"We have formed the foundation of our Common Economic Space and the Customs Union and are moving towards the Eurasian Economic Union – I’m confident we’ll establish it."
Remarks by Dmitry Medvedev:
A plenary session of the Business Forum of the Member States of the Common Economic Space
Good afternoon. According to local tradition, if a question is asked, it should be answered. The main point is to implement all those ambitious plans that we have drafted. Listening to my colleagues, including Mr Khristenko, (Viktor Khristenko, Chairman of the Eurasian Economic Commission Board) the head of our supranational body, I came to the conclusion that in the last few years we have done lots of things and created an absolutely unprecedented mechanism that is working well in some respects and isn’t working at all in others. But when we launched this process in the 1990s and when we stepped it up (with my participation) and signed foundational documents, we realised that this would not be easy. I have seen a lot of evidence that we haven’t wasted out time during these years – I’m referring to figures on the growth of our economies and trade, and my colleagues have cited other economic indicators. I won’t repeat them. They are still valid despite the slower growth rates of the global economy and recession in many countries, which is affecting our countries, as my colleagues have pointed as well.
Obviously, we haven’t yet done everything we ought to do. Yes, we have formed the foundation of our Common Economic Space and the Customs Union and are moving towards the Eurasian Economic Union – I’m confident we’ll establish it. But we still have a lot of very difficult and complicated bureaucratic and corporate work to do – not only government members, presidents and prime ministers, but also business people. Ultimately, the success of our cause will depend on how well you work together.
The European Union (it took more time to establish it compared to our union, but they faced different problems) began working at full capacity, even despite the current difficulties, only when its economies got used to each other and companies started following the same rules. I think we should pay special attention to this.
And one more point. What Mr Basko (Vladimir Basko, General Director of the Infopark Scientific and Technological Association) said about the competitiveness of our goods and services is absolutely correct. Friends, the governments should, of course, work to promote integration day and night; parliaments should help them; and presidents should make political decisions. But your work is also very important. You should produce new products that will be competitive not only in our union, which is trilateral at this point. You should reduce overheads and transition to modern systems of corporate management – only in this case will we be competitive. Mr Akhmetov (Serik Akhmetov, Prime Minister of the Republic of Kazakhstan) was asked about equal access of companies to government contracts. First, I fully agree with what you said. Second, I’d like to repeat that everything depends on our will, our directives. We have the will, though it’s still not easy. Of course, there will always be ultrasensitive spheres like the manufacture of certain types of weapons or something else that would be extremely expensive, extremely sensitive and extremely important for each of our economies. But access to everything else should be unrestricted, and this lies in the sphere of political decisions.
I won’t be saying anything new if I point out that the Customs Union and our common Eurasian space create new advantages for the business community, but they should be used promptly. Business people should learn how to use them. In this context, we will review trade liberalisation with third countries and many other issues that our commission is in charge of, with your participation. Otherwise we won’t get anywhere.
It is also very important to improve the general business climate in our three countries – Belarus, Kazakhstan and Russia. The famous Ease of Doing Business index has already been mentioned here and we are doing worse than our partners in this respect, so we should start with ourselves. We should not ask someone else to do this job for us. We should be unwavering in our efforts to improve the investment climate in our countries. This would reflect on our common market. None of our countries should be a drag on our union. We must help each other, be it Russia or our foreign partners. Industrial cooperation is highly important – we have discussed this today. Mr Myasnikovich (Mikhail Myasnikovich, Prime Minister of Belarus) mentioned this in his presentation. This is something we want, something we are working to achieve. We are ready to move ahead as far as our partners – including Belarus – are prepared to go.
What I mean is that we need to convert our favourable opportunities into tangible competitive advantages. Business is very sensitive to decisions we make here and to mechanisms that we launch. Our colleagues who spoke here today have called for changing the Customs Code of the Customs Union and for simplifying border formalities as much as possible.
Mr Mordashov (Alexei Mordashov, General Director of Severstal) has spoken about determining the customs value of goods, about unification of various formalities, classification of goods, regulations and the use of IT. The Customs Code that is now in effect was certainly drawn up in a very limited time. Therefore, we have no choice but to test how well it works through trial and error. But this could not have been differently, because otherwise we would have been developing the Customs Union for another 20 years, and the very idea behind it would have died. So I agree that the Customs Code needs to be changed, or rather, a new version needs to be worked out.
Our Eurasian Economic Commission is already working on this. I think it would be good to set up an additional working group associated with the commission but that would involve business people. Let’s propose this format.
Mr Borovoi (Nikolai Borovoi, President of the Association of International Road Carriers (BAMAP)) has spoken about transport. This is also a competitive advantage. As we are building a common market, we must grant each other opportunities for transport development, and on the other hand, we should be able to benefit from the existing transport infrastructure and facilities. There is a colossal transit potential here that we are not utilising, and this is true. This is true for all types of transport services. This is a major task for the future.
Mr Dvoretsky (Vladimir Dvoretsky, chairman of the Republican Union of Metal Recycling Industrialists) has spoken about supranational bodies as well as about improving customs legislation, existing problems, payments to and from third parties, the arbitrary classification of goods and various constraints to effectively performing customs declaration formalities. This is all true. And it is very important that we work on this together. Let me tell you something I have observed as the head of the Government and in my previous post. You must have come across this attitude in Belarus and Kazakhstan as well. Most official agencies have assured me that they were working properly, and that the poor results were due to problems of their “neighbours.” “If they do not sort this out, we are washing our hands of this,” they say. I can see that this is a sly position, for each of the three countries. Each of us has problems to address. But it is important to start at home and to create conditions for an agreement to be reached, rather than shifting the responsibility toward each other. Otherwise, we won’t be able to continue with the Customs Union, let alone the Eurasian Union, unless the various agencies learn to reach an agreement. They have come a long way, and some synchronisation has been achieved. But there is still more work ahead of us.
The new integrated structure is compelling us to eliminate the remaining barriers, and the presidents have just discussed this. Colleagues, I know this is hard. But, if we want to continue with integration, we will have to do this, despite the losses our economies will sustain. We must all have this understanding, and a very clear position. I can assure you that we understand this and are prepared to bear these losses here in Russia, because we are aware that this will eventually benefit all of us.
There is something else. Colleagues, what we are witnessing is a very important integration process, which attracts keen interest from our foreign partners. They have expectations of their own, and are even jealous of what we are doing. But our countries certainly show the greatest interest in what is happening. Therefore it is a major goal for us to create an environment conducive to expanding partnership.
We have just witnessed a memorandum signed with Ukraine. Similar documents are likely to be signed with other countries too. This is the first step, and a highly important and necessary step, too. We are happy to have taken it but we also know that it may be the last one unless we make more efforts. We have welcomed it sincerely, because we understand that if our partners truly want to participate in the new integration project – the Eurasian Economic Union – they will have to take a series of difficult and largely unpopular decisions. Anything less would be a compromise. They certainly should not undertake any other commitments that would prevent them from joining the Eurasian Economic Space and Union. I think this much is clear to everyone.
If this does not happen, we can continue as friends and develop bilateral relations, but a common market will be out of the question. We hope that strategic decisions will be taken.
Ladies and gentlemen,
I very much look forward to holding such meetings regularly. We have already had one in St Petersburg, and are holding the second one in Minsk. These events are proof that our integration is growing closer. Allow me to wish you good luck in your business, despite the current difficulties. Our governments will continue working toward our vision – the integration of our economies and friendship between our people, and successful business in all of our countries.