Prime Minister Dmitry Medvedev chairs government meeting
Transcript of the beginning of the meeting:
Dmitry Medvedev: Good afternoon, everyone. I see that you have no documents on the table.
Colleagues, the first issue on the agenda of the government meeting today concerns amendments to the programme of federal property privatisation. Our task is to adjust our plans for selling ownership in our largest companies, joint stock companies, until 2016. As a reminder, I outlined this issue as one of the government’s seven priorities for the next six months.
The draft resolution provides for the possibility of the full or partial privatisation of such large companies as Sovcomflot, Sberbank, VTB, United Grain Company, Rosagroleasing, RusNano and Russian Railways. The list also includes large energy and oil producing companies and industrial corporations, in particular Rosneft, which should be taken out of direct state control by 2016.
I’d like to remind you that all these amendments will be made to the part of the programme that stipulates the privatisation guidelines for this planning period. The deadlines and the size of the offering for the leading companies are to be determined separately. Overall, we need to reduce excessive state presence in the competitive sectors of the economy and create conditions for fair competition and for attracting additional investment in the development of companies and economic sectors as a whole. All such decisions must, of course, be balanced and strategically validated. We must also consider the current situation on the investment market and the possible risks. But above all we have to stay on schedule.
The next important issue concerns the ratification of the protocol on Russia’s accession to the World Trade Organisation. As you know, we worked hard during negotiations to adjust Russian legislation to WTO standards. Now we must use these tools to the minimise risk in some industries while giving them an opportunity to operate, giving investors the opportunity to participate without sustaining losses.
We recently held a series of consultations with the business community and representatives of various industries. I also discussed this issue with some experts yesterday within the Open Government programme. I set the goal of not simply preparing [for accession] – I believe that we are generally ready – but also to monitor the situation, that is, monitor the changes in our economy following accession, and also taking the necessary decisions. We need to finalise and implement plans for adjusting individual economic sectors to WTO terms. I’d like to say that after joining the WTO we will honour our agreements and commitments. Of course, we will not assume any new commitments. As I said at the meeting with the experts yesterday, this is a very important project, a major move related to our economic development, but it must also fully meet our national interests. Therefore, we will proceed from the needs of our national interests first, while at the same time honouring the commitments we made to join the WTO.
The protocol on WTO accession is to be submitted to the State Duma soon. I hereby instruct Economic Development Minister Andrei Belousov and the heads of other agencies concerned to cooperate closely with parliament, which is waiting for these documents, in order to complete all the necessary procedures in July. Russia must become a full-fledged member of the World Trade Organisation in early August.
Another issue related to the WTO is a law drafted by the government on its own initiative. It concerns additional guarantees to the investors in the Russian automobile industry. I’d like to remind you that this industry is using the SKD regime, which is bringing results, in particular additional investment, new jobs, management expertise and new technology. Such agreements will expire in 2018–2020. Import duty discounts on auto components are to be lifted on July 1, 2018, as we agreed when negotiating our WTO entry. Therefore, since they will have to pay new customs duties, our auto manufacturers that are involved in these projects, will need to review their long-term investment plans, with all the ensuing consequences. To prevent this from happening, the government should create conditions that will not impair the financial performance of our partners.
There has been a suggestion to introduce a mechanism for subsidising their expenses, in an amount equal to auto components’ import duties, in 2018-2020. This will make it possible to balance the situation. I hope that all these measures will send a good message to investors, serious investors in the Russian economy and those manufacturing up-to-date and competitive products in this country.
Here is another highly important issue from an entirely different sphere. This issue has to do with Russia’s integration into the international law infrastructure and the protection of children’s rights. The government has drafted resolutions regarding the signing of the Convention for the Protection of Children against Sexual Exploitation and Sexual Abuse, as well as the Optional Protocol to the Convention on the Rights of the Child on the sale of children, child prostitution and child pornography. The signing of these documents will make it possible to conduct more anti-crime operations in line with international standards, and this will also facilitate cooperation between Russia and other countries in this area. First, the intension is to sign the convention and the optional protocol, to bring national legislation in conformity with them and to ratify both documents.
