Vladimir Putin’s opening remarks:

Ladies and gentlemen, friends.

I’m pleased to welcome you to St Petersburg, and to Russia.

Today at the CIS Heads of Government Council meeting we will be dealing with a broad agenda that includes over 20 issues. We will also review the main results of our performance in 2010 and shape our plans for the future.

CIS countries managed to perform fairly well in trade and economic relations during this difficult post-crisis year. For example, from January to August of this year the trade turnover within the commonwealth grew by almost a third to over $120 billion. This is an impressive amount that testifies to the fact that we are starting to overcome the temporary decline in our trade and investment.

This positive trend could also be reinforced by a new agreement on a free trade zone in the CIS. Based on existing WTO standards, this agreement is meant to replace the obsolete provisions of the 1994 agreement on a free trade zone and should become a firm legal framework for the successful development of business partnership in the CIS.

I’m convinced that this new agreement could be prepared for signing by the end of this year. This is an attainable goal. We have just discussed this agreement in a narrow format and heard comments and opinions. But now we have the time to reexamine this agreement. Today we will hear about how work on this agreement is going, and we plan to sign it next year.

Naturally, we need additional measures to encourage direct ties between our production facilities, companies and regions. I’d like to recall the initiative to open exhibition halls for the CIS member states at the Russian Exhibition Centre in Moscow, thus reviving this old and, to my mind, useful tradition. I’d like to bring this to the attention of our partners. We are offering quite favourable, and unusual terms and conditions for the use of these exhibition halls in Moscow – a 50-year lease with a token price of 1 rouble per year. We have discussed this in a narrow format, too, and we are ready to discuss it now in an extended format. I’m referring to the fact that some countries would like to work together in one large hall while others prefer to have an individual exhibition hall. This is all possible and every issue can be settled.

We have already reached specific agreements on this. I hope that in the near future visitors to the Russian Exhibition Centre will be able to learn more about CIS member states, their ways of life today, and about their achievements in industry, science, technology and other areas.

Let me remind you that this year was declared the Year of Science and Innovation in the CIS. Russia has prioritized these issues as chair of the CIS. 

We have strong backgrounds in science and technology, as well as in culture. We see significant projects being carried out in these areas, including those under the auspices of the Council and Foundation for Cultural Cooperation. For example, Moscow has recently hosted the 5^th Forum of Creative and Scientific Intellectuals of the CIS. The next such forum will be hosted by our Ukrainian friends.

The Interstate Council for Cooperation on Science, Technology and Innovation has commenced its work. It should become a mechanism to coordinate national research programmes in fundamental and applied sciences.

It is important to keep up the pace of this work and actively involve leading universities, research centres and the general public of the CIS countries in this partnership and cooperation. Moreover, we are about to begin implementing two large-scale interstate projects. The first project is the Innovation Cooperation Programme, the second one is the Plan to Develop Humanitarian Cooperation. We will be discussing these projects at our meeting today. I’m sure that they will contribute to the development of human capital and improve the competitiveness of our countries.

It’s worth mentioning that the Year of Science and Innovation in the CIS will be followed by the Year of Historical and Cultural Heritage in 2011. Undoubtedly, this initiative will further strengthen the long-standing cultural, humanitarian and spiritual ties between our countries and people.

I’d like to thank you all for your attention and recommend that we get down to work. I now give the floor to Minister of Economic Development Elvira Nabiullina to speak about the work on the draft agreement on a free trade zone. And I ask you, Ms Nabiullina, to put particular emphasis on certain issues, to explain Russia’s position and our partners’ positions. Why has it become necessary to amend the existing agreement or even sign a new one? I mean that we have had a corresponding agreement on a free trade zone since 1994. Why is this new agreement necessary? And please brief us on its main features.

Elvira Nabiullina: Good afternoon, ladies and gentlemen,

The Russian Federation considers the swift coordination of the new agreement on the free trade zone to be a priority for the future of economic cooperation in the CIS. And it is one of the most important issues to be settled during Russia's presidency of the CIS.

Trade relations between CIS countries are currently regulated through a general agreement from 1994 and about a hundred bilateral agreements. The problem is that these agreements use different conceptual frameworks and do not consistently set up clear regulations. These agreements played a very important role when they were concluded 20 years ago by preventing a break in economic ties between CIS countries, but they have become obsolete over the years and need to be updated and improved to meet new economic challenges.

