Vladimir Putin’s address:

First of all, I would like to thank our Kazakh friends for creating excellent conditions for our work. We are in the centre of Moscow, but the hotel where we are meeting belongs to Kazakhstan and I can see that it is doing very well.

This business forum of Russia, Belarus and Kazakhstan was timed to coincide with a momentous date – the formation of the common customs space, the common customs territory which was completed on July 1. Customs offices on the borders between our three states have been removed. This is not just a formal lifting of administrative procedures. For the first time since the collapse of the Soviet Union the first real step has been made towards restoring the natural economic and trade ties in the post-Soviet space. I congratulate you all. Qualitatively new conditions have been created for doing business in our countries. Incidentally, trade between Russia, Kazakhstan and Belarus has grown by 43% during the first four months of this year, a remarkable indicator even for the period of post-crisis recovery. A very good indicator.

As a result of the lifting of the barriers that formerly hindered mutual trade there is a large and growing common market with more than 165 million potential customers. Of course, this creates very good conditions for any business (business in the three countries and for business from other countries), conditions that will provide an outlet for our efforts, capital and talent. It is important that the rules of the game for economic agents have become more stable and predictable. Moreover, as many of you know, when we were establishing all these procedures, we in fact were creating the legal framework for the Customs Union and the future common economic space. We proceeded from the principles and standards of the World Trade Organisation. Therefore, for our partners from other countries, too, work in this common space will become more understandable and predictable.

I should stress that now both business and our government institutions are starting to work in a genuinely competitive environment. Mr Shokhin (Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs) spoke before me and I agree with him on every point – we shared our views before the conference began. It is true that the bureaucracies in all three countries will live in a competitive environment and provide the best conditions for the use of capital in our countries.

Because, naturally, after conditions have been created in which one can register and work in Belarus, Kazakhstan and Russia, businesses will of course choose the country where the conditions are the best. The Russian government will have to take another hard look at what is happening. We view some things with worry and we in the government are discussing what needs to be done to be more competitive so that business chooses to be in Russia. There is a powerful new incentive for the national bureaucracies to work better.

Co-sponsored by the leading business associations of Russia, Belarus and Kazakhstan, this conference is clear proof that the business communities in our countries are not only actively involved in integration processes but are ready to promote them further. The challenges we face are indeed formidable. The Common Economic Space should be up and running as of January 1, 2012. Along with the free movement of goods, it involves the free movement of capital, services and labour. Each company registered in any of the CES state will essentially enjoy all the advantages of a domestic producer, that is, will work under the national regime.

The CES will be based on a coordinated macroeconomic policy, on fair competition in the fields of technical regulations, as has been mentioned here, agricultural subsidies and transport tariffs. Of course, some mechanisms of the CES will require some fine-tuning. We count on your active and dedicated participation, ladies and gentlemen, on your ideas on how to get rid of all sorts of administrative barriers, how to optimise the instruments of integration and adjust them to suit the interests of business. And, of course, as Alexander Shokhin also said, we would hate to see national bureaucracies being replaced with a supranational one, or worse still, additional pressure being brought to bear on the part of supranational bodies as is happening in some integration organisations not far from us (let us not point fingers).

Incidentally, this conference has heard some useful ideas and considerations that should be taken into account in our future work, including the improvement of the legal framework of the Customs Union and the Common Economic Space. A decision has been taken to codify it so as to have two fundamental documents, the new codified treaty on the Customs Union and the CES and the Customs Code, at least I hope it will be the case. In addition, beginning January 1, 2012, the EurAsEC Court will start operating fully so that not only states but business entities, economic agents, will be able to refer to it. We have been thinking about how to make it truly supranational and strong. This will apply to procedures, rules and the judges’ pay.

On the whole, the role of supranational structures will progressively grow, above all the Customs Union Commission. Within the CES it will additionally be vested with 90 different powers, including decision-making power on competition policy, technical regulations and subsidies. Naturally, it will call for improvement of the mechanism of the Customs Union Commission which, in our opinion – and I am glad that the colleagues agree with us there – in our opinion, the Commission should be a standing body dealing with day-to-day practical issues of our interaction.

In lifting the barriers within the Customs Union we will be careful to prevent any insurmountable barriers from being erected on the outer borders of the Customs Union. On the contrary, our main task is to ensure that by pooling their efforts all our countries would become integrated in the global economy more effectively and harmoniously – I stress, to become integrated with and not to fence itself off from the global economy. Russia continues negotiations on joining the World Trade Organisation. I am aware that our partners are also continuing this work. I am sure that the outstanding issues will sooner or later be resolved. I would like it to be sooner, but we will not rush the issue and artificially accelerate these processes. We do not intend to surrender our national interests.

Let me note that as a troika, Russia, Belarus and Kazakhstan can offer promising topics for further dialogue with the European Union and with individual countries and regional associations. Consultations are already underway on a free trade zone with the European Free Trade Association, and further down the road we plan to start negotiations on a free trade zone with the united Europe, with the EU.