We will also have to discuss an entire range of issues regulating our work within the format of the Collective Security Treaty Organisation. There are three important documents that we should approve, including a protocol on the deployment of military infrastructure facilities on the territory of CSTO member states, and we should submit them for ratification.
Let’s get to work. Minister of Economic Development Andrei Belousov will report on the first issue – introducing amendments to our privatisation programme.
Andrei Belousov: Thank you. Mr Medvedev, colleagues, first of all, I would like to say a few words about the current privatisation programme and specific federal property privatisation guidelines for the 2011-2013 period.
In all, there are plans to privatise the share parcels of 1,408 shareholding companies. In all, Russia has 2,714 shareholding companies with state capital. The intention is to sell about 1,300 share parcels and to contribute 7.4 share parcels to the statutory capitals of incorporated entities. Moreover, 278 out of the 2,427 federal state unitary enterprises are to be converted into shareholding companies. The share parcels of 319 companies, including 10% of Vneshtorgbank’s shares, were sold under this programme throughout 2011. In 2011, proceeds from federal property privatisation reached about 121 billion roubles, an all-time high in the entire history of privatisation. At the same time, we should, of course, keep in mind that the Russian Federation had received about 100 billion roubles, or 95.7 billion roubles, to be more exact, from the sale of Vneshtorgbank’s shares.
We are continuing to implement the privatisation programme in 2012. This concerns about 200 enterprises and the share parcels of some 960 shareholding companies. Considering share parcels, which will be mentioned below, we plan to receive about 300 billion roubles this year and to considerably exceed last year’s parameters.
I would now like to say a few words about the upcoming privatisation transactions. Some 200 small and medium-sized shareholding companies will be sold before September 1, 2012. Moreover, transactions concerning seven major shareholding companies are currently being finalised. These transactions are conducted with the help of government-appointed investment consultants. The largest transactions include a 20% share parcel of the Apatit shareholding company; a 100% share parcel of the SG-Trans shareholding company; a 55% share parcel of the Vanino Merchant Sea Port; the relevant share parcels of the Murmansk Merchant Sea Port, Siberia (S7) Airline, the Arkhangelsk Trawler Fleet and Territorial Generating Company No 5. In all, we plan to receive about 30 billion roubles in this sphere.
Now as regards the largest companies. A number of their share parcels may be privatised in the near future, first of all Sberbank shares. At the current rate, they amount to 7.58% minus one share and cost over 100 billion roubles.
For Sovkomflot, the figure is 25% minus one share, which would bring about 25-27 billion roubles. This also applies to the ALROSA stock, up to 49% of the shares of the United Grain Company, and 10% of RUSNANO shares. These stocks are more or less ready for sale and may be sold in a relatively short time.
To implement measures on improving the investment climate the government has decided to broaden privatisation of the biggest domestic companies. In cooperation with the branch departments of the Ministry of Economic Development, it has prepared proposals to supplement its forecast privatisation plan. The government has a relevant draft resolution. The proposals include both plans for the near future, which I have already mentioned and which must be carried out for the most part during this year and 2013, as well as plans for the period until 2016.
Long-term privatisation plans until 2016 provide for the complete withdrawal of the state from such major companies as the VTB Bank (in which we have 75% of shares), Rosselkhozbank (100% of stock to be sold), Rosagroleasing (99.9% to be sold), Sovkomflot (100% of shares), Sheremetyevo international airport (83%), Aeroflot (51%), the United Grain Co (100%), ALROSA, RusHydro, Rosneft (in Rosneft the government owns small stock but 75.1% of shares belongs to Rosneftegaz), Zarubezhneft (100%) and Inter RAO. Before 2016, the government plans to reduce its participation to 75% plus one share in Russian Railways, Unified Energy System Federal Grid Company and Transneft, and to 50% plus one share in the United Shipbuilding Corporation, United Aircraft Corporation and Uralvagonzavod. The government also plans to continue privatising Sberbank shares through the Bank of Russia.
I’d like to point out that the proposal to privatise the shares of the fuel and energy companies that is reflected in the suggested supplements to the privatisation programme fully conforms with the presidential executive order on measures for the privatisation of federally-owned stakes in the largest companies of the fuel and energy complex. In accordance with this order, Rosneftegaz's relationship with these companies will be as an investor, which we believe will enhance capitalisation and the cost of shares for their subsequent sale.
