Alexey Ulyukaev: We expect the legal registration of our agreements with Ukraine and the EU
Russia has imposed sanctions against Turkey following downing of Russian warplane. A new food restrictions will be introduced against Ukraine after the EU-Ukraine free trade agreement enter into force. In the interview with "Vesti. Economy" the Minister of Economic Development of the Russian Federation Alexey Ulyukaev remarked that these measures are not intended to run a food deficit in Russia.
- Alexey Valentinovich, thank you so much for taking the time to answer our questions. Another round of talks of the trilateral Russia-EU-Ukraine meeting is over, what are the results today?
- If we were talking a year ago, I would say that the outcome is very positive. Because, perhaps for the first time during this time the parties have demonstrated that they can not only listen, but also hear each other. We have given our suggestions to the document that can serve as a denouement to our problems arising from the implementation by Ukraine of its free trade agreement with the European Union. And for the first time, this is already our fifth proposal, the parties have agreed to work based on it. With some things they immediately agreed, some things raised questions. It is clear that the discussion at the expert level is needed. We have to consult with them, with their offices. It's understandable story. Only time is not very much, unfortunately. Ahead there is only one month. Experts continue to work. Probably they will give some product.
But the next ministerial meeting has not been appointed. Of course, if necessary we will be ready, probably, to come quickly if there will be some material, let's wait for those results. Time is running out.
- If all parties to the negotiations demonstrate the desire to reach a compromise, then what is the cause of the disagreement of the parties?
The main disagreement consists in the following. We believe that the document should be legally binding in nature. The parties must agree to something. For example, with the fact the transitional period is introduced. We offer, for example, in the field of technical regulation that the Russian exporters, as well as Ukrainian ones, who now have certificates of export, will continue using them during the transitional period. Or that Ukraine may be eligible to select which standard to use: the one that they are now introducing - a European, or one that operates on the basis of numerous agreements with Russia, Ukraine and other countries of the CIS zone, i.e., the system of GOST standards. That's right, when there is the right of choice for businesses. Incidentally, it corresponds to the European practice, because in Europe the standards act as international. For a certain transition period, we believe that this is the period up to 2025 year, but willing to consider other suggestions if any. And again not all product groups, we have identified 7 sectors which are most sensitive to us. And tried to meet our partners halfway and reduced the number of these sectors. We started from first 20, then 15, now we are talking about 7. But this must be recorded as an obligation of the parties. Our colleagues (European, Ukrainian) are saying, that it will be as a wish. Both sides will make efforts, will be able to create a working group that will study it. And the verb "must" is used in their project once and only regarding the Russian Federation. The Russian Federation has to retain preferential treatment in trade with Ukraine, and the rest can consider the wishes of the Russian Federation, and can show good faith. We believe that it should be obligatory both in that and in other case.
Ukraine's accession to the Agreement on free trade area with the EU means that the commitments of Ukraine on technical regulation, sanitary control, customs administration, which it took against the Russian Federation on a large number of bilateral and multilateral agreements, are reduced. Ukraine decreases the level of commitments, and they want Russia to keep the scope of its obligations, and our obligation is a zero customs rate. It is unfair and economically wrong, not beneficial, interferes with work of the entities. Therefore our main demand and requirement, if you will, is to have a legal binding agreement. And, second, is it specific content. In part of technical regulation I have already said, what we offer to fill it with. The same thing is regarding to sanitary and phytosanitary measures – animal health certificates in their current form must provide electronic document exchange. And in the area of customs administration. We say, let's create a tripartite system of information exchange in order to understand that the preferential system with zero customs tariff is used for the goods, produced by Ukraine and not by third countries, transiting them through Ukraine, in the absence of customs borders between the countries, to the Russian Federation.
