RUSSIAN TRADE ASSOCIATIONS LANDSCAPE

The Russian private sector has created a large number of organized interest groups. Russian busi­ness associations help companies become more competitive through member education and assist political decision makers in formulating effective public policy.

In Russia, the majority of business associations are influential only on a local or industry level. Their nationwide reach remains limited. Most associations act as spe­cial-interest lobbyists for their industries and pay less attention to their potential civic, educational, and standardization roles. This is due in part to insufficient legal and tax regimes in Russia for char­itable organizations and in part to their meager resources and the lack of understanding and pro­fessionalism in the trade association sector.

Virtually all major Russian industries have created representative bodies, but instead of a single trade association representing each sector, each large com­pany creates its own competing trade association.

Main existing structures for private-public sector dialogue in Russia:

1. The Chamber of Commerce and Industry (TPP in Russian): 20,000 enterprises, 169 regional chambers, 178 business associations, offices in 14 countries.
2. The Russian Union of Industrialists and Entrepreneurs (RSPP): Network of 30 industry associations and othe affiliated associations in 56 Russian regions.
3. Business Russia (Delovaya Rossia): Close link with the government and the president
4. Union of Entrepreneurial Organizations (OPORA): Represents mainly small business associations and individual firms, seeks to represent their interests in relation with regional and local bodies.
5. Coordination Union of Associations of Employers of Russia (KSORR in Russian): Umbrella organization. Both the Chamber of Commerce and Indusry and the Russian Union of Industrialists are members. KSORR represents the business comunity with government and trade unions.

Russian business associations seek to improve the business environment in Russia and to encourage Russian economic development and business initiatives. In theory, the larger umbrella bodies are supposed to provide a mechanism for bringing smaller trade associations together to lend more clout and credibility to their efforts and to achieve unified representation on major issues. In reality, this rarely happens. Instead, given their similar missions and memberships, Russian business associations often find themselves competing for resources, member companies, and influence with the government.

To be effective, an association should represent a substantial proportion of its sector and have a broadly based membership, including key players. In Russia, privately owned companies are more active in business associations than the state-owned firms are. While the private sector has to lobby for its interests, the state-owned conglomerates enjoy the automatic operational support of the govern­ment agencies.

Few associations in Russia work in coalitions or create alliances to accomplish their goals. Major Russian companies have only recently begun to insist on cooperation among industry associations to avoid duplicating work and segmenting lobbying efforts.

The Russian government has no special policy on business associations. No Russian laws specifically address trade associations, except those regarding the Chamber of Commerce and Industry. Russian laws provide for no tax exemptions, and most non­profit nongovernmental organizations (NGOs), including business associations, must pay the same tax rates as for-profit companies pay.

Russian Trade Associations' Primary Goals and Activities

The articles of association of most Russian trade associations outline their major goals, which typically include:

• Lobbying and advocating for the interests of their industry and member companies in the execu­tive and legislative branches,
• Creating networking and learning opportunities for members,
• Helping to settle disputes within the industry,
• Conducting market research and creating indus­try ethics codes and quality standards,
• Promoting trade and positive images of the industry within Russia and abroad, and
• Providing information and analysis on specific industries to the mass media, government, NGOs, and academia.

Because the state is actively involved in economic life, lobbying and advocacy are an essential part of Russian business associations' work. At the same time, the fragmentation of the trade association sec­tor decreases their effectiveness. The government often ignores and bypasses business interest groups, preferring to talk directly with the companies.

Overall, Russian associations have yet to succeed in promoting positive images outside of Russia.

Russian business associations have already emerged as an important resource for professional development through training activities and dis­semination of best national and international prac­tices among member companies. However, the relatively small size of the Russian business association sector means that no organiza­tion can meet the professional training needs of its own staff. Few trade associations in Russia have succeeded in developing professional and safety standards and codes of ethics. Until recently, this has not been a priority agenda item for the business community. Yet the situation has been changing over the past few years as Russian compa­nies increasingly integrate into the world economy.

 Although the role of Russian associations in the national economy has been increasing, most associations act as spe­cial-interest lobbyists for their industries and pay less attention to their civic, educational, and stan­dardization roles. This is due in part to the lack of legal and tax frameworks, insufficient resources, and lack of understanding and professionalism in the trade association sector.

• The Russian government should encourage trade associations to strengthen their representative and advocacy roles by improving the quality of representation, adopting more effective management and leader­ship practices, expanding their traditional areas of expertise and services, enhancing cooperation among trade associations, and playing a more proactive role in dealing with emerging issues relevant to the industries that they represent.
• The Russian government should support business associations in their efforts to reduce regulation and make business decision making more transparent. Institutionalized representa­tion activity would make lobbying by business interest groups more transparent and accessible and less susceptible to corruption.
• The Russian government should create a more favorable operating environment by providing tax exemption to NGOs in general and to trade associations in particular.

The Russian government has become somewhat more willing to engage in dialogue with business interest organizations. Nevertheless, the sector is still weak and underdeveloped.

Further advancement of institutionalized busi­ness representation in Russia requires joint action by government, business, and the associa­tions themselves. This should include granting tax exemptions for membership fees and donations, stronger participation by associations in economic decision making, and improving the associations' internal management and professional practices. This is a difficult but achievable challenge for Rus­sian business associations.