I’d like to emphasise that the inclusion of different stocks into the privatisation programme does not mean that we are becoming some kind of hostages to the adopted decisions and that we won’t be able to take into account the circumstances or any aspects of their sale.
In fact, I’d like to draw your attention to the multi-stage nature of the privatisation procedure. There are six stages all in all, and the government will have to make two decisions for every company – on appointing an investment consultant and on the specific terms of its sale. In other words, it’s not that we are launching the process and then stop controlling it, rather it is the other way round. Adoption of the current decision will allow us to start preparing for the privatisation programme, especially to pick consultants and determine the best terms for the sale of each company. But the government will have to make a separate decision on each of these conditions, including the choice of consultants and the terms of working with them on an individual basis.
As I’ve already said, following the adoption of the proposed privatisation programme, the Ministry of Economic Development will select investment consultants for drafting proposals on the optimal periods, stages and methods of selling shares as well as the criteria of potential buyers.
The government will also make a decision on the specific terms of sale, taking into account the proposals drafted by the Investment Bank. The President will make a decision on reducing the share of the state in the charter capital of strategic joint stock companies. I’d like to note that the classification of a company as strategic does not mean a ban on its privatisation – it simply requires a separate decision from the President.
Mr Medvedev, as I’ve said, the draft resolution providing for supplementing the 2011-2013 privatisation programme with the plans on selling shares of biggest companies is in the government. This draft has been approved by the departments concerned – the Finance Ministry, the Transportation Ministry, the Energy Ministry and the Ministry of Agriculture. It has been proposed that we adopt this draft resolution. I’d like to ask you to support it.
Dmitry Medvedev: Thank you very much, Mr Belousov. Please take your seat. Are there any ideas? You want to support it. Mr Dvorkovich, please go ahead.
Arkady Dvorkovich: I’d like to comment on one aspect associated with the executive order on Rosneftegaz, notably, that the company can act as an investor for the share parcels of fuel and energy companies if this is considered expedient, but not necessarily for all transactions. This should be formalized in the document.
Dmitry Medvedev: Of course. Everything should be based on the principles of expediency. It is up to the government to decide. Okay, but please, be brief.
Mikhail Abyzov: Mr Medvedev, colleagues. Your instruction of March 22, 2012 provided for the formation of a registry of state-owned companies, the conduct of public and expert discussion of the expediency of preserving them as the state’s property and the introduction of a relevant supplement to the privatisation plan before December 1. In addition, the presidential executive order on long-term state economic policy provided for the state’s withdrawal from the capital of the companies of the real economy sector and the natural monopolies before 2016. In this connection, the submitted materials propose that the controlling stake in the Sberbank be retained in the period after 2016. Strategy-2020 envisaged a reduction of state participation to the level of a blocking stake by 2015. That is an extremely important issue in terms of ensuring competition in the banking services market and availability of capital for the real sector of the economy. Therefore I would like to keep open the option of privatisation and the sale of Central Bank shares in the Sberbank capital with a reduction of that share to a blocking stake by 2015 as envisaged under Strategy-2020 which is being proposed and discussed.
Dmitry Medvedev: Thank you. Igor Shuvalov, please.
Igor Shuvalov: Mr Medvedev, esteemed colleagues. As regards the banking sector, we propose to adopt the decisions put forward by the Minister for Economic Development. At the same time I would like to inform you that we had a separate discussion on Sberbank and at the end of that discussion we arrived at the conclusion that at present it is advisable to preserve a controlling stake in the hands of the Bank of Russia, and that there is a real need to discuss the issue with the public and experts because it is the biggest bank whose services are used by the majority of the population. Therefore it has not only an economic but also a political character. We will proceed carefully.
Dmitry Medvedev: Very well. It always pays to proceed carefully. But once a decision has been made, one should act firmly.
Let us come back to this topic later. Mr Shuvalov, as the first deputy prime minister who is in charge of privatisation issues, I would like you to call a meeting and discuss this topic. Are there any additions? If not, the decision on introducing amendments to the privatisation programme for 2011-2013 is adopted with due account of what has been said here.
The next issue is ratification of the protocol on the accession of the Russian Federation to the agreement on the World Trade Organisation.
