Transcript of Deputy Prime Minister Igor Shuvalov's address:
Ladies and gentlemen,
This conference gives us another opportunity to review the fundamentals of the integration rules we work on today. In particular, this conference gives us another occasion to explain what we are doing, why, with whom, and what our objectives are. One of our goals is to harmonise the legislation on technical regulation and crucial norms. It is an ambitious practical task of critical importance.
First, I would like to thank my colleagues in the Customs Union and its commission, Mr Andrei Kobyakov and Mr Umirzak Shukeyev, who hold prominent posts in the governments of Belarus and Kazakhstan respectively. They are entrusted with the task of permanent work in the Customs Union Commission to develop the Customs Union and speed up the establishment of the united economic space, just as the Russian government has entrusted me with a similar duty.
When Mr Viktor Khristenko addressed this audience, he modestly said that he knew the job well. I must say that the foundations needed in the Russian government have been laid in recent years thanks to his efforts after the formation of the Customs Union became a particular political priority. Thanks to those foundations, we were able to get the job done. It is no exaggeration to say that Mr Khristenko and his colleagues have accomplished a greater part of the work on this carried out in Russia. These compliments are richly deserved.
Back when I was just starting my government work in 2000-2003, many meetings chaired by the president and the prime minister dealt with migration and I had no idea just how complicated these processes were. Mr Khristenko's explanations and evidence appeared to me far-fetched, it seemed to have little bearing on our economy. Now, however, it is part and parcel of our life, our realities and priorities. Mr Khristenko, I thank you and your colleagues for your contribution. We were lucky that our work has a solid basis, and that we are into the home straight. The most difficult targets were met in previous years. I have said this to the national leadership more than once, and I say it again now.
Let us pass now to the situation we find ourselves in following January 1, when the Customs Union was officially established. I have to acknowledge that we are not adequately explaining to the public what the Customs Union is all about, what supranational arrangements it involves, and that it is an initial stage of the united economic space. I think this point concerns Belarus and Kazakhstan just as much as Russia.
We certainly need more meetings like this. We should use professional and public conferences, government and public chamber meetings, and other diverse meeting formats to explain what we are doing and what benefits it promises. Some people, who have only a vague idea of what we have established, treat integration in a rather offhanded way. Certain national leaders and experts from various countries, including from Customs Union member countries (and incidentally there is a wide range of opinions among Customs Union members) say something like this: "If you were establishing a customs union or united economic space with the European Union or in any other format of this kind, we would consider it real progress. But what we have is three underdeveloped economies getting together into a union. In fact, you are putting together something that will weaken you and create even more problems in economic development."
I think this absolutely erroneous view stems from a lack of understanding of the current economic situation in Russia and an underestimation of the progress made by our partners in the Customs Union. This is something I hear from Russian experts. I heard similar questions from experts, journalists and economists when I met with them a few days ago. I posed them a counter-question: "Do you know what has been done about banking, technical regulation and fiscal innovations in Kazakhstan? Do you understand the current situation regarding industrial policy and technical regulation in the Republic of Belarus?" I got no proper answers, only superficial judgments. Few people delve into the detail of what is going on in those countries. I have gone into this in great depth, as have my colleagues from the Ministry of Economic Development, the Ministry of Finance and other ministries, so I can say that our partner countries have much better developed institutions in many fields than what we have in Russia. On the other hand, Russia possesses certain more sophisticated macroeconomic structures or better developed macroeconomic policy than those countries, and so on.
People who understand these matters better have no doubt that integration into the Customs Union and the formation of the united economic space will help us create a powerful economic basis for really significant progress. Look through what Customs Union Secretary Mr Sergei Glazyev has said in the press and you will see that he bases his stance on economic and mathematic calculations.
How will the united economic space benefit each individual economy and the whole economy of all three countries? All three economies will benefit, as will the united economic space. We are confident that these processes will benefit all three nations. If you want more detailed explanations and comments, please ask the conference organisers: Mr Vladimir Mau and other staff members of the Academy of National Economy, which has always coped well with conference organisation. Perhaps we should continue this dialogue here.
An international economic conference that met here in January discussed the next decade's essential projects that aim to ensure that by 2020 Russia will become the country we want it to be, the country that Mr Vladimir Putin described in his address to an expanded-attendance meeting of the State Council in the Kremlin in February 2008. If we really want to see Russia become the most progressive country, the most comfortable for its citizens, if we really want to meet this goal within a decade, we will need an integration project that uses competitive tools to improve life in our country.
