Transcript:

Alexander Shokhin (president of the Russian Union of Industrialists and Entrepreneurs): Colleagues, please join me in welcoming Prime Minister of Russia Dmitry Medvedev, Prime Minister of Belarus Mikhail Myasnikovich and Prime Minister of Kazakhstan Karim Massimov.

Your Excellencies, colleagues and guests, allow me, on your behalf, to thank heads of governments from three member states of the Eurasian Economic Union for taking part in our business forum that was instituted in order to maintain a three-way dialogue between our countries. The leading business association of the three countries instituted this business dialogue two years ago. The first business forum was held one year ago and was attended by heads of governments. One year ago we mentioned that the Customs Union had become fully operational. Currently, we can talk about early phases of the full-scale functioning of the Eurasian Economic Space and forming a supra-national government represented by the Eurasian Union Commission.

Today’s topic of discussion will go beyond general integration issues and advantages of integration and cooperation to include discussion of specific issues leading to better industrial cooperation. We went beyond specific examples of industrial cooperation. Certainly, we need to resolve a host of system-wide problems in order to promote industrial cooperation. These issues include taxes, VAT reimbursement procedures and introducing electronic methods to process customs and VAT declarations. Each of our countries has its own problems in this regard, so we should work to ensure the interoperability of these electronic techniques.

Then there’s the problem of technical regulations. The fact that the Eurasian Commission and the Eurasian Union Council have adopted scores of regulations does not solve the issue of accelerated analysis of technical regulations. We need this work done in order to establish the technical regulation base and use it to adopt standards. Importantly, the competency of the Eurasian Commission, which signalled the transition from the Customs Union to the Common Economic Space – I am referring to the standardised base of technical regulations and standards – should be implemented as soon as possible. We should preserve the public nature of discussions about technical regulations and involve the business community as much as possible in the development of these standards.

A lot of issues have to do with the implementation of the already signed or soon to be signed agreements. Clearly, industrial cooperation hugely depends on the mutual access of our respective companies to each other’s markets. This includes government contracting, which is also being done in electronic form, and the issues of manufacturing subsidies, which should be resolved on a non-discriminatory basis in order to create a level playing field for all our companies.

Of course, formalising procedures of business participation in drafting regulations of the Eurasian Union and attendant monitoring are a very important issue and many speakers mentioned it. We have prepared a draft memorandum of cooperation between the business communities of the three countries with the Eurasian Economic Commission and we hope, your Excellencies, to be able to sign this memorandum in your presence. It sets forth fairly stringent techniques for including the business community’s opinion, which include area-specific coordinators and an advisory council that will include all members of the Eurasian Union board, as agreed.  Mr Khristenko (Viktor Khristenko, chairman of the Board of the Eurasian Economic Commission) agreed to lead this advisory board. Let’s hope that these techniques will include the best practices regarding inclusion of business opinions from Kazakhstan, Russia and Belarus.

We have discussed in detail the tools and techniques of industrial cooperation. In particular, the issue is about harmonising national industrial development programmes. Each country has its own programme that is based on different premises and timeframes. I believe it would be right to coordinate these programmes in terms of deadlines and implementation mechanisms.

Of course, we do not count on the governments to start instituting holding companies or industrial and financial groups using their administrative authority. It is important to create favourable conditions for mergers, takeovers and joint ventures. Undoubtedly, if we manage to create such a favourable entrepreneurial environment, then the companies will be able to learn about each other and carry out joint projects in order to be more competitive on third-party markets and on the global market as well. In this regard, it is very important to support the cooperation projects that have already been identified by businesses.

I don’t have enough time to list all ongoing projects now. I will name the industries: the automotive and electronic industries, joint manufacturing of avionics, high-resolution earth probing satellites, joint research projects and research clusters. We have these things preserved in our countries and we can join our efforts in this sphere.

There are projects in the sphere of nuclear energy and power engineering. Our today’s meeting is held at the Power Machines company, which, alongside the Izhora Plant, is participating in the design and construction of a new Belarusian nuclear power plant. The Leninets holding company and Russian Railways have joint projects with Kazakhstan. Cooperation in the sphere of aviation is at a high level. However, listing these projects is not what our forum should focus on. We want to hear our top government officials tell us what tools and mechanisms will be used by each country in order to encourage mutual investments and what supranational mechanisms will foster industrial cooperation and growth.

In addition to industrial issues, we have touched on issues of system-wide importance and I have mentioned some of them. We have also touched on neighbouring industries such as the agro-industrial complex. We have also spoken extensively about transport and logistical infrastructure. We won’t be able to reach the full potential of industrial cooperation without using shared infrastructure, such as railways. Mr Yakunin, the Russian Railways CEO, spoke about it in detail.

