The EU summit was
staged here last week just before the US summit.
How has the landscape changed as far as trade is
concerned? What have been your latest advancements?
The top issue of both summits was market economy
status, which means that the decisions taken during
the summits would be based on the decision taken
a few days ago by the US to grant us the market
economy status and a future decision of the European
Commission to do the same in a couple of months.
The basis was discussed and agreed upon to some
extent during the summits, which were probably the
most important trade events organised in Russia
during the last decades.
Besides its economic importance, there is also a
political importance for Russian goods not to be
any longer discriminated on foreign markets. We
believe that this will eliminate trade barriers,
which are now in place in the US. And we will partly
adapt our trade policy to these trading partners
in the future because this is a very good sign to
investors as many of them hesitated to do business
in Russia because they were afraid to do so in a
non-market economy. However, we believe that this
issue has now been positively solved with the US
and will be soon with the EU and investors are now
thinking about their future activities on the Russian
market.
When will it start to have a positive effect
on the Russian economy? And when will Russian companies
start reaping the benefits?
It is sometimes possible to have great impact on
some sectors of the economy that suffer seriously
from trade barriers like steel, fertilisers, etc.
And Western consumers will also benefit from this
decision because they will have access to really
competitive goods.
Russia is now in the process of WTO accession.
Some people say it is too early and others say Russia
needs it by 2003. What is the process? Do you believe
it is actually going to be implemented in certain
phases or are you looking to reach a comprehensive
agreement?
We have to adopt a certain country admission document,
which would be a comprehensive agreement and would
include all elements of the accession as there are
still many outstanding questions because of the
rules of the WTO. Of course the speed we are moving
at is different from one issue to the other. For
example we are progressing rather well with International
Commercial Terms (Incoterms), we are driving at
a lower speed with net taxes and services, we are
stuck with agriculture, and we have started real
discussions on systemic issues which will be included
in the so called Protocol of Accession. Nevertheless
I believe that we could complete this process rather
rapidly, provided that all the factors are realistic
and pragmatic.
Are you using the China example?
The Chinese approach is not exactly what we are
looking for. We believe that the Chinese accession
is not the best example for Russia because we are
quite different in terms of economic development
and system. We are looking for accession that will
not create additional obligations to the ones we
will already have under WTO conditions.
Do you feel that there will be certain industries
for which it will take longer to apply WTO rules
such as the steel and aluminium industry, the heavy
industry or the agriculture? Will there be different
phases for these specific industries asking for
special treatment?
We do not think that we will be forced to change
something fundamentally in our trade and economic
regulations after the accession. However, we will
have to bring our registration and visa system in
accordance with the current system of commitments
and rules under the WTO.
We are confident that the accession will not substantially
change the state of our economy. There are already
positive signals, but some members of the WTO will
decide and we will not. They probably need more
market access than what we think is effective. Granted
because we are looking to a balanced approach where
Russia of course should pay an entrance ticket but
this price should be relevant and the profits from
accession should be higher than its value. However,
I would say this price does not cost billions.
Do you think that the industry is ready to be
competitive at the same level as international firms?
Do you feel that there is still work to be done
to increase the efficiency and strength of the Russian
companies?
Companies have to decide how they will react to
this. We recommend them to think about more competition
in the market and how they will adapt to it. We
also recommend them to read more carefully legal
texts and governmental agreements to understand
how they can use the opportunities of the membership
to expand their business abroad. However it is their
decision and we will not influence them. We can
only recommend them to prepare to it. However, I
do not really believe that Russian business will
be affected negatively, rather the opposite. I believe
that Russian business will have much more opportunities
both in investment and market terms because WTO
rules are transparent and the members are only benefiting
which means that the companies will have more opportunities.
You mentioned that regions will also have to
implement these decisions and there will be 7 districts
in Russia. Will this help the process now that there
will be stronger districts with stronger decision-making
power?
It will probably make things easier. The consolidation
of the regions is already making things easier because
these districts will have better universal instruments
to coordinate our policies and to ensure that regional
governments are acting in accordance with Russian
federal legislation and Russian international commitments.
When do you expect something to be passed through
Parliament? Is there a timeline to ensure that 2003
will really be the final deadline?
Legislative reform will be completed by the end
of the year, latest early next year. This means
that the accession will depend on the position of
our trading partners.