I think this is a legitimate and natural offer. And all these proposals emanate from the convenience of businesses. Imagine otherwise, if we do not have this agreement on an information exchange of customs bodies, we will have - and there is nothing to be done in this case – to stop and check each truck: and there, in fact, is Ukrainian lard or anything else. Why do we need to create a problem for companies, for business to lose time and money? We want only if a risk is identified, then in some cases to check, but trying to maximum extent to do without it. The same applies to certificates. Probably not bad if Ukrainian companies will adopt the European standards, but not all can do this. Because all these need two things – time and money. Do our Ukrainian partners have them? I'm not sure. But both for them and for our producers would be better to retain the ability not to interrupt trade relations during these transition periods. And during this time, we may be able, both technologically and administratively, to restructure production and to ensure that these relationships do not fall apart.
- Since Ukraine joined the sanctions against our country, it causes retaliatory embargo by Russia, which comes into force on 1 January 2016. What products it will affect?
- Ukraine's accession to the free trade zone does not force Russia to impose an embargo. Russia is forced to introduce embargo by the fact that Ukraine has joined the anti-Russian sanctions. In August this year, Ukraine acceded to individual sanctions against companies and the sectoral sanctions, such as, for example, air transportations. In response to this, we have introduced a food embargo, postponing its practical application until 1 January 2016. The response to the introduction of the mechanism of a free trade area, if it is done without taking into account Russian concerns, will be the introduction of a regular trade mode, that is, what is called the most favored nation. This means that Ukrainian goods will be subject to the same duties as German, French, and Finnish. But you entered into a free trade zone with the European Union, and it will be fair if you enjoy exactly the same privileges and opportunities, which are available to the countries of the European Union. Nothing more. This applies to food products. So just as it relates to food of the European Union, the United States, Japan, Australia and Canada, all these countries.
- Will the loss of Russia be tangible? Do you see new opportunities for cooperation?
- I think it would not be very sensitive. Unfortunately, over the last two years the volume of trade between Russia and Ukraine has strongly reduced, especially food. Now this year, the food trade, Ukrainian exports to Russia of food have declined 11 times. What we have now, 200 million dollars value of food exports this year. It is clear that at a macroeconomic level it's insignificant value. Therefore, I think it's for the economy, for consumers of Russia as a whole all these measures will be almost imperceptible. Of course, some individual companies that are engaged in the import, processing may suffer.
- That is the dissemination of the mode of food embargo from 1 January next year will affect Ukraine. Is a similar change in the relations with Turkey possible?
- No, no. It's a completely different situation. Restrictive measures in relation to Turkey are associated with implementation of provisions of the Law on special economic measures that may be imposed against the state, which takes aggressive action and threatens the territorial integrity and sovereignty of the Russian Federation, and the lives and rights of its citizens. So it is measures that affect tourist exchange, because it is the risk to civilians who are on dangerous territory. Therefore, this restriction is provided in the field of visas. We had a visa-free regime, will set a visa to monitor the possible risks associated with moving people out of areas where the terrorist threat is high. The same thing applies to transport.
The same terms apply to products. A government decree, that has been just signed, says that a number of goods, indeed, all of these goods, relate to only food assortment, but it is much more narrow in comparison with the requirements of the embargo in relation to the countries I mentioned. They relate to a fairly short list of about two dozen positions, mostly related to fruits and vegetables.
- How the closing up of economic relations with Turkey will impact on Russia?
- I hope we have a good opportunity to replace these products. We have two positions in which the share of Turkish exports to Russia is very high, it's tomatoes and citrus fruits, lemons, first of all. But there are a large number of countries of the Arab East, Iran, North Africa, a number of other countries that are able and can supply the products in large volumes. Of course, it will take time for the contracting, sanitary and phytosanitary inspection in cases when such countries have not yet supplied to us such products in large quantities. It will require time. Therefore, it is possible some short-term failures. But overall, I think that this situation is absolutely manageable and within a reasonable period of time we will definitely restore all positions in the Russian consumer market.
- Thank you very much.