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Interview of Andrei Slepnyov, Minister for Trade of the EEC, to Rossiiskaya Gazeta newspaper: WhaT’s in the pOrtfolio?

Interview of Andrei Slepnyov, Minister for Trade of the EEC, to Rossiiskaya Gazeta newspaper: WhaT’s in the pOrtfolio?

7/6/2012
Andrei Slepnev, Minister of Trade of the Eurasian Economic Commission (EEC), spoke about the prospects and challenges that open up for Russia, about new opportunities of the Customs Union and the Common Economic Space in his exclusive interview to RG.​

 
- Gennady Onischenko, Head of the Federal Service for Supervision of Consumer Rights Protection and Human Well-Being says that in connection with the forthcoming WTO accession there is a threat that poor-quality counterfeit products might flow into the Russian market. First of all, from China. How can you comment on this?

 
- The problem of counterfeit is unfortunately not new to us. We perfectly remember, for example, how the Cherkizovsky market operated. And the customs control present at the Russian-Kazakh border was no obstacle. The point is in the quality and coordination of work carried out by supervisory customs services, and their efficient interaction on the territory throughout the Customs Union.
 

 
Mechanisms are being arranged in the frames of the “troika” to substantially reduce the risk of mass import of poor-quality and counterfeit products to the territory of the Union. A system for advance presentation of information on cargo delivered by motor transport was introduced on June 17.
 

 
Importers must present electronic information on imported cargo no later than two hours before the scheduled border crossing. This will let the customs services to carry out a preliminary risk assessment of the import of particular goods. A unified database on cargo transfer will be formed for the customs services of the three countries. This will make import by motor transport, including that from neighboring foreign ports, more transparent and reduce pressure exerted on law-abiding importers.
 

 
Strengthening of control is apparently not enough without clear and distinct quality criteria for imported goods. Our product safety legislation complies with international regulations; the Customs Union countries are developing common technical regulations, and there are such already available on most categories of food. At the same time, the customs control should not replace the work of control services in home markets, their work with distributers and retail companies.

 
- So we need not worry?​

 - There is no real threat of a sudden and sharp increase in the import of counterfeit or hazardous products resulting from the formation of the Customs Union or accession to the WTO. Such risk management is per se a routine work for customs and control services.
 

 
Yet, after accession to the World Trade Organization, their work will have to follow new standards. Speaking further about import restrictions, according to the WTO rules, it is vital to exactly define the subject of import ban and justify in detail the need for such sanctions. Let’s say, it will be impossible to restrict import of all types of meat from the European Union. Particular types of products that the restriction pertains to, as well as the countries and enterprises they come from should be clearly identified, and the claims should be founded.
 

 
- How can the “troika” countries protect themselves in the frames of WTO, jointly or separately?
 

 
 - They will be well-placed to defend their interests, using the resources and instruments both of the Customs Union and the World Trade Organization. The Eurasian Economic Commission will introduce safeguard measures over the entire territory of the Union. The countries will be able to take other measures independently. This will be a very flexible stand allowing minimization of risk associated with the WTO accession.​
 

 
From among the measures to be applied at the Customs Union level, I can name, for example, anti-dumping investigation and special safeguard measures. This is an efficient tool for protecting domestic markets. Each country used to carry out such investigations by itself, now they are carried out by the Eurasian Economic Commission, and the investigation results and safeguard measures are applied throughout the Union.
 

 
We have recently completed such investigation related to the Customs Union legislation. It pertained to dumping import of polymer-coated rolled metal from China, and now considerable duties are imposed on this type of products from PRC. The resulting demand may be met by producers of the Union countries. And this means jobs and taxes.

 

 
- Tell us about the “kitchen” of the Eurasian Economic Commission. It is a peculiar government of the “troika”, a supranational authority. How do you make your decisions if contradictions arise among the countries?
 

 
 - The Board consists of nine persons, three from each country. Decisions are typically made by a consensus. Some issues may in theory be passed by a two-thirds vote, but in practice we try to avoid such a precedent and pass decisions only by a consensus.
 

 
At the same time, members of the Board (Ministers) represent their work blocks: industry and agriculture, financial markets, trade, etc., rather than their countries. And during discussions my colleagues take a stand according not to a national criterion, but to a professional one.
 

 
When complex and sensitive issues are considered, discussions are not just unavoidable but urgent so as to achieve a viable and useful solution. We have several working formats that allow us to handle contradictions. Thus, such issues of principle as tariffs and duties on most sensitive goods and industries are discussed at the Council of the Eurasian Economic Commission, where each country expresses its opinion, and the Council attempts to conciliate such opinions. If the attempt fails, the issue is taken to the judgment of the premiers. Should no compromise be achieved, we seek further solutions. This ensures thorough examination and high quality of the resulting decisions, which are recognized and abided by.
 

 
- The experts say that for the time being Belarus has gained most from the Customs Union. It that so?
 

 
- Last year, Belarus increased its share in the Russian and Kazakh import approximately by 15 percent. The Russian business demonstrated the greatest growth particularly in the Russian-Kazakh line. For example, the Russian share in the Kazakh import increased by 30 percent both due to the development of strategic trade relations and to active border cooperation, which received a strong impetus to develop. The Kazakh trade dynamics is more modest.
 