Some specific topics that you will most likely discuss today have to do with Russia’s accession to the World Trade Organisation and commitments that the members of the Eurasian and Customs Union will assume in connection with Russia’s accession to the WTO. In particular, the placement of the auto parts production facility was discussed in connection with the vehicle assembly arrangements that will be implemented in Russia during the transition period until 2018 and 2020. I believe that such mechanisms and tools can be implemented in many other industries with due account taken of the WTO rules and regulations.

Certainly, industrial clusters, software technology parks and national zones that have the potential to become international ones can be used to advance our industrial policies. What we need here is not a prescriptive technology but rather information about the possibility of carrying out business projects at each other’s technology and industrial parks.  

In general, we believe that the Eurasian business forum is beneficial for everyone. Your Excellencies, we believe that we will have the opportunity to report back to you about our vision of the Eurasian Union’s prospects and issues that need to be addressed in order to accelerate the formation of the Common Economic Space during annual meetings of prime ministers. If you have no objections, then let’s decide which country will host this meeting next year. Of course, we expect to get an invitation, but in case we don’t, we’ll come without one.

Colleagues, let’s move on to speeches by our colleagues from the business community. My colleagues in the business dialogue entrusted me with summing up the results of our discussion. However, the heads of governments would like to get a sense of our discussion. Therefore, we will have three business representatives, one from each country, speak now. I would like to give the floor to Alexei Mordashov, owner of Power Machines, Severstal and many others companies. He is also head of the Committee for Integration, Customs Policy and the WTO at the Russian Union of Industrialists and Entrepreneurs.

Alexei Mordashov (Severstal Board Chairman and General Director, Severgrupp General Director): Thank you, Mr Shokhin. Heads of governments, colleagues, guests! I’d like first to thank the prime ministers and the Russian Union of Industrialists and Entrepreneurs for having chosen Power Machines as the venue for holding a business forum.

First I’d like to say that although I’m not sure that this is a common opinion of businessmen, all of us welcome the creation of the Common Economic Space, essentially a common market, or another great step towards creating a common market with a population of 165 million and a total GDP of some 2 trillion [roubles], thus creating additional options for businesses of various countries, for cooperation and development, especially considering that those economic ties were forged on our territory over the course of decades and perhaps even hundreds of years.

Power Machines is one of the successful examples of such cooperation: today we are meeting at Power Machines. Power Machines is a producer… Or let us put it this way, Power Machines has produced over half of all existing power generating equipment in Belarus and Kazakhstan. In Russia, some 65% of the total power generating equipment has been produced by Power Machines. And all this creates good potential for cooperation and the further build-up of the power capacity of all our countries.

Currently, Power Machines is designing and implementing some 24 projects with Kazakhstan and Belarus, including such large and significant projects as the construction of a Belarusian nuclear power station, which will hopefully be implemented with our participation. There is another very important project for us, which is also a very good project of our industrial cooperation with the BelAZ, when Power Machines make units and components installed on large trucks and mine dump trucks which are supplied to Russian mining enterprises.

On the whole we see great potential for development and cooperation with BelAZ: currently we are working on options for creating joint ventures with BelAZ for car component production. And this is far from a unique example of successful coordination between enterprises of Russia, Belarus and Kazakhstan. And I’d like to stress – following Mr Shokhin and many business representatives who spoke today –  that despite the generally positive situation there is a number of significant unresolved issues hindering the development of cooperation and, in general, businesses in our countries.

Given the diversity of these issues, I’d like primarily to focus on three sections that seem to be the source of impediments to growth, because they hinder interaction and cooperation. These three issues are customs, trade protection, especially anti-dumping procedures and special protective measures, and technical regulation. We heard many opinions on this today and will hear a lot in the future. 

Here’s what I’d like to emphasise in the presence of the top leaders in this hall: In my view, we are currently in a phase where common declarations and vague generalities – though often right and good – cannot ensure the effectiveness of the economic system, which needs specific mechanisms, specific details of legislation and law enforcement. Although this is obvious, this has not become the desirable focus to be seen in the work of state bodies and businesses. I’d like to stress that it is very important for businesses to actively participate in the dialogue and make their proposals. But currently we see some steps made in this direction.

The Atameken National Economic Chamber of Kazakhstan, the Belarusian Confederation of Industrialists and Entrepreneurs and the Russian Union of Industrialists and Entrepreneurs have signed an agreement on cooperation. We are surely ready to advance in this direction and consolidate business efforts, and develop a common position on law improvement. But it is very important that the Eurasian Economic Commission and its board be prepared to work with businesses – to hear, listen and interact, discuss and develop joint measures. Here it is very important to welcome all steps providing for consolidation of the economies of the three countries in order to develop the Customs Union governing bodies and make them more efficient, make them working bodies. I’d like to stress that currently we need better development of the Economic Commission of the Eurasian Economic Community and the Customs Union so that this commission is prepared to conduct dialogue with business, and develop standards and procedures of changes. Currently the customs law needs changes and most importantly the customs enforcement needs to change. Technical regulation should without a doubt become a subject of special attention. I hope that, following Russia’s accession to the WTO, the mechanisms of anti-dumping special protective measures that now are probably one of the major tools that we have secured for protecting the domestic market of our three countries, could also be used in terms of the economic commission and its board. 