I agree that this not an easy task. But together, within the Common Economic Space, we will be able to solve this task far more successfully and, I am sure, with greater benefits for Russia, Belarus and Kazakhstan than if we did it on our own. The reason for this is clear. By uniting, the three states within the CES become attractive for any partner, and we can raise the bar of our demands. Above all, of course, we will be guided by the interests of business, your interests, which in this case certainly coincide with the national interests of Belarus, Kazakhstan and Russia.

I have to mention our initiatives in the Asia Pacific region. The topics of trade liberalisation and lifting barriers in the way of economic cooperation will loom large on the agenda of the APEC forum due to be held in Vladivostok next year. In this work, Russia will act in the interests of all the Customs Union partners and promote our common agreed interests. In short, we want to see the Customs Union and then the Common Economic Space integrate into global economic processes and play an active role in the formation of the regional and international agendas.

We face large-scale, massive challenges. If we can meet them, the configuration of the Eurasian space will change. The Customs Union and the Common Economic Space will pave the way for the formation of a Eurasian Economic Union, a still higher level of integration.

We intend to create a powerful association that can and must become a pillar of the global economy, and we are not exaggerating or getting on our high horses. It will indeed enable us to take part as equals in the industrial and technological process, to compete for investors, to create new, high-quality jobs. I am convinced that our countries have all that is needed for that. We have the labour resources and the natural resources. I need hardly speak about it: it is clear if only because Russia was the number one oil producer last year, and we are increasing production this year. Last year, we hit the 505 (million tons in annual oil production) mark, and will produce even more this year. Kazakhstan has vast potential. Belarus was known in the Soviet Union as the assembly shop: it has wonderful prospects due to its location on the western border of the Customs Union. If we add all this up we shall see that there is no exaggeration: we can truly compete with our Western friends and partners. The main thing is our common interest in using the advantages of integration to build a modern economy and to improve the quality of life in Russia, Belarus and Kazakhstan.

I think that the synergy of the governments and the business communities in our countries will grow stronger and joint events such the one we are holding today will become regular and will undoubtedly benefit our common cause.

Thank you for your attention.

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Prime Minister Vladimir Putin’s comments on speeches by conference participants:

First, I'd like to draw attention to the fact that all of our joint plans, primarily those related to infrastructure, are taking on a whole new dimension. I would like to point out to my colleagues from the Ministry of Economic Development, the Ministry of Transport and the Ministry of Finance right now that the construction of the road is a major joint project. The road extends from China through Kazakhstan and Russia to St Petersburg. Indeed, our section is the longest, and we need to start thinking right now about how we are going to engage and finance this joint work. We cannot allow construction to come to a halt at our border. With this in mind, we should be able to move towards coordination in our actions, teamwork, including in the budget area. This is my first point – or rather, a small remark.

My second point concerns our willingness to support what our colleagues from Kazakhstan and Russian have just said. We need to move towards creating a single regulatory base. This is an essential point that does not lie on the surface but still is very important. Of course, it makes sense to work on these issues together, bringing our regulations closer to the international standards. This will make our work much easier.

My next point concerns our Belarusian colleague's observation… What’s important here is that our unification can certainly serve to encourage our municipal, regional and federal authorities to use products manufactured domestically. I would like to emphasise, however, that we will not coerce anyone into doing so, using administrative means. The point of establishing this association was to boost your competitiveness. For example, if a product is made in Russia, Belarus or Kazakhstan and you are trying to sell it in these three countries, then you’ll feel the effect of these benefits, because you will not have to pay customs duties, taxes or import duties. That alone will make your products cheaper and put you at an advantage. Plus, there is a 15% discount on procurements for state needs, which means a discount of 25% from the price. If a product is not competitive even under these circumstances, then we will have to seriously consider whether we really need such a manufacturing facility. But the advantages of such an arrangement are clear, and we need to put them to good use. We will, of course, continue thinking about how to further develop these advantages.

And my last point. I very much hope that we will work closely together. The fact that businesses are not pushing the state to address certain issues – and were not doing so at previous stages – is not surprising, because it has always been dangerous to nudge the government in Russia. But I can see here, during our brief discussion, that businesses are now trying to do something along these lines. I am serious, and our colleagues are telling us that they need assistance from the government in certain issues... Let me assure you that we are listening, that we hear you and that we will certainly work with you to address these issues. Thank you.

One more specific point. Mr Myasnikovich mentioned the possibility of working on state defence contracts. I understand where this is coming from. We adopted an Armaments Programme until 2020 and allocated a substantial amount of money to it: 20 trillion roubles. Normally, the state uses its own resources to ensure its security. However, given our close cooperation with enterprises from countries of the former Soviet Union, we will continue our cooperation in the defence sector. The Russian Defence Ministry holds very active and tough dialogues with Russian enterprises. Given the current integration levels between Belarus, Russia and Kazakhstan, and the particular political relations between our countries, our cooperation in the defence area should and must be continued – provided, of course, that the products are competitive. Thank you.