Andrei Belousov, please.
Andrei Belousov: Mr Medvedev, esteemed colleagues. We submit for your consideration the issue of ratification of the protocol on the accession of the Russian Federation to the agreement on the World Trade Organisation.
But first I would like to say that we have recently received from the WTO Secretariat copies of archive documents concerning Russia and the USSR. They include a 1946 Russian translation of the Havana Charter, the forerunner of the WTO, in which Soviet representatives took part. And there is a copy of the Note of 1986 of the Soviet intention to take part in multilateral trade talks. This is documentary proof of our repeated attempts over the decades to join the world trade club, which as you know were unsuccessful because for a long time we were simply not welcome to that club. And yet the organisation includes countries with different political and economic systems from the USA to communist Cuba, and the WTO is not preventing them from following their chosen paths of development.
The WTO accounts for about 95% of world trade, it has 154 members and all the countries understand that without common trade rules the world will slide back into the era of trade conflicts and wars.
I have to say that after our application to join the WTO was eventually accepted in 1994, it took 18 years to conduct the negotiations. The main milestones were: 1999 – the submission of our proposals on access of goods to the markets; 2001– the submission of proposals on access to the services market; 2004 – the signing of the protocol on the completion of negotiations with the European Union. Then there were some delays mainly of a political nature connected with a cooling of relations with the United States. In 2005, the talks with the US were completed and in 2006 there was a year-long pause because a new administration was being formed in the United States. At last, in 2009, after another pause due to the formation of the Customs Union, we entered the home stretch and completed the job.
Three documents are submitted for ratification (please, pay attention to slide 3). First, the protocol on the accession of Russia to the Marrakesh Agreement on establishing the WTO. Second, a supplement on Russia’s commitments concerning market access. They include our commitments on export and import duties, the extent of support for agriculture, tariff quotas and agricultural export subsidies. And third, a supplement containing our commitments concerning access to the services market, which has a list of exemptions from the most favoured nation regime, in particular, it seals Russia’s right not to apply measures envisaged by individual bilateral agreements to the services and providers of services of all the WTO member-countries. The text of the protocol refers to the so-called systemic obligations to regulate foreign economic activities stipulated in the report of the working group on accession. This is in fact the main document, it is not part of the package of documents subject to ratification, but there are references to it, so it is, of course, part of the whole body of documents.
I would like to briefly describe the documents we are discussing. First, the so-called systemic obligations. The systemic obligations Russia has assumed for the most part do not go beyond the standard WTO commitments by which all its members are bound. These obligations flow from the WTO agreements that regulate trade in goods, services, intellectual property as well as agreements concerning technical regulations and the use of anti-dumping measures. There are more than 20 such agreements at the WTO. In some spheres the protocol imposes additional obligations on us, the so-called WTO pluses. For example, in the sphere of gas price regulation, we must ensure that Gazprom derives profit from the sale of gas to domestic industrial consumers (but we met that obligation back in 2004). There are obligations concerning transparency whereby we must publish in advance draft normative documents of a general nature that regulate WTO issues and provide an opportunity to interested persons to comment on these. But the WTO pluses are offset by WTO minuses, such as prolonged transitional periods for the application of measures that do not meet WTO standards, for example, in terms of investment agreements in the automobile industry or the free economic zones in Kaliningrad and Magadan. The duration of transitional periods varies but they end in seven years’ time, that is, the deadline for adaptation is 2019.
Regarding terms of accession and customs duties, the weakening of tariff protection is seen by the business community today as the main risk for various sectors of the economy. The average weighted rate of duties on the import of goods will go down by 4 percentage points over three years, or about a third: in 2011 it was 9.6%, in 2012 the average weighted tariff is almost the same, it declined a little due to structural shifts to 9.5%, in 2013 it will be 7.4%, in 2014 – 6.9%, in 2015 – 5.9% and by 2019 it will hover around 5-5.3%.