In conclusion, I’d like to thank again all those present, primarily the prime ministers, and the Russian Union of Industrialists and Entrepreneurs for having chosen Power Machines as a venue for this business forum, and I wish to invite the prime ministers to visit our production floor. We are sure that we will be able to show you good examples of cooperation between the economies of our three countries. Thank you.

Alexander Shokhin: Thank you. Mr Shumilo, Atlant General Director, Belarus, now has the floor.   

Viktor Shumilo: Mr Myasnikovich, Mr Medvedev, Mr Massimov, comrades! The Common Economic Space without а doubt offers us opportunities for growth. The states create the economic conditions for the development of businesses in each participant country. This development is more rapid when conditions are more favourable. On the other side, the Customs Union and the Common Economic Space work under the common rules and the result depends on compliance with these rules. 

One of these rules is the agreement on the rules of identifying the country of origin of a commodity within the Commonwealth of Independent States. Although this agreement exists, there is practically no oversight of its execution in CIS countries beyond the Customs Union. Experts of chambers of commerce and industry sign acts, receive money, payment, but are not responsible for verified information. The certificate says that an expert is not responsible for the data included in the expert report. As a result, our common market sells lots of commodities produced beyond the CIS borders but having a required country of origin label (certificate) and sold on our territory. In my view, it’s time to establish an efficient mechanism for implementing this document.  

A similar situation is true for confirming the stated parameters of the commodity. They produce one specimen for certification, and sell a different commodity whose declared consumer qualities and such qualities as power consumption class do not comply with the certificate. Our citizens suffer as a result. That is caused by the absence of a mechanism of control over the declared specifications within the Customs Union.

On the one hand, the Customs Union and the WTO do open markets. On the other hand, each state creates the conditions for the development of specific sectors on its own, and we should take this into account. For example, our trade with China, Turkey and South Korea is far from parity. The customs duty on refrigerators and washing machines imported in Korea is 18.8%, in China, 38%, in Turkey, 60%. Meanwhile imports from these countries to the Customs Union is liable to a 20% duty for refrigerators and a 15% duty for washing machines.

Let us recall what we have on our market. Russia and Belarus have created the capacity for supplying compressors for refrigerators. In Moscow, Krasnoyarsk, Orsk and Baranov, four modern plants have been built. What is the current situation? China levies an 80% customs duty on imports of compressors; we reduce the 10% duty to a 5% duty for supplies from China to the Customs Union and here is the result. We have shut down modern plants in Moscow and Krasnoyarsk, the Orsk plant is idle. Only Atlant is fighting to survive. As a result, China has taken over the entire market. 

Should the Customs Union levy the same customs duty on compressor imports, Russian plants would start working and Atlant would have an opportunity to increase production – and as a result to completely meet the demand of the domestic market, since compressor production is a high-tech process with high added value and a tolerance between one and two microns.  

Russia has joined the World Trade Organisation. The Ministry of Economic Development has developed a thorough plan to abolish restrictions on exported Russian goods. This is certainly good. But I believe that within the Customs Union we need a detailed plan to protect our market and secure development of the industrial complex, and primarily to provide conditions for developing the sector of components and equipment. If we manufacture quality components and equipment, we will have everything else.

The Common Economic Space also requires coordinated efforts in the sphere of credit and monetary policy. Acute fluctuations of currency rates within the union lead to an abrupt change in work conditions and results. This is highly important for business. With the Customs Union’s territory covering one sixth of the world’s land, the rates for transport have a considerable effect on commodity flow interceptions. Given the importance of this aspect of business, we are requesting that this issue be carefully considered with due account of the priority for transporting goods produced in the union. During the recent financial and economic breakdown in Europe, the cost of transporting, say, one refrigerator from Port of Guangzhou to a Baltic port was equal to the cost of transporting one refrigerator from Minsk to Moscow. This is the influence the government has. Overall, at the government level, we would like to ask for quicker responses to developing situations.

Establishing the Customs Union and, later, launching the Common Economic Space provide excellent prospects for developing business, and here everything depends on us.  

Alexander Shokhin: Thank you, Mr Shumilo. The next speaker is Din Kim, chairman of the board of Agromashholding, Kazakhstan. Please, go ahead.

Din Kim: Mr Medvedev, Mr Myasnikovich, Mr Massimov, let me first thank the organisers for such an important event and such a large platform for our dialogue. Our states are going through active integration processes. We have become members of the Customs Union, and now we are entering the Common Economic Space and preparing to join the World Trade Organisation. This process is definitely aimed at strengthening our economies and our external economic positions. As manufacturers, we have gained an incentive to develop domestic cooperation and industrial projects. Our enterprise is participating in the project of manufacturing farm machinery together with large Belarusian enterprise Gomselmash. We are also cooperating with the large Russian carmaker Sollers in the automotive industry.