The new draft agreement, which experts from all the CIS countries have been developing for almost two years, compensates for all the legal shortcomings of the former documents. It introduces comprehensive regulatory mechanisms in trade, notably trade protection measures, and sets forth the procedure for their application and the specific circumstances under which they can be used. This is significant because these have been contentious issues in the CIS. The new agreement also establishes unified procedures for technical, sanitary and phytosanitary measures in line with international norms.

More to the point, we have agreed to develop a comprehensive procedure for settling disputes. The only mechanism that CIS countries currently use to settle disputes between member countries is consultations, which are not always effective for obvious reasons, hence the growing number of unresolved disputes in the CIS. The new procedure is based on the best international practices and is very clear. It involves independent adjudication of disputed issues and provides concrete solutions within a reasonable amount of time.

The delegations that have participated in the talks have arranged and finalised almost all the details of the new agreement on the free trade zone. At a meeting in September, the economic ministers of CIS countries resolved most of the disputed issues. And the remaining unresolved issues were settled at the meeting of the Economic Council yesterday. The heads of government are left with just a few issues to focus on. First of all, we would like to ask the Council of the Heads of Government to expedite the ratification of the agreement on the rules for determining the country of origin of commodities. This issue is critical for our trade relations, and it is very important that the agreement should take effect no later than the agreement on the free trade zone.

Yesterday we settled the remaining issues with Belarus. In light of the decisions we made at these talks, we would like to ask all of our partners to consider one reservation to the agreement on the free trade zone. The agreement will apply to relations between Belarus, Kazakhstan and Russia on the condition that they don't contradict the agreements of the Customs Union and the Common Economic Space. We hope that everyone involved in the talks will support the introduction of this reservation to the agreement.

There are yet two more articles that need to be settled. First, our Azerbaijani partners have suggested considering the possibility of excluding customs administration rules from the agreement. All of our other partners believe that customs administration rules are important for the proper application of free trade regulations. This is why we would like to ask Azerbaijan to join the other countries on this issue.

The second issue is the provision that stipulates that no reservation can be introduced to the agreement once it has been signed and that reservations must be agreed upon by all negotiating parties. Azerbaijan continues to contest this issue as well, and we hope that they can be more flexible on it.

I'd also like to highlight one more issue we have been negotiating. The delegations unanimously agree that the new agreement should replace existing trade agreements between our countries. As I said, there are over a hundred such agreements. They reserve different scopes of rights for countries and use dissimilar terms and regulatory systems. We now need to develop a single legal procedure for automatically cancelling old agreements.

If we manage to settle the problems I mentioned, then there will remain one last issue to negotiate – the list of commodities outside the framework of the agreement on the free trade zone. We made much headway with this issue at the meeting of the Economic Council yesterday and hope to finalise it in the near future.

Russia believes that all these issues can be resolved in the short term. We plan to hold the next round of talks on December 21-23 and hope that all parties will participate. Once we have agreed on these issues, we will be able to submit the draft agreement to each country for approval at the national level, which will take another month or two. Therefore, the agreement can be signed in spring, as planned. We would like to ask you to instruct your delegations to conclude talks by the end of this year. We believe that this is a realistic timeline. Thank you.

Vladimir Putin: Thank you very much, Ms Nabiullina. Does anyone have any questions or comments? Any other opinions on the issue? No? Then I suggest that we approve this decision. Any objections? No? Decision approved. Thank you.

I'd like to add a few words to what has been said. I'm sure that each party is interested in finding the optimal solutions to these problems and I'd like to ask all heads of the delegations to participate in expert discussions of these issues.

Because if we lack experts from some particular country, then it will be difficult to reach consensus at the final stage because it’s not always possible to begin talks all over again from the beginning. This is a complicated, lengthy and difficult process.

Thanks a lot.

The next issue on our agenda has to do with the development of the draft interstate targeted programme for innovation cooperation. Farit Mukhametshin will speak on this. Mr Mukhametshin, please go ahead.

Farit Mukhametshin (head of federal agency for the CIS, Rossotrudnichestvo):

Mr Putin, ladies and gentlemen.

In keeping with your decision of May 21, Rossotrudnichestvo, in association with Russia’s School of Economics and agencies representing customer states, has developed the draft interstate targeted programme for innovation cooperation between CIS member states until the year 2020. The CIS Executive Committee has provided proactive support throughout.