Two reservations are in order. First, we have the right to raise some duties to the level allowed under our WTO commitments. I would like to note that the so-called commitment level – initial and final – is much higher than the current level of duties. For many goods we voluntarily introduced the zero rate: that applies to many investments goods, technological equipment and so on. The initial commitment level, that is the level of obligations on which we have agreed, is not 9%, but 12.6%, which is much higher. It is slightly over 15% for agricultural goods and 11.3% for industry. The final level will be 8.1%, so it is not about absolute values but about structure. As regards structure, this is the main issue of our adaptation measures and our talks with businesses and support for them.
Second, I would like to say that real tariff protection is determined by many factors, including the rate of the rouble against the main currencies. A drop of the rouble by 1% increases tariff protection by about 0.95%, that is to say practically by the same amount. For example, the rouble weakened by about 15% during May. If one translates this into customs duties, it is equivalent to about a 2% increase in customs duties, so the situation is pretty fluid and I would like you to keep this in mind.
Now as regards our commitments to support industries. Our support commitments, so-called commitments on supporting trade distortion policy, or “yellow box” policy, will make it possible for Russia to significantly increase it in the coming years compared to the current level. The restrictions here are largely due not to our WTO commitments but to our budget capabilities and to the efficiency of the instruments that we have chosen and are using. And if Russia uses the maximum allowable level, then the proportion of GDP support for agriculture will be twice as high as in EU countries compared to 2008, if we take the 2008 level because it is liable to change.
In addition, we maintain the option to redistribute support to the so-called green box (these measures do not distort trade) and use other measures as well. In particular, the WTO has a rule that the level of support does not take into account the programmes whose proportion is below 5% of the production of a specific agricultural product – they are not taken into account at all. Here we also have rather large leeway and possibilities.
As for the commitments on services (slide eight), the WTO lists a total of 153 service industries. We have undertaken obligations on access to 117, of these full access is open only in 15 industries. These industries include services of office cleaning, copying, and others. In those industries where we have undertaken specific commitments, our ability to restrict access of foreign suppliers or to introduce restrictions on them on the market will be restricted in one way or another. In 39 service industries, including practically all industries concerned with raw-material production, processing and transportation, in industries of natural monopolies and many other industries, we have not undertaken any commitments at all, which means we can completely deny access to foreign companies there if, for example, we think it necessary based on our investment climate and the requirements of, say, competition. We have this option, however the advisability of such practice is for us to decide.
In addition, we have maintained the right to extend subsidies without restrictions and extend other state support to Russian service providers. Currently foreign access is restricted or banned under current rules only in 11 industries, so in principle we have here rather large leeway, options for regulating foreign access – I’d like to call your attention to this too.
Now, regarding the advantages of accession to the WTO and risks involved. People often ask questions about the quantitative assessment of these advantages, about additional growth, about additional investment, and so on. Such an assessment has been made, and I will cite some figures, but I’d like to say that the WTO includes over 150 countries and accession to the WTO just means that we recognise ourselves and that we are recognised as an adequate trade partner playing by the rules adopted worldwide. We become a known quantity for our trade partners and most importantly for investors. This is a psychological advantage, but it is very important. In fact, it is a key advantage.
The WTO agreement standards establish clear rules for foreign trade with an understandable algorithm for their application, and this will ensure not only the stability of the Russian foreign trade regime but also predictability of the legal base in specific areas for Russian and foreign economic operators. They will work under the same rules both in Russia and in foreign countries.
According to the OECD, the WTO customs rules provide for considerable customs optimisation and an approximately twofold reduction in costs for economic operators in this area, which on the scale of global trade means a reduction in business costs of $900 billion. Our share accounts for some 2%, and there are assessments that the costs of Russian businesses will reduce by $10-15 billion, or even $18 billion, due solely to changes to customs rules and more efficient legal practices.
According to the World Bank report on the Russian economy, in the short-term Russia’s accession to the WTO will provide for annual GDP growth of three percentage points. I will not support this figure right now against the backdrop of the growing crisis phenomena in the global economy, but I’d like to note that no current Russian forecast, including expert reports, speaks of any serious negative impact of WTO accession on macroeconomic indicators. There are various assessments on pluses but there are none, including those authored by critical experts, forecasting losses.