The process of entering the Customs Union has provided new opportunities for manufacturing companies and has expanded the borders of our markets. In addition, we have lowered administrative barriers to the transport of goods within the Customs Union.

Yet, there are certain issues that need to be coordinated in the union, particularly technical regulations for installing GLONASS car navigation devices, considering that GLONASS system does not work in Kazakhstan. These standards have not been adopted and are currently under consideration.  

Another example is Russia’s WTO accession. As members of the Customs Union, we have to lower customs duties for a member joining the WTO. But we are not members of the WTO yet, and we are facing certain risks here.

Russia is considering introducing a disposal tax as a safeguard measure. As of today, Kazakhstan and Belarus are not quite prepared to take it as they are not yet members of the WTO, which imposes requirements on us not to introduce it. This will lead to customs duties going down and pose threats to the competitiveness of our projects. I would like to use this unique opportunity now and put forward an initiative to set up expert councils in working groups which are involved in talks on WTO accession and which will take part in managing processes in the Customs Union. These councils would include businessmen and business community representatives in certain sectors, who would be able to more efficiently and effectively help our groups involved in talks.

In conclusion, I would like to once again thank the organisers as this event allows us to express our opinion and share experience. Thank you.

Alexander Shokhin: Colleagues, during today’s discussion, speakers – including Sergei Sidorsky, board member in charge of industry and the agro-industrial sector of the Eurasian Economic Commission, who made a detailed report – have mentioned advisory and expert councils which have been set up in various fields. Yet we expect that signing agreements between the commission and our three business dialogue organisations – which is an open structure – will facilitate the unification of businesses’ voluntary and necessary participation, with the opinion of business community members always considered with respect to all issues. We would like all expert advisory bodies to apply a similar approach and techniques in their work in certain fields.

Colleagues, I hope that at least these three reports have given our prime ministers a good idea of the issues we have been talking about. Let us now listen to their speeches and comments. I would like to give the floor to Prime Minister Dmitry Medvedev.     

Dmitry Medvedev: Good afternoon, ladies and gentlemen. I’d like to thank the previous speakers for their important comments. I have felt the nerve of the discussion. The issues are specific and “the disposal fees” have already been mentioned. The speakers obviously took the time to prepare their reports and consult my colleagues on what to say. This is normal because we all want to do business in the most comfortable, congenial conditions. Appropriately, our heads-of-state meeting is preceded by the business forum of the member-countries of the Customs Union and the Common Economic Space. I’d like to thank my colleagues for taking part in this business forum. It’s always a pleasure to see you. This is also a special day for one of our colleagues, partly because not all prime ministers would agree to spend their birthday with business people, but Mr Massimov has chosen to do so (Prime Minister of Kazakhstan Karim Massimov). Let’s congratulate him and wish him success and good health!

It was really interesting for me to hear what the heads of business federations and the representatives from our national business communities had to say. Obviously, we are in a new reality, one that has been formed by several factors that have an impact on business in our countries. First, and this is no secret, the global economic crisis continues, albeit less intensely. The consequences can be felt in every country. We are watching with extreme concern what is happening in the European Union, especially in the Eurozone and in the Asian markets, and what is going on at the stock exchanges. All business people, including, of course, those in Russia, Kazakhstan and Belarus, are thinking about these issues.

On the other hand, we live in a new reality because we have united into a Customs Union. We are creating a common economic space and, hopefully, will soon establish the Eurasian Union. All of these steps will change the business environment.

I cannot say that we have achieved fantastic results yet, but when I was aboard the plane I reviewed our statistics and saw that trade between our three countries… You know statistics is a tricky thing, but ours puts this trade at $125 billion. This is an impressive sum!  Our tripartite turnover has grown 36% and, to a great extent, not because of price hikes on fuel and other raw materials. This means that the Customs Union has started functioning. This is good for us in many respects, although there are economic problems that company executives have mentioned. These problems are relevant for a number of countries that have been and remain our trade partners, and we have special relations with them. This is a challenge. I will not deny that they express grievances from time to time. But we always proceed based on the fact that only those countries that are part of the Customs Union, that have taken upon themselves the full responsibility and every commitment and have signed a pile of documents, can benefit from all the advantages of a common economic space and a working customs union.

I would like to repeat for you all – as well as for some of our partners who for some reason believe they can join our Customs Union any time later by just signing five or ten papers – this will not be possible.