 
- How can such increase in exports from Belarus be explained?
 

 
- The Belarusian export is more diversified and to a greater extent oriented towards markets of the Union countries. A more substantial share in export belongs to finished industrial products. In addition, Minsk markets its goods more aggressively. And we should not forget that the national currency devaluation in Belarus also contributed to higher competitiveness of their products and to export build-up.
 

 
Yet Russia also demonstrates considerable success in trade development within the Customs Union. Due to integration, the market for our products grew by 30 million people in total, with the consumption pattern in the partner countries similar to that in Russia. Higher market capacity gives us another advantage: the market becomes more attractive to investors. Many of them choose Russia as their location because Russia is the largest economy within this alliance. In general, all the “troika” countries get a more stable basis for the current and future development due to the Customs Union.
 

 
- Much is said about the “second wave” of the crisis. How can it affect your alliance?
 

 
- The crisis is indeed a global phenomenon that affects everyone. But our integration project might be one of those remedies that make such shocks easier to survive due to the development of cooperation and additional market stability. Trade opportunities become narrower in Europe but wider within our Union. A large boat is more difficult to rock. I think that the crisis-related concerns count in favor of further deepening of regional integration.
 

 
- Will the Customs Union expand? Due to which countries?
 

 
- There is one application received by now, from Kirgizia. A special working group has been formed to thoroughly analyze the consequences of Kirgizia’s accession to the Customs Union, and its work pace depends on a number of factors.
 

 
We should understand that the economies and regulatory environment of the countries considerably differ. A harmonious and mutually-advantageous integration will require some specific steps from Kirgizia. We should realize all possible risks both for the economies of the Customs Union states and for the economy of Kirgizia. And as to our short-term plans, they are still probably connected with deeper integration among the Union countries.
 

 
The directions for the development of the Common Economic Space are programmed in our agreements; deadlines are specified for a number of key issues. The major objective is to form the Eurasian Economic Union by January 1, 2015. An essential portion of our work relates to drawing up a single comprehensive treaty in future. We must analyze now the decisions made, taking into account practical work experience, and turn them into a consistent complex document similar to the Customs Code. Agreements on common rules of access to infrastructure and on antimonopoly policy are to be drafted this year. Starting next year, the countries will have to coordinate macroeconomic indicators, such as budget deficits, national debts, and inflation.
 

 
- Yet it is clear that Belarus will not be able to keep the same level as Russia as regards deficit and national debt. What is the point of imposing restrictions?
 

 
- Life is for sure richer than any documents. Nevertheless, I hope that such an agreement will form the basis for taking common decisions. We cannot allow such economic problems to happen as those in Europe. Under tight integration and interpenetration of various institutes, problems of one country rapidly become common problems.
 

- And when can we pass on to a common currency?
 

 
- Studying the experience of Greece, we should very carefully analyze the consequences of introducing a common currency. As practice shows, it is a much more sensitive issue than it might seem.
 

 
We should also understand that the economies of Russia, Kazakhstan, and Belarus differ not only in volumes but in their structure as well. For example, if oil prices rise, it is good for Russia and Kazakhstan as the value of their currencies grows. But the Belarusian ruble should in this case become cheaper because expensive oil increases the costs and deteriorates the competitiveness of the Belarusian economy. A contradiction arises: if we introduce a common currency, how will its exchange rate reflect the real economic situation in our countries?
 

 
Integration should move in this direction very cautiously. We should probably first expand mutual trade in national currencies and develop a system to converge the exchange rate policies. See the results of such policy and gradually move forward.
 

 
Prospects
 

 
- The Commission starts negotiations on a free trade area with Vietnam. What does this regime provide for? And with what other countries can such agreements be signed?
 

 
- In general, such regime provides for duty-free import of goods into a county and removes other market access restrictions, such as treatment of investment, access to state procurement and to strategic projects of the governments. For the Vietnamese producers, this facilitates the work in the Customs Union. For Russian, Belarusian, and Kazakh producers – in Vietnam and further in the promising Asia-Pacific Region. For business, this means new orders received and new jobs created. For consumers, lower prices and wider range of products and services. We are completing the preparatory work with Vietnam. The beginning of negotiations might probably be announced in September at the Asia-Pacific Economic Community summit.
 

 
We are also holding consultations on a possible similar agreement with the European Free Trade Association, which unites Iceland, Switzerland, Norway, and Liechtenstein, as well as with New Zealand. We have been addressed in total by 35 countries with an offer to negotiate the free trade area issue. And we will try to move ahead as fast as possible in areas of clear interest to the Customs Union countries.
 

 
- Which areas are of priority to your estimation – eastern or western?
 

 
- We are committed to a multi-vector principle. We do pay much attention to the Asian Region, where the center for the future economic growth has been formed. We think that it would be unwise to neglect the opportunity and stay out of the process, especially as Russia is an APEC member. By the way, interaction in the Asian Region has been based for many years on a system of free trade area agreements. And access to this region implies the availability of such ties.
 

 
But strategic relations with the EU are also very important to us. We count on gradually achieving the free trade area regime. Though it is still an issue of the future, for economic and many other reasons including the EU-Belarus relations. Finally, the Agreement on the Free Trade Area in the CIS is to be ratified within the following several months.
 

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