The draft programme, put up for consideration at today’s session of the Council of CIS Heads of Government, is based on provisions laid down in the CIS Economic Development Strategy and in the Guidelines for Sustained High-Tech Cooperation between CIS Member States, which you adopted over the past two years. We’ve proceeded from your decisions to drastically revise the current modes of scientific and technological cooperation in the commonwealth and to move on to a new stage of integration.

The programme is aimed at offering a broad-based format that would enable us to harmonise national innovation systems and national laws while also developing and organising national targeted programmes and high-tech projects of other formats in order to create the conditions for boosting the global competitiveness of the CIS economies in the new political and economic environment. The document lays down advanced approaches to high-tech sectors, including in the development of technology platforms, centres of excellence, and so forth.

Work is currently underway in Russia to build technology platforms under a resolution of the governmental commission for high-tech research and development, which is led by the prime minister. And we are coordinating our efforts with those working on such platforms. It has been agreed that Russian platforms will be made accessible to all CIS member states.

As we are eager to cooperate with European partners, we’ve decided to develop an approach that would make it possible for us to collaborate on projects under the European Union’s Seventh Framework Programme and similar programmes operating in countries in the Asia-Pacific region. This means that we will try to supplement some of the major programmes that are running across the world, and we hope that we’ll be on the same level.

The draft programme I’m presenting to you here today consists of five sub-programmes, dealing with interstate high-tech cooperation, the advancement of science and technology, human resources, the joint use and further development of high-tech infrastructure and the interstate regulation of operations in high-tech sectors. 

All these sub-programmes are, in fact, interstate targeted programmes. And we’re ready to expound on any of them upon request. The draft includes a unit on the management of a programme of funding, monitoring and evaluation. At the moment, this unit is still being agreed upon by officials of customer states and experts who have developed it.

The draft programme came under consideration at a meeting of the CIS Economic Council on September 17 of this year, and the further development of the draft programme will take due account of the council’s recommendations. The board advised that customer states speed up the preparation of national units as well as that of high-tech sub-programmes. Admittedly, our programme’s national sections remain quite weak.  We’re set to examine this issue in detail at a session of the working group in Astana on December 13-14 of this year. 

By contrast, the part related to specific projects has been enriched with plenty of proposals on high-tech projects and technology platforms, from customers and experts in CIS member states. There is a list of more than 140 projects by now. The project proposals submitted are all at different stages of development, though. If you support our approaches to the draft programme today, we’ll set down to finalizing them.

Esteemed council members, I would like to draw your attention to a problem that arose over the course of working on this programme. The development of such a large-format programme came into conflict with the document’s provisions for developing, implementing and financing CIS interstate targeted programmes, which was approved by the Council of the CIS Heads of Government on April 16, 2004. This is understandable because the procedure was developed seven years ago in totally different economic conditions.

What are these contradictions? In particular, the current system does not allow for using mechanisms of state guarantees, budget crediting, bonded loans, tax, customs, and tariff preferences. Additionally, it does not allow for the implementation of obligatory preferential terms when buying innovative products, the use of constitutional contracts or other mechanisms of public-private partnership. Also, the system does not allow for setting up a regulatory body to manage the interstate programme. And finally, the current system does not provide for financing for the programme and its innovative projects from national, intergovernmental and international funds such as venture funds, trust funds, development institutions, banks and other funds coming from non-budget sources.   

We believe that the aforementioned conditions are necessary for implementing the programme successfully. In this respect, the client coordinator (Rossotrudnichestvo) and the main developer (Higher School of Economics), national state customers, national developers as well as a number of the CIS Executive Committee’s units have agreed that both the format and the name of the programme must be changed. As for the Russian position, the Ministry of Economic Development, the Finance Ministry and the Ministry of Education and Science have supported such an approach.  

Considering the aforementioned, we are asking for your consent to change the name of the document from the Interstate Targeted Programme for Innovation Cooperation to the Interstate Programme for Innovation Cooperation, thus excluding the word “targeted” from the name. This will provide for a smooth transition from a targeted to a large-format programme. The developers will make every reasonable effort to accomplish your order so that the draft programme will be submitted for consideration of the Economic Council next April and will be submitted for your approval at a regular meeting of the Council of the Heads of Government in May of 2011. Please consider this.

Vladimir Putin: Thank you very much.

Colleagues, are there any questions or comments? No? I propose that we approve the decision of the Council of the Heads of Government on this issue. Any objections? The proposal is approved. Thank you very much.