A few years ago we decided to speed up the Customs Union project. I remember speaking with Nursultan Nazarbayev back then, as well as Alexender Lukashenko. It seemed a great challenge at first, but we braced ourselves and did it. At some point we all received a very clear and unambiguous message: if you go ahead with this, you will not be admitted to the WTO. But Russia was admitted, and you will be as well. They will admit everyone. On the contrary, the Customs Union promoted our countries’ accession to that important international organisation – which creates some serious problems for our economies, provides global benefits along with the current difficulties. In any case, we will provide our partners with all the assistance we can give them in their WTO accession talks.

I would also like to remind you that the three heads of state will sign a special memorandum during this meeting. It is aimed at setting up an Advisory Council at our board, which would give officials more reliable feedback from companies. Everyone has agreed on the need to have such feedback. Alexei Mordashov (head of the commission on integration, trade and customs policy and the WTO of the Russian Union of Industrialists and Entrepreneurs) has mentioned this.

It is very important that the government, the board, the federal ministries and other agencies hear the voices of businesses, especially in the current circumstances, while our common targets are being worked out. I think that the business community should appoint coordinators to give recommendations on every specific aspect of the council’s work. I do not harbor the delusion that our work will be completely smooth and problem-free, or that the Customs Union, once up and running, will immediately create dozens of business conglomerates. However, as far as your interests are concerned, (in fact it is your interests we should be promoting, rather than ideas generated by the Prime Minister or any other top official), so long as this complies with your need for integration, we will provide both organisational and economic assistance. Dialogue with the business community is a multilateral affair. Mr Din Kim (President of AgromashHolding Kazakhstan), who spoke here, mentioned an expert council. I fully agree with him that we need one. All we need to do is work out how these contacts will be arranged. Should it be integrated with the advisory council, or should it be a separate entity? In any case, it will be useful.

There are more complicated issues: one of our Belarusian colleagues has just raised the issue of certification, including relations with the CIS countries, China and other Asian nations with regard to duties, restrictions and supplies. All of these issues should be harmonised. In any case, the fact that we are part of a single Customs Union and are moving toward the WTO together, demands that we harmonise our approaches. The national governments and our colleagues will have to do this within their terms of reference.

Furthermore, our integration should be expanded; we should now think in terms of a Eurasian union, which should be established in 2015. We need to consider things that might not yet be the focus of discussions, but that we must bear in mind anyway, especially given the unstable global markets. I am referring to our SDRs, and the possibility that some other settlement units will appear, and maybe even – if I may say so – the adoption of a single currency. This may not be a major concern today, but we need at least to start thinking about it. Incidentally, an expert council should be able to provide some answers.

I hope that the accumulated cooperation experience – some examples have already been mentioned here, such as technology exchanges and other types of cooperation, which will continue growing – will certainly enrich each of the member countries. I will not go into details, but our joint projects range from high-tech ventures to transport, agriculture and new materials. We have joint financial institutions. We should keep all of those going. In any case, trilateral cooperation is quite possible, and even advisable. It is important that we cooperate in a civilised manner and voluntarily, and that you initiate ideas for cooperation, because you are the generators of greatest business ideas.

Ladies and gentlemen, I hope that, given the new realities and new conditions, we will be able not only to cope with the current global, bilateral and national difficulties, but also to reach a new level of our economic relations. I am confident that our countries’ business communities will make important contributions to this valuable endeavor. I wish you good luck.

Alexander Shokhin: Thank you. I would like to give the floor to Prime Minister of the Republic of Belarus Mikhail Myasnikovich.

Mikhail Myasnikovich: Distinguished participants in the forum and representatives. The meetings of the heads of government of our three states with the business community is becoming a good tradition. My colleague, Karim Massimov, and I have discussed the holding of the next Forum, and we believe that it makes sense to hold it in Astana next year.

Dmitry Medvedev: Announcing a different host state is a good tradition.

Alexander Shokhin: So, Mr Myasnikovich, it will be held on June 15 of next year?

Mikhail Myasnikovich: I am saying this so that it does not appear as though each of us is declaring his own country as the host and so that we do not have to sort out whose proposal is best.

But here is what I would like to say regarding this. Formerly the business community had been propping up the authorities and the government with its ideas for integration, concrete projects and directions. It seems to me that there have been fewer such initiatives on the part of the business community recently, and I think that these meetings could be held more regularly. Perhaps work within the framework of our Eurasian Economic Commission, the collegium could help – we support the idea of creating an advisory board. But I believe that work can proceed on two tracks, one of which was mentioned by Viktor Shumilo who pointed out some unfortunate aspects that we still have in spite of the signed documents.

But we should also give more thought to the creation of joint companies, of joint corporations. So far we have been combining our efforts on a technical level, and until we introduce common business in certain sectors between certain companies, the job will remain only half done. Therefore the projects we are implementing in the automobile industry and especially the military-industrial complex should be sped up. And indeed, in order to secure it in concrete holdings and joint companies and in order to develop united production – and we have considerable scientific-technical and production potential – it would be a very good idea if we could again discuss the topic of Customs Union goods, goods produced in the common economic space. That would diminish some of the unfortunate problems that exist in the area of certification and so on. I will not go into this topic any further, you are all professionals here. Of course it is hardly possible or indeed reasonable to do everything at once for all the goods, but for certain groups there must be a vigorous effort. We should move forward so that the goods we produce in the common economic space will have the status of Customs Union goods.

