STATE
REGULATION OF FOREIGN TRADE ACTIVITIES
Gaziza Abdimazhitova master first-year course
Specialty
« State and local government» KBTU
Supervisor – Leila Salykova PhD., associate professor
State in its
regulatory activities use legal forms of enforcement and manages the huge
economic resources. State regulation tools include such important resources as:
the state budget, the system of state-owned banks and the public sector. The
state influences the functioning of the economy by stimulating economic growth
and supporting foreign trade companies through them. Interaction between
private monopoly and government regulation is intended not only to adapt to
changing conditions, but also the implementation of structural changes needed
to further economic development [1].
In modern conditions,
foreign economic activity is an important component that forms the structure,
dynamics and stability of the national economy. Today there is no country in
the world which will be able to develop without an effective system of foreign
economic relations, allowing integration into the world economy. However,
despite the trend towards the integration, the world economy is a
conglomeration of hearths with different levels of development and with
unmatched or even opposed interests. Therefore, it is essential for each
country to realistically evaluate their current and possible future place in
the community taking into account their interests and specific development
goals. Under these conditions state regulation of foreign trade activities as a
set of measures and institutions to facilitate the implementation of the
foreign policy of the country in regard to the relationships with foreign
partners earns particular importance.
Currently, there is
a reasonable basis to analyze the main directions, mechanisms, and results of
foreign trade to support a number of conclusions with a view to their possible
adjustments. The analysis shows that the current foreign policy is no different
to improve the effectiveness of foreign trade and to overcome losing export structure.
Equally important is the protection of the national market by the state, where
could be used such instruments as reasonable revision of customs duties on
imported goods (of course, where applicable), the introduction of a quota
system profitable, licensing, and direct restrictions on imports. Issues of
unemployment rate reduction cannot remain outside the field of view of the
state, i.e. issues of increasing the level of employment by encouraging
investment activities and operations of economic entities of middle and lower
level of the economy, working both on the domestic and the foreign market.
Interests of this approach to the choice of the principles of state regulation
of foreign trade activities require changes in the structure of exports envisaged
in favor of high quality and competitive finished goods, and in the structure
of imports - in favor of new equipment, technology, and high quality materials.
Somewhat different set of methods of state regulation of foreign economic
relations is used to solve the problems of import. The main ones are: the use
of quotas and licensing to restrict imports of the products, the penetration of
the domestic market which is not desirable in every respect, and to ensure
stable growth of assets balance of payments; licensing of foreign loans,
attracted businesses and regions to organize their economic activity;
regulation of foreign competition in the domestic market through the mechanism
of tariff duties in order to support their own producers and improve the structure-forming
role of import; competitive placement of foreign purchases among possible
suppliers; pricing of imported goods on the domestic market; the
one-dimensionality of levying taxes on imported and similar domestic products.
Its figures are under the influence of changes in the exchange (both solid and
floating) rate of the national currency.
Therefore, it is
not accidental that these changes are always projected and are controlled by
the state. [2]
State regulations
of foreign trade activities include a variety of shapes and forms. The main
forms of regulation are:
1.
financing of foreign trade;
2.
taxation;
3.
investment;
4.
external borrowing;
5.
external debt;
6.
export subsidies.
Control methods
meet the forms and include direct and indirect ways. The direct forms include
administrative control: licenses and quotas; a state monopoly of foreign trade
activities can also be established (for foreign trade, foreign exchange
transactions). Licensing and quotas for export and import are used as temporary
measures for stabilization and the saturation of the domestic market with
limited natural resources and commodity funds. State monopoly is the most
inefficient way of regulation of foreign economic activity, but in the adverse
conditions of the economy can be used to solve the problem of reduction in the
balance of payments due to the control of imports and exports. This method can
be applied in the form of exclusive rights to the state company to perform
certain foreign operations or maintenance of foreign economic relations. In
general, these measures relate to the methods of non-tariff regulation.
Consequential or
economic methods of regulation are more effective and relevant to development
of foreign relations. These include taxes, including customs duties, exchange
rate, world prices, and interest rates on foreign loans, the rate of bonds,
other securities and payment of funds.