A very important aspect in connection with WTO accession is the issue of the Customs Union. I’d like to note that Russia is the first nation in WTO history to join the WTO as a member of a customs union that is not part of the WTO; and all participants of the Customs Union are not part of the WTO either. We are doing much to facilitate the road to the WTO for Belarus and Kazakhstan, because we have agreed practically all obligations concerning the terms of reference of the Customs Union. Approximately three-fourths of the report of the working group that I mentioned consists of explanations of regulating mechanisms in the Customs Union.
In reality, the WTO, the WTO bodies and WTO members have a very delicate and careful attitude to the situation when the rules of regulation are taken to a supranational level. But in this case, all talks on this aspect have been concluded, and the WTO members, our counteragents, have accepted the relevant terms and rules of the game. The Customs Union’s legislation has been subjected to a detailed analysis in Geneva in the past two years to establish whether it is in line with WTO regulations. This will subsequently facilitate the procedure of its formal recognition by the WTO.
Now I’d like to focus on the risks we face. Pursuant to government instructions, we’ve held dozens of meetings since January with members of the Russian business community. The idea behind this has been to identify risks related to meeting the commitments made along with determining appropriate measures to remove them [the risks] or reduce them to a minimum. The existing risks can be broken up into three categories. One group has to do with possible negative implications of reducing tariff protection. This may affect livestock production, as well as agricultural machinery, textiles, car manufacturing and consumer goods industry. The measures we’re working on together with relevant government agencies and the business community employ a whole variety of tools. In some cases, this involves the monitoring of imports with a view to adopting protective measures. I’d like to call your attention to the fact that under current legislation, which we’ve completely harmonised with the WTO’s already, in case there’s a threat of a surge in imports on some market, we have the right to unilaterally use protective measures in that market, following related consultations with fellow Customs Union member states. That kind of possibility is always there. Measures of financial support are under consideration as well; the business community pays a lot of attention to measures of technical regulation, to the adoption of new technical regulations and veterinary requirements, with the primary aim being to raise the competitiveness of Russian industry and limit the import of low-quality goods.
I’d like to point out here that our business partners are concerned these days not so much about the lower competitiveness of our companies as about the lacunas and loopholes in our legislation, those that could allow low-quality goods into Russia. Filling them in is one of the key priorities, one of the adaptation measures I’ll go over later on. But this is fully in line with our national interests, including that of protecting the domestic economy.
We view state contracts as an effective tool, with Russia’s WTO commitments enabling us to set preferences for domestic merchandise as well as impose total bans on foreign goods and services within the framework of a state contract. Since we haven’t signed up to these commitments formally, we still have the right to bar foreigners from state contracts without providing most favoured nation (MFN) treatment for them, but, of course, this should be done with major reservations, as we may hurt ourselves in the process, undermining the very foundations of competition in relevant sectors.
Improving procedures for introducing market protection measures is another relevant area of activity, and is seen as such by all producers without exception. This issue is regulated by Customs Union agreements, which, in the business community’s view, should be modified, primarily to speed up and simplify anti-dumping measures. Such schemes should be simple and swift, and we’re preparing appropriate amendments in line with our adaptation plan.
Almost everyone is concerned with the issue of lowering interest rate on loans. This is, perhaps, the second most popular issue, after the import of low-quality goods on Russia’s markets. This important tool should be used to level the playing field for competitors. Our competitiveness reserve, which we’ll be able to keep almost intact upon Russia’s WTO accession, is also about regulating prices on the services of natural monopolies.
A second group of potential risks is related to cuts on effective subsidy programmes. We see this risk as minimal because the instruments failing to meet WTO regulations are not that many. Such programmes could be reconfigured into rules in line with the WTO as well as our commitments. It’s primarily about subsidising aircraft, agricultural machinery and shipbuilding. We’re to adopt a programme of production localisation with WTO obligations in mind.
One other important task is to boost support for exports. Many companies ask us to step up our activities to support export programmes with measures authorised by the WTO, including through long-term lending for large projects and many other methods.
In light of this, we’ve included a roadmap for export support into the national entrepreneurial initiative list, which already includes four other roadmaps submitted to the government earlier this month in keeping with the instructions of the prime minister. A detailed plan has now been elaborated, primarily by the business community, to raise the efficiency of export support from the point of view of small and medium-sized businesses as well as large ones.