In principle one could expand the theme of a common industrial policy. I know that Sergei Sidorsky has delivered a substantive report on this matter. One can envision two areas: a common policy (as part of creating uniform conditions for our transnational corporations which it would be good to work on more actively) and common agreed-upon terms for those who are not involved in industrial cooperation, but are working actively in the domestic market and in the market of third states so that we will not come face to face with the kind of unfortunate issues that the speakers today have brought up, because there are no proper conditions in place for our coordinated work in the markets of third states.

I have several points regarding scientific-technical cooperation. We are a bit slow in this department. We discussed this with Dmitry Medvedev a month ago in Ashkhabad, and we see completely eye-to-eye. I think that the promising projects that we will implement together must be highly competitive and must truly ensure that our economies develop on the basis of fifth and sixth technological level enterprises. We cannot afford to be dependent even on the highly developed Western countries or on Chinese products. We must develop our own products more actively, and build new factories in order to stay with the times. Let us be frank: we have few factories (few in Belarus, probably more in the Russian Federation and in Kazakhstan) that are truly state of the art industries which will lead  scientific and technical progress for the next 10, 15 or 20 years.

Accomplishing this is easier said than done, with competition and the issues of national security, the security of our three states. So we believe that such scientific-technical centres as Skolkovo, which is being created in the Russian Federation, as well as scientific-technical centres and incubators – there could be more of them… We propose that some scientific-technical centres that will form the core of Skolkovo could also be set up in the Republic of Belarus, and we agree to contribute to the funding of these projects. I recently had a meeting with Nobel Prize Winner Zhores Alferov, who quoted to me very apt words of Dmitry Medvedev to the effect that Skolkovo is not a territory -- Skolkovo is an ideolology. We agree with this approach, and if we move in that direction we will be truly competitive in the long run.

Some issues of institutional development of the common economic space: we have few, if any, rating agencies and corresponding research centres and so on and we, as well as the rest of the world, look at the development of our Customs Union through the eyes of Western rating agencies. I think we could rectify that situation and create corresponding institutional structures. Of course that is a systemic issue, but we must go down that road if we are to position ourselves seriously both in the common market, in Europe and in the world.

There is much talk about the second wave of the crisis, the global crisis, and I understand that we are discussing this topic separately and together. Urgent measures need to be taken. First of all we should seek true diversification of our markets. We must step up the work in our domestic markets in order to depend less on the problems that may crop up in the markets of third states, and we believe that there is much to be said for shifting the focus to the countries of South East Asia, specifically ASEAN. And we could work more actively through Vietnam with that group of states that has such massive and growing markets.

Just a few more words. I understand that the mass media make up the so-called fourth estate, an independent estate, but I think that the media do not say enough about our Customs Union, the common economic space, and if they do, they focus on sensationalism and shortcomings. Meanwhile the tax payer must also know the positive aspects that take place in our common economic territory.

I would like to wish everyone success. I hope that our meetings will become regular and that we will help each other. Thank you.

Alexander Shokhin: Thank you, Mr Myasnikovich. Before I give the floor to Mr Massimov I would like to wish him a happy birthday on behalf of the business associations, the business unions of the three countries, and to thank him for the invitation to hold the business forum next year in Astana.

And now let me hand over to Prime Minister of the Republic of Kazakhstan, Karim Massimov.

Karim Massimov: Well, it remains for me to invite you all to the business forum in Astana in Kazakhstan next year. This is our second meeting in this format, with the three prime ministers and the business community. A year ago we held it in Moscow, now we are meeting in St Petersburg, then it will be in Astana and then probably in Minsk, by definition.

Dmitry Medvedev: So are you inviting us to Minsk?

Karim Massimov: Well, a year has passed, and it has seen many changes. Mr Medvedev, we are glad to welcome you to our club of prime ministers. We congratulate you on your appointment to this post. I think it also offers many opportunities for meeting the challenges of modernising the Russian Federation. Congratulations.

We have been joined by Viktor Khristenko in his capacity as the head of the Eurasian Economic Commission. This time last year you were the Industry Minister in the government. I think it is also very important that you and your colleagues… Sergei Sidorsky (Member of the Collegium on Industry and the Agro-Industrial Complex) who is here and Danial Akhmetov (Member of the Collegium on Energy and Infrastructure) – these are two former prime ministers of our countries. I think this is a very high-powered commission that can confidently address the tasks facing the common economic space and solve the problem that is confronting the business community, because in a market economy business is the main actor and we must do our best to resolve its tasks.