Customs tariff
regulation of export and import is carried out in many states. Customs Code
sets out the principles of customs (how to move across the border goods, the
customs levy, execution, monitoring and other tools to enforce customs policy)
based on the unity of the customs territory, customs duties and customs fees.
Customs tariff is
designed to regulate foreign competition in the domestic market. Customs Tariff
is systematized collection of customs duties, which charge imported to the
customs territory of the Republic and imported outside the territory goods and
other items. [3]
The system of
import duties is the protection of national production from the expansion of
foreign products: higher import duties are imposed on goods competing with
domestic; goods and products that are not produced by or are in insufficient
quantities in the country have lower duties. This principle at the same time
provides the fiscal interests of the state to fill the revenue of the State
budget.
In order to ensure
balanced socio-economic development of the Republic of Kazakhstan on the basis
of foreign economic relations the state exercises: the registration of foreign
economic activity; declares goods and other property transferred across the
border; establish the procedure of export and import. One of the economic
policies of the Republic of Kazakhstan in the market environment is the
liberalization of foreign trade conditions to overcome the insolvency of the
republic, the advancement of Kazakhstan in the international division of labor,
expanding markets for Kazakhstani goods. For revival of foreign economic
activity the dismantling of quantitative restrictions in foreign trade is
carried out, which essentially boils down to a drastic reduction of quoted
goods. Goods limited with quota will be sold on a competitive basis and at
auctions in the domestic market. Licensing functions are transferred to the interagency
licensing committee, which carries out examination of export and import
contracts, primarily for compliance of their prices and the world in terms of
quality of the proposed technologies and products. The development of foreign
economic relations requires accelerating the development of the list of
investment projects with an appropriate feasibility study for attracting
foreign investors and creditors. Bilateral agreements on mutual protection of
investments with major trading partners, both to join existing international
agreements in this area should be developed. It is important that the treatment
of foreign investors has been steady, and the changes you make will not worsen
the conditions for existing investors in the payback period of their contracts.
By adjusting the
level of prices of domestic goods towards the world prices it is possible to
maintain sufficient competitiveness of the national economy and, accordingly,
the foreign trade surplus. To remain competitive the bank withdraws part of the
foreign currency with further transfer to the state budget. Government spends
the currency to import advanced technology. Thus, ordering ratio of domestic
and world prices through monetary and fiscal policy the government can provide
not only the pace of real growth, but steady increase in revenues for the state
budget. International experience of
state regulation of foreign economic activity is currently in use in
Kazakhstan. A new in state regulation of foreign economic activity is the
approach to the role of the state. This new approach is fundamentally changing
the content of the role of government, the principles upon which it is based,
the content of the functions of foreign economic activity and their
relationship; there are new problems and recommended solutions. The main task
of the state regulation of foreign trade activity is the formation of its
legislative framework, the creation of favorable economic and organizational
conditions for the development of all types and forms of foreign economic
activities and increases its effectiveness. Simultaneously function of state
control over the execution of foreign economic activity of the current
legislation is increasing, which provides national security [4].
Public authorities
play an important role in regulating the balance of payments. Along with the
introduction of appropriate restrictions on imports an active fight against
inflation is widely used, because the deflation process "heals" the
economy and brings the positive impact on the performance of the balance. The
importance of state regulation of foreign trade activity is understood as a
major part of economic relations developing the institutional structures. Why
is it so important that international relations are not only organized for efficiency?
The main issue of the foreign economic relations is to obtain prosperity of
scientific technology. Accordingly, scientific technologies are not only set in
one country, but are integrated into the global economic system after a certain
time. This gives much more flexibility to get the economies of cooperation with
each other to create new international relations.
References:
1. State regulation of economy and prices. N.
Marenkov
www.inventech.ru/lib/cost/cost-0042/
2.
Mamyrov N.K., Ikhdanov Zh. State regulation of
economy in Kazakhstan (theory, experience, challenges). Almaty: Economic, 1998.
3. Sahanova M.S., Akhmetova L. State and business. Almaty, 2002
4. Law of the Republic of Kazakhstan «on currency regulation and currency
control» - //Kazakhstanskaya pravda, 2005.