And, finally, the last set of problems. In fact, we consider this set to be the most important, as it has to do with potential complaints from our trade partners. We must get ready for this, because even during preparations for the accord’s ratification, many of them have already started preparing to take their complaints to court. We must devise a system for processing these complaints, reviewing them and giving an appropriate response.
Participants in yesterday’s meeting on the WTO made proposals to draft a system of expert review to check the compliance of regulatory acts with WTO rules and standards. To do this, we must first of all train enough specialists for profile and other departments and build up all WTO-related agencies.
Mr Medvedev, we would like to ask you to give us and other departments an instruction to draft such proposals no later than the end of July and submit them to the government.
In January 2012, the commission on economic development and integration approved a plan of measures on adapting the Russian economy to the terms of the WTO membership. Slide 12 shows the departments in charge of these issues and the number of items for which they are responsible. All in all, if we look at the quarters…
I’d like you to look at this plan. We must implement it during this year. It consists of 50 items, most of which deal with measures to adapt the existing support measures to WTO requirements. I’d like to draw the attention of our branch departments to the need to adopt applicable regulatory acts during the current budget cycle, no later than September. All relevant measures have been provided for.
Summing up, I’d like to say that we are absolutely clear on the risks that may arise from our accession to the WTO. We know how to work to minimise them. The government is studying proposals of the business community and the regions. The necessary decisions have already been or will be adopted as a result of this work.
Our entry in the WTO will enhance competition in some markets but it won’t damage our industries, particularly if we use our reserves and WTO-sanctioned protection mechanisms. In this sense, the WTO will afford us significant opportunities for development and we must make use of them. I hope you will support this idea.
Dmitry Medvedev: Thank you, Mr Belousov. Take your seat, please. So, we have the long-awaited set of documents in order to ratify the protocol of Russia’s WTO entry. Do you have any remarks?
Igor Shuvalov: Mr Medvedev, in line with your instruction at yesterday’s meeting, together with the Ministry of Economic Development, the Ministry of Industry, the Ministry of Agriculture and others, as well as with the deputy prime ministers supervising the relevant branches, we will be working to make sure that the benefits from WTO membership far outweigh the ensuing risks. These risks exist and we have studied them together with representatives of specific companies for more than half a year. In some cases the situation is even dangerous. Mr Dvorkovich is going to hold a meeting on this issue at one agricultural equipment manufacturer. We will deal with this problem to reduce the risks to a minimum.
I’d also like to tell you about the ministerial meeting held in Kazan as part of our APEC chairmanship. During two days trade ministers from the APEC economies welcomed Russia’s ongoing accession to the WTO, because as a result the Russian economy will receive a different status and become more transparent.
Dmitry Medvedev: Thank you… Esteemed colleagues, let’s sum up. The minister has just described how difficult and long the road to the WTO was for this country, including its legal predecessor the Soviet Union. It tried to join the Havana Charter, the General Agreement on Tariffs and Trade (GATT) and later the WTO, but was turned down.
This process was dragged out for many years and it is great that, owing to joint efforts, it is coming to completion. I’d like to repeat that, as a result, our economy and its individual industries will become more competitive and our living standards will improve.
Naturally, after joining the WTO, we will be guided by our national economic priorities. I’d like to reiterate this point. At the same time, we must do what Mr Belousov and Mr Shuvalov mentioned. We must continue monitoring the situation in the context of our WTO entry. We must learn to respond to the actions of our partners who are also our rivals. We must learn to be tough and take the matter to court, if need be. Therefore, we should create the necessary conditions for such actions, in part by consolidating the agencies dealing with WTO membership. This is the right thing to do, because joining the WTO not only opens new vistas before us but also creates problems, not only for our economy but also for the agency in charge of its development.
Our colleagues, including our partners in the Customs Union and the future Eurasian Economic Space, are really looking to us with hope. As soon as we complete all procedures, a direct road to WTO membership will open up before them. We will give them all the support they need, as I’ve promised repeatedly. We have travelled an interesting road. Several years ago when we decided to speed up the formation of the Customs Union, some of our colleagues said that we would never make it to the WTO and that all our efforts to this end had been wasted. But they were wrong. We were accepted and even earlier than we expected. I’d like to congratulate all those who were in charge of this very important work. Let’s consider the decision adopted. We are submitting the documents for ratification.