It is symbolic that we are meeting at Silovye Mashiny. Mr Mordashov has a strong presence in all three of our countries, he is quite active in Kazakhstan, at least, and I think he is in a position to see (like other businessmen) the opportunities opening up for our enterprises.

Of course, following these two prime ministers… one has to make adjustments as one goes along not to be repetitive, but I would like to stress a few points. First, accession to the World Trade Organization. We have made it very clear from the start that the building of the Customs Union and the Common Economic Space is not some kind of bloc that will be isolated from the rest of the world. We all want to be part of the world community and to accept its principles and terms. Of course all the countries within the WTO, and we, who are members of the Customs Union and the Common Economic Space, must do all we can to promote our business and its development within the rules. All countries do this, and we must also do it. Perhaps we should not be too timid, and should be more aggressive within the confines of the permitted projects. That depends greatly on our countries' negotiators, in order that we can give a fair assessment of our opportunities.

Like many of those present I have taken part in the negotiations with the European Commission, the WTO Commissariat and the US Administration. They are aggressive people and they are defending their industry and their entrepreneurs very actively. Perhaps we should learn from them and take their experience into consideration.

While on the subject of international and integration associations, I would like to draw your attention to the Organization for Economic Cooperation and Development. I know that the Russian Federation has filed an application and a schedule has been set for joining that club. Kazakhstan and Belarus are also conducting negotiations. I think it would be good to be a part of the developed world in order for our domestic economy to be in conformity with these standards. I think that to become members of that club would be a worthy aim.

As for facilitating business inside our countries, in Kazakhstan, we attach great importance to the World Bank index of the ease of doing business. But every party has its own methods, though they are similar in principle, and I think we can coordinate our efforts in order to harmonise conditions for doing business and to remove barriers. I don’t think anyone would be against this, and we could coordinate the terms at the level of governments and business associations in order to give recommendations to governments and the relevant ministries. We are putting this proposal on the table and we believe that everybody will benefit from it. And I think we should take another look at the Customs Code of the Customs Union even though we adopted it fairly recently. Practice indicates that there are still many blank spots: at least businessmen in Kazakhstan have been putting this question to me. I think that the business communities in the Russian Federation and Belarus have similar questions. Perhaps we should hold another meeting of the working group and look into this matter more deeply.

Regarding certain practical matters, I think we already have done some good work and there are areas in which we can move forward together. I would like to mention first of all the transport sector, because this is something that we objectively have, and it is an area in which we can cooperate. Mr Yakunin (President of the Russian Railways Company) was recently in Astana, where he had a meeting with Nursultan Nazarbayev (President of Kazakhstan), and we have discussed this very good proposal in the government. Today we will discuss that proposal within the framework of the meeting of the three prime ministers -- the proposal to create a common container transport company. If such a decision is made, the three railways of the three countries will be able to carry cargo from the Kazakhstan-China border across Kazakhstan to the Russian Federation to the Belarusian-Polish border, to Brest. I believe this is a good idea, and in principle, we can approve it today. That would enable the entrepreneurs of the three countries to move more actively in that direction.

We have discussed this today with Mikhail Myasnikovich. As you know, we have a major project to build a motorway across Kazakhstan, stretching more than 2,500 km from the Kazakhstan-Chinese border to the Kazakhstan-Russian border. We are building a four-lane highway and work is also underway in the Russian Federation. Logically, it should pass from Russia to Belarus up to Brest. I think that is a good idea and we should move more actively in that direction.

Regarding power, we have many joint projects with the Russian Federation. We invest in each other’s industries and that enables us to create a common energy market more actively. With Belarus, we got off to a good start, but we have to continue and perhaps create some three-way associations so that Belarusian business will be present in Kazakhstan and Kazakhstan business would have a bigger presence in Belarus.

Regarding the crisis. This is a big talking point. It does not depend on us, it will strike anyway. The question is how, and with what force? This issue, perhaps, falls under the umbrella of the Eurasian Economic Commission, under Viktor Khristenko. The three governments could finally form a working group (we have already discussed this) in order to respond adequately to the problems that arise.

That applies to our currency policy, an area in which we have seen questions cropping up here and there. Based on the experience of 2008, all three of our countries had their own methodology for assisting their enterprises. Perhaps it would be useful to sum up that experience in order to hit the ground running? We recently visited several European countries, and they are preparing very seriously. They are preparing, and in my opinion this cannot be avoided. We simply must understand how deep the slump will be. We all know very well that until 1988, the Soviet Union was not so closely involved in international division of labour: we had our own division of labour within COMECON and our enterprises controlled 40% of the market. After the events that you all know about, we lost many of our markets in aircraft-building and in machine-building and all these other areas. Of course, there is no vacuum -- in other words we gave a second wind to many enterprises in other parts of the world to help them develop. But that is coming to an end because there is massive overproduction on the world scale.

