% and sausages for 15% of the total export of meat and fish products. The exports of meat decreased considerably while the exports of fish increased. The exports of fruits and vegetables was also on the increase. An important share in food exports belonged to confectioneries, but the increase in their exports was modest and thus their share in the overall trade volume decreased. The share of soft drinks and alcoholic drinks in the 1994 food exports was 5%, with half of it being soft drinks, 35% alcoholic drinks and 6% beer.
There is reason to believe that in some groups of goods, including foodstuffs, Estonia is an important middleman between the West and the East, and vice versa. However, it is hard to evaluate the extent of this transit on the basis of the available data. It can be done in reference to some fruits that are not grown in Estonia as well as food products not produced locally. Thus, for example, the exports of fruits (bananas, citrus fruit, grapes, pears) to Russia in 1994 accounted for 5% of their total imports to Estonia last year. The corresponding figure for sugar was 10% and for tea, 21%.
The role of Russia in Estonia's total foodstuffs exports (see Table 4) was relatively large (particularly concerning vegetables and fruit preserves, and meat and fish products) and points to a tendency of growth in several categories of goods.
During the socialist years, Estonia imported mainly mineral products (mostly fuels), chemical products and plastics, machinery and equipment, metals and metal products from Russia (see Table 5). Major changes in the structure of import occurred mostly in 1992, when the share of mineral products increased to 55%. A sharp increase also occurred in the share of transport vehicles; the imports of all other groups of goods decreased. In 1993, no major changes took place in the structure of import. The biggest change in 1994 was the decline in the share of transport vehicles in Estonia's import. Slight growth took place in the imports of timber and paper products (particularly plywood), clothes, footwear and headgear and metals. As mineral products play a very important role in Estonia's import from Russia, separate analysis would be in order.
Mineral fuels amount to more than one-half of the goods imported to Estonia from Russia. In 1994, they accounted for even more Ä 54.8%. In monetary terms, fuel imports from Russia increased 1.8 times last year. The specific role of Russia in providing Estonia with fuels is also testified by the fact that last year, 66% of the mineral fuels that Estonia imported came from Russia. As we can see from Table 6, Russia mostly provided black oil, natural gas and diesel fuel. Compared to 1993, the share of diesel fuel increased in overall fuel imports while the share of natural gas decreased.
Analyzing the role of Russia by different mineral fuels, we can see that Russia provides 100% of natural gas and almost 100% of coal used in Estonia. Coal was bartered for electricity last year. Russia has also an important role in delivering diesel fuel and black oil (93% of the latter). Among mineral fuels Russia's role was minor only in case of petrol: in 1993, 3.9% of total petrol was imported from Russia, in 1994 petrol import increased to 12.8%. The bulk of petrol was imported from Finland.
Table 7lists the average prices of fuels. As we can see, prices are lower in Russia as a rule. At the same time, it can also be noticed that the prices of mineral fuels have been increasing at a higher rate in Russia than in other regions. This is particularly true of the price of petrol, which rose greatly in 1994: while in 1993 Russia's petrol prices were less than half of the prices in Western countries, then last year, prices almost reached the world market level. The price of natural gas decreased, which explains the decrease of its significance as a fuel imported from Russia, in monetary terms. By volume, the import of natural gas has increased considerably.
After analyzing the prices of mineral fuels, we can conclude that Estonia has become totally independent from Russia as far as petrol is concerned. It is also possible to buy diesel fuel and black oil from other countries, albeit for higher prices. For example, buying diesel fuel from Finland costs approximately 25% more; and about one-third more than buying black oil from Lithuania.
The situation is different with natural gas. Estonia is totally dependent on Russia's gas deliveries because gas is piped to Estonia. No pipelines connect Estonia with other countries.
Despite a considerable fall in the share of transport vehicles in Estonia's export and import with Russia last year, this group of goods still has a significant role in trade between the two countries (see Table 3 and Table 5). This is particularly true of Estonia's export in which transport vehicles accounted for one-fifth last year. The exports of transport vehicles to Russia increased 21% last year as compared to 1993, while imports from Russia increased 6%. More than 95% of the total exports transport vehicles to Russia was road transport vehicles (excluding rail) and their spare parts; their share in import amounted to 77-78% (see Table 8).
In road transport vehicles, a large part was made up of automobiles: 60% in 1993 and 44% in 1994. A surprisingly big share of the exports of road transport vehicles to Russia was made up of spare parts, which increased to 43% in 1994.
The imports of the road transport vehicles from Russia was much smaller than their export. The import were also dominated by automobiles, which accounted for 70%. The changes in the structure of the imports of road transport vehicles concerned a considerable increase in the share of buses and trucks and a slight increase in the imports of spare parts.
Table 9characterizes the share of Russia in Estonia's total exports and imports of transport vehicles. As we can see, Russia had an important share in exports which increased further in 1994: 62% of automobile exports went to Russia. In imports, the role of Russia was less important (15% of total imports, mostly tractors and automobiles).
In conclusion, we can say that Russia is firmly in the second place among Estonia's foreign trade partners. It is the main market for Estonia's most important export article, i.e., foodstuffs. The bulk of mineral fuels used in Estonia is still imported from Russia. Therefore, it is important that trade relations with Russia should function smoothly. At the same time, we should not forget the fact that the more there are countries Estonia can trade with, the better. A one-sided orientation to the Eastern market can, in certain situations, cause serious problems in the economy. It should suffice to recall the example of Finland.Reet Kirt