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Should they believe that the price is too low
whereas we cannot move further without injuring
our national interests, then we will have to negotiate
for another couple of years. So we could move
the deadline. Of course this depends on the results
of the negotiations.
Do you think you are playing an important part
to help push the Russian economy to modernize
and compete internationally as the WTO is one
of the last clubs that Russia is not a member
of? Do you see that as your mandate?
I have been a governmental official for many years
and I am doing what I am committed to do with
the government. So I do not see any personal role,
but for the government the decision to join the
WTO was connected with the necessity to coordinate
internal legislative plans with international
rules. I believe the government understands that
the sooner Russia will be there, the sooner the
business and economic climate will have more stimuli
to move in the right direction.
Will you also be playing a strong role to help
Russian companies develop an export policy - not
necessarily through direct funding which of course
will no longer be acceptable under the WTO rules
- but through a major export development policy
and package which will help Russian companies
develop abroad and sell more products?
Yes. We are considering a total restructuring
of our foreign policy in this respect. First of
all, we are looking at the experience of our trading
partners like the US and the EU member states
to learn from them and add Russian specific issues.
Are the Russian people supporting what you
are doing? We see everywhere in the world anti-globalisation
protestors, people who are against the WTO. What
does a typical Russian think about all this?
If you ask an average Russian, I think he does
not know what it is. If you question a businessman
who has many concerns, which we partially take
into account during our negotiations, you will
have a different answer. Still many people do
not know exactly what it means. So we take upon
ourselves the function to give people a clear
understanding that the industries and sectors
of the economy are under control. They should
know that there are 130 happy members in the organisation,
which means that a new member will not face any
unsurpassable hurdles. That is not what it was
designed for.
What do you see as your next challenge in the
next few months, perhaps in the course of the
negotiations?
We expect that finally we will find a common approach
to the problems and they should be solved during
the negotiation process. For the agriculture sector,
we are stuck with Australia and Canada insisting
on substantial cuts on our domestic support policies
and the elimination of heavy import duties. We
cannot accept this because the EU is the biggest
food supplier on the Russian market and continues
to substantially subsidise its domestic agriculture.
We cannot ruin our agriculture just for the sake
of accession. So it is a dispute between the EU
and Australia, Canada and other countries, which
is an important issue in the Russian accession
negotiations.
When do you think will it be possible to go
to a restaurant in France and eat Russian chicken?
Russian chicken is good. By the way we have a
very strong competitive advantage because we have
not invested a lot of money in our agriculture,
which is an advantage as we are still producing
most of our food products without any chemical
additives. And after all the disease scandals,
we will have a very bright future if we do not
copy EU agriculture policies. We are the biggest
suppliers of pure natural meat: you probably forgot
what this is. You must be eating French chickens
with a large percentage of drugs and aspirins.
Russian chicken is quite natural.
However, I can hardly tell you when Russian chickens
will be available in French supermarkets. Russian
agriculture is oriented to the domestic market
but as we have an import share which for some
products like chicken reaches two thirds of the
whole consumption, so better prospects would be
to develop our domestic industries. And it is
more or less the same issue with beef. However,
I do not think we will export chicken to Paris
except for special shops trading with environmentally
friendly products.
The international community has been strongly
hit with a lot of positive news on Russia in the
past few weeks. We are happy to make our small
contribution by doing this economic report on
the Russian economy. More generally what would
be your final message to the readers of the magazine
keeping in mind that they are potential investors?
Some investors believe that it is not a good time
to invest in Russia because of a lack of stability
and transparency, because of some internal developments
like the Chechnya issue, which of course has nothing
to do with the investment environment. But they
are watching TV and an investment decision is
to a great extent a psychological decision.
What I can say is that those who have invested
despite these negative presentations - because
most of them do not reflect the real situation
in the country - have already had good returns
on their investments and are very happy to have
done this in the first place. And the country
has fundamentally changed in the past two years.
We hope to complete most of the internal reform
process within the next years. We can also see
that many major domestic companies are diversifying
as steel and gas companies are buying car plants
and aircraft producers. And the international
image of Russia is also improving and I hope this
trend will go on. Even while reading newspaper
and TV reports I note that now they concentrate
on what is really happening rather than what people
would like to see, which is good.
Note: WINNE cannot be held responsible for
the content of unedited transcriptions.
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