We should be very careful, because during the crisis there will be fierce competition for our markets. They will stimulate their enterprises in every possible way -- by zero-rate credits, all sorts of subsidies, protectionism -- just to keep the enterprise going. And these enterprises will compete with all of us. There must be competition but it should be fair. And we as governments and the business communities must move forward together. I don’t think anyone would object to that. I think this is where we should be together. This is a short-term issue.

This morning I had a meeting with a very intelligent man. We discussed the future development of industry. Three issues over the next 20-30 years… This brings me to a specific proposal for my colleagues: perhaps we should look at the current state of affairs. First: what will happen to the world industry, what will be the focus? The digitisation of all design and production work, of the entire economy. That is, any design proposal will be available in 3D or 6D. Where are we in this process? Not very far behind. Perhaps we should create a public-private partnership in this area? Perhaps the budget resources of our national governments should be spent, under the supervision of Khristenko, to set up some joint design offices on the territories of our countries? It's unlikely that any country can achieve this single-handedly.

The second area is the development of new materials, composite materials and still more advanced materials. These new composite materials, and those that follow, are vastly superior to what we have today, with our traditional metal production and our traditional machines. When these two processes combine, one can safely say that this will be the end of the industry of our three countries if we continue to develop at the current pace. So perhaps we should pool our efforts in these two areas, with the help of our governments? Perhaps additional resources are needed to prop up our private enterprises? Otherwise they may cease to exist in 20 years’ time.

And the third area is robotics. When these areas combine in 20-30 years, cheap labour will cease to be attractive and will no longer be a competitive advantage, because a robot will be able to bring together a 3D project and a new composite material. We are talking about the foreseeable future – 20-30 years from now – and these are big challenges that we are facing, this is an area in which we should combine all our intellectual, financial and other resources, and move forward.

To conclude, I would like to say the following. Our delegation has just returned from a presentation of Kazakhstan at EXPO-2017. There remain two cities at EXPO-2017: Astana (Kazakhstan) and Liege (Belgium). During this presentation the President of the European Union openly supported Liege. “We are European Union countries and we will support Liege.” That makes sense, since it is in the European Union. We should learn to lobby and support each other within our Customs Union, within the Eurasian space.

Dmitry Medvedev: There you are, Mr Massimov -- we openly support Astana.

Karim Massimov: Thank you, Mr Medvedev, we support… the Sochi Olympics… The Sochi Olympics is our mutual pride and EXPO-2017 is also our mutual pride, which will continue into the future. And on all the other matters: the ice hockey championship in Minsk – we will all come there and vote.

Dmitry Medvedev: That's right.

Karim Massimov: Once again, I thank all of you for the invitation. Until we meet in Astana. Thank you very much.

Alexander Shokhin: Thank you, Mr Massimov. I would like to remind our colleagues and the Prime Ministers of Belarus and Kazakhstan that Yekaterinburg is bidding to host EXPO-2020 -- make sure that you vote for it. I would like to give Mr Medvedev an opportunity to comment on the remarks made by his colleagues.

Dmitry Medvedev: I do not wish to comment on what my colleagues have said, because in that case our conversation will never end. It is pretty stuffy in here and we all need a rest and so do the businessmen that are present. I would like to just make a couple of remarks to elaborate on what our colleagues have said.

My first remark has to do with the current economic situation. I spoke about it and Mikhail Myasnikovich spoke about it and Karim Massimov spoke about it. Of course we are all taking measures to protect our economies and you can rest assured – and I am picking up where the previous speakers have left off – that we are open to discussing the ideas that we have, and the protective mechanisms that we have already used with our Belarusian and Kazakh friends. So when the three of us meet today I will talk about this, because we are truly in the same boat and we should not work at cross purposes, with one country doing one thing and another doing another thing.

My second remark concerns the future of our economies and production. I completely agree with what Mr Massimov said because we are proud of our industrial potential that is left over from the past, and we are proud of the latest achievements in the modernisation and reconstruction of our economies. But if we do not manage to reach a different level of quality, for example, if we fail to digitise, we will surely face colossal problems, and even the advanced ideas that we discussed here today, will have no future. Why do I say this? It costs money, really it is expensive, but we must take on these expenditures. I would suggest creating a fund to support such work. At one time we created a special fund for high-tech projects in the framework of EurAsEC, but now in the framework of the Customs Union and the Common Economic Space, we could consider creating a fund for digitising our developments. Then it would be easier to commercialise ideas, and ultimately reorganising our production would be easier and much more useful.

So I would like once again to thank my colleagues for their interesting contributions and wish success to all those present. Of course I agree that we should support each other in every way possible within the Customs Union. Thank you.

Alexander Shokhin: Colleagues, permit me on your behalf to thank the prime ministers for taking part in our forum and for their very interesting contributions and the ideas that they have presented to us. Next year we must all be prepared.