Integration, the Customs Union and the united economic space together form one of the instruments we need to hit our target. We have a complicated job ahead. We established the Customs Union a year ahead of schedule and implemented our initial plans. As you know, the presidents first agreed to get the Customs Union going on January 1, 2011, but later shifted the deadline to January 1, 2010. The task has now been completed.
We are preparing the three countries' Customs Code for ratification. As soon as it is ratified, we will shift customs control from the Russia-Belarus and Russia-Kazakhstan borders to our shared external borders, that is, the outer limit of the Customs Union. We think the Customs Union should be fully operational from July 1.
In addition, the goals were broadened, and on November 27, 2009, the three presidents set the deadline for the formation of the united economic space on January 1, 2012. As a member of government, I have tackled all kinds of projects, and I daresay this might be the most complicated of all. To form the basis of the united economic space we need twenty framework agreements with Belarus and Kazakhstan on pivotal macroeconomic aspects, unified terms of competition, agricultural and industrial subsidies, access to the transport and energy infrastructure, and a great deal more besides. These will be pivotal agreements. In fact, they will form the backbone of the three countries' economic life. Here, I will repeat what Mr Khristenko has said because it is an essential point, and one that we, as the country currently presiding over the Commonwealth of Independent States, will promote in the Customs Union, and in our integrative ties with the European Union. I want to explain our aspirations concerning the united, common economic space.
Russia and the European Union have come to an agreement on several common economic spaces. To put it simply, a common economic space implies unified legislation regulated by similar institutions. However, the countries within this space have no supranational administration. The European Union possesses such an administration, and so has its common market, united economic space and supranational regulation. In their time, Russia and the European Union agreed to create
a united space. Regulation of it however, will remain at EU level for the European Union countries, and at the national level for the Russian Federation. Accordingly, it will involve sovereign national administration.
In creating the united economic space between these three countries, we essentially extend the idea underlying such space. We are adapting civilised WTO and EU economic norms to our three countries' economic space while establishing the supranational administration of those areas as and when we deem necessary.
A decision has been made within the Customs Union to cede the duties of setting and administering unified customs tariffs to this supranational agency. You surely know that we have had a supranational agency called the Customs Union Commission since January 1. It is the first, unprecedented, occasion of its kind in the three countries' recent history. The commission has already taken over some national rights. Now, decision-making on import tariffs and duties belongs not to the national governments of Russia, Kazakhstan and Belarus but to the international agency.
As we form the united economic space or, in other words, adapt the standards of the World Trade Organisation and the European Union to our economy, we should all draw analogies with the European Union in determining what will be regulated by the supranational agency. This shares the January 1, 2012, deadline.
This is how the economic legislation will be harmonised to the greatest possible extent, maybe even completely, between Russia, Kazakhstan and Belarus, on the one hand, and the European Union, on the other. Issues on which relevant decisions are taken will be regulated supranationally in our three countries just as in the EU. We will work consistently with the other CIS countries that are not part of the Customs Union and EurAsEC to advance the idea of the united economic space. We will influence countries outside our integrative alliance, to harmonise their economic legislation throughout the former Soviet Union in line with how we are doing it in the united economic space and in conjunction with the European Union.
We are promoting all the achievements our partners in the European Union have made, and their positive experience, right across to the Pacific coast. I hope my explanations of this point are simple and explicit enough. When we say that we need a united Europe from the Atlantic to the Pacific, it is not just a nice turn of phrase. It can be understood in various ways. I, for my part, proceed from the concept of united Europe as a common economic basis, common economic legislation and similar regulatory institutions in the European Union and the Commonwealth of Independent States.
Let us take stock now of what needs to be done to unify technical regulation standards. As you know, there was a heated discussion of this problem in Russia in the early 2000s before the relevant law was passed. Later, we saw that people did not comply with it. It had to be amended because it was so hard to comply with, in its initial form. It was a tremendous challenge to adopt a new normative base for technical regulation nationwide. As I see now, we were under the naïve delusion that we should adopt such regulations in Russia simply to see what regulation we really needed.
