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Alexey Ulyukaev: New challenges make non-energy export development the only solution

23.10.15

Alexey Ulyukaev, Minister of Economic Development of the Russian Federation, made a speech at the plenary session focused on the New Stage of State System Reform for Russian Export Support during the conference hosted by the Russian Non-Energy Export: Economy Development Trends Russian Export Centre.

Alexey Ulyukaev commented that the Russian economy currently faces domestic and international challenges. “Despite a negative export trend in US dollars, exports grew by 1.9% in volume to 629.4 billion tons year-over-year,” he said. Non-energy export increased by 4.9%, including a 28.5% export growth for hi-tech goods, 9.6% growth of added-value products export, and 5.7% growth of innovative goods export.

The Minister also commented that global economic growth rates are not high being almost twice behind the previous rates of 3% on the average. However, a substantial reduction in growth rates is observed in emerging markets. “And global trade rates are below global economy growth rates for the first time in many years,” he added.

Nevertheless, the Minister informed that no sharp declines are expected in the long-term run. “But $50-$50+ oil price is here to stay for many years,” he said. “I believe we have entered a long period of low energy prices which is a long cycle we are running through and will be running through for more years to come.” Therefore, when estimating Russian export volumes and witnessing a dramatic reduction in value, we must understand that it is driven by an energy price decrease as export volumes increase by about 2%. “And these low energy prices are here to stay because the economy growth cannot be driven by external energy trade,” he commented.

He also believes that there are serious challenges for global trade. “Nations understand that export revenue is a sort of the magic skin which is diminishing and imposing restrictions such as national protectionism and new trade associations. Thus, Trans-Pacific partnership is a huge challenge because it is not only trade agreements. It is a new type of association which has never been there before, a kind of a “trade agreement plus” because it incorporates regulatory harmonization, customs administration, sanitary control, environmental and occupational requirements ", he added.

“All of these challenges make non-energy export development the only solution,” Alexey Ulyukaev emphasized. He also commented that import substitution and non-energy export are “two sides of the same coin”. The Minister informed that non-energy export rates are not high but are almost in line with the approved road map stipulating an annual growth of 3%-6%.

He believes that there are three basic elements which can significantly support non-energy export and economy growth in the country in general. The first is a service for an actual or potential exporter. “This was the basis for creation of the Russian Export Centre as a one-contact system, with the front office directly contacting actual or potential exporters,” he say. The second element is a financial support system which includes export lending, export subsidies to Roseximbank and VEB and some others. The third track is international business which includes WTO-related activities. “Another WTO conference for ministers will take place in December. We need to define a small Doha package. Currently, we speak about a small compromise package but it includes an important item which is reduction of subsidies to agricultural export,” the Minister commented. He believes that such subsidies are globally “excessively high”. “Our volumes are immesurably low and we certainly compare poorly here,” he noted. According to the Minister, this resolution under WTO will improve competition for Russian farmers.

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