We held a seminar with our colleagues from the Ministry of Industry and Trade that was attended by European Union experts several months ago. The experts came to tell us about traditional and innovative approaches to technical regulation, about how they were working with national governments with respect to accreditation agencies, and so on. We saw at once that their work contained ample room for improvement and that our European partners were dissatisfied with the formation and application of their technical regulations.
What I mean by "naïve delusion" is that our construction norms and specifications, and all the other norms regulating our life are desperately outdated and impede the work of economically active individuals and businesses while Europeans have the best possible up-to-date norms. As we know now, this assumption is quite wrong: European Union countries have plenty of obsolete agencies and patterns which experts deem necessary to reject. Nevertheless it has been recognised as worthwhile, to allow businesses to retain established norms when these norms suit them. So we have made an alternative decision to retain the available EU technical regulation norms for our Customs Union partners.
I also want to say that European Union directives have been largely adapted and possibly improved by the national laws of Kazakhstan and Belarus. After we took stock of technical regulation in Kazakhstan and Belarus, it was easy to make the decision to adapt their acts to our own national legislation. You know our government recently decided to adopt thirteen Kazakh technical regulations into our own domestic norms. Another decision is being made in which we recognise the European Union directives and one Belarusian decision in our national law. This decision will be made within several weeks on the president's and the prime minister's order, and virtually everything has been prepared for it.
Overall, the work on technical regulation and the formation of its normative basis will be finished within the year. This is the deadline we are working to. We are also expanding the list of businesses, commodities and services that will be eligible to replace mandatory certification by voluntary notification. We will continue working on this however harshly we might be criticised for it because this is our political goal.
At the same time, we will reform accreditation agencies. A recent meeting chaired by the prime minister decided to establish a single accreditation agency in Russia. This is what the European Union is also working to establish. Along with other measures, we will move toward unifying the normative bases of the Customs Union and the united economic space.
As January 1, 2010, approached we slowly realised the most important thing: national technical regulations are obsolete. All such acts should be converted into international agreements obligatory for at least Russia, Belarus and Kazakhstan. We will be glad to see the other EurAsEC and CIS countries joining these agreements. The plans we have adopted in the Customs Union show the long road we need to travel to adapt national technical regulations or convert them into international legal acts.
We could formalise legislative acts as the international agreements awaiting ratification, or we could extend the rights of the Customs Union or its commission to make the relevant decisions. This can be discussed later by experts to ensure the discussion continues at the political level in order to enhance our decisions' flexibility. When errors are made, we will then have the opportunity to correct them quickly enough, so the entire process will be less conservative.
So as not to take up too much of your time, I will only mention what results we would like to see from your discussion.
First, technical regulation is much criticised. I have discussed the matter with Mr Khristenko. These criticisms have no bearing at all on technical regulation proper. We need your expertise and professional opinion on the boundaries of the security zone that will be covered by technical regulations and other norms that should be amended as necessary. These norms should also be unified within the emergent united economic space. However, we must make it explicit to the public and the business community what technical regulation will cover, and what is necessary for security but has no bearing at all on technical regulation.
Second, what should we do about the international agreements on technical regulation expected by January 1, 2012? What extent of international agreement do we need on this, and how many? Do we need fifty or a hundred agreements? What subjects and what activities should they cover? We need to decide all that in order to confirm what fundamentals we will be working from. We need to know precisely what we have to do if we are to make the united economic space work properly. On what level will this operate: are we talking about international agreements subject to ratification? Or should we expand the duties of the Customs Union Commission enabling it to approve technical regulations mandatory in all the three countries?
And the list goes on. What is relevant right now to all three national economies? What businesses qualify for voluntary notification and what should continue to require mandatory certification? Public opinion differs on this. We know how upset media outlets are about decisions that have entered into force quite recently, fearing these decisions will hurt people. We do not think their fears are sufficiently grounded. In fact, they are quite baseless because counterfeit and harmful commodities flooded our market even when we had extremely strict mandatory certification rules. No degree of control could fully protect our fellow citizens.
So this was not about public security but additional barriers that gave many officials the opportunity for extortion and bribery.
These are the subjects under discussion alongside any others you deem it necessary to raise. We are eager to hear your answers, and we will take your opinions into account in our work. Your answers are vital for us. Technical regulation could become the first field to replicate the economic legislation of the emergent united economic space.
I wish you every success. Thank you.