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Vladimir Putin: Good afternoon, colleagues.

A year ago, I met here in the Kremlin with representatives of the agribusiness sector, and we discussed in some detail the problems affecting agriculture, especially with respect to Russia’s accession to the World Trade Organisation. Today I would like to discuss this same subject with you and, of course, talk about the broad range of issues concerning the processing industry. I would like to hear your views on the situation in the sector and the problems you face at the moment.

I have just discussed this subject with the Prime Minister. Trends have not been bad of late, but these are only trends. Overall, the situation remains quite complicated. The Russian processing industry’s share of the domestic market is only 52.8%. Imports account for the rest. What’s more, as soon as people’s incomes rise, the share of imports on our market increases; and you know this as well as I do.

We have also become less competitive on foreign markets, including the markets in the CIS countries, where Russia has traditionally had a strong presence. Our colleagues from these CIS countries have pointed this out themselves. We must make sure that this does not become an ongoing situation. In this respect, I would like to hear your views on the prospects for the processing sector, and your thoughts on the economic policies the state should follow with regard to this sector.

The relevant members of the Government – the Deputy Prime Minister and the Economy Minister – are present here today. I think we should really be able to discuss the issue in detail today. Also present are the representatives of several companies, competent people who have worked for many years in this sector and gained a lot of knowledge. I repeat, I would like to know your opinions on the problems Russia faces in joining the WTO.

At the meeting with the representatives of the agribusiness sector last year, we identified the sensitive issues for the sector and clarified the Russian position at WTO accession negotiations. I want to point out here that there is a lot of public discussion going on over Russia’s possible entry to the WTO, and we often hear the idea that we should not hurry and not do anything hasty. I absolutely agree.

As you can see, we are not trying to rush the issue. Consultations with representatives of all sectors are ongoing, and specialists are also working on the issue. I think we should devote at least half of our meeting today to discussing this question. We do want to know your opinion, and I promise you that we will draw the corresponding conclusions during this negotiating process.

I would like to emphasise, however, that joining the WTO is a most important part of Russia’s economic policy today. How effectively Russia’s manufacturers work, both today and in the future, depends a great deal on how ready we are to work within the global trade system.

The results so far have not been inspiring. The processing industry’s share of total Russian exports is still falling, and came to slightly more than 15% last year.

In this respect, I would like to hear from you about the investment situation in your sector, and also about the situation with introducing innovative and science-intensive technology. Essentially, I would like to know about what is being done in those areas that could considerably increase effectiveness and boost industrial growth.

I would like to make a few general remarks on Russia’s upcoming entry into the WTO. Some people seem to see WTO accession as a panacea against all evils, which will protect them from anti-dumping investigations into Russian goods, non-tariff barriers and investment starvation.

But I think that the majority present here today would agree that joining the WTO will not in itself be a remedy for the biggest problems that Russia faces in its economic development. Whatever happens, we will still have to resolve these fundamental problems through our own efforts. And it is up to us to achieve high economic growth rates, including in the processing sector. For now, unfortunately, the sectors you represent account for only around a third of total industrial output, and the raw materials sectors are growing much faster.

But I do believe that joining the WTO will definitely stimulate efforts to become more competitive, and being able to take part in drawing up the rules governing world trade will contribute to the successful development of Russian industry in general and create more favourable and civilised conditions in which to work.

Of course, not all Russian companies will have an easy time coping with tougher competition, but overall, economic integration and adhering to the world trade rules should help the recovery of Russian business.

The Government is involved now in active negotiations. There are many questions to discuss, and they are complex in nature. It’s enough to say that Russia has to deal in these negotiations with a record number of partner countries in WTO history.

Among the WTO member states, 67 countries have expressed an interest in the Russian market. Each of these countries has its own approach. Yes, these countries clearly do want to see Russia join the ranks of the WTO’s members, but they are also studying very carefully the potential consequences this decision could have for their own economies. We should clearly take a similar line.

The negotiations in progress have already brought some tangible and positive results. Stepping up the negotiation process has enabled Russia to take a firm stand in demanding recognition as a country with a market economy, and we have, as a result, been granted this status. This in turn has given us greater access to foreign markets.

A State Council meeting is scheduled to discuss how ready Russia is to join the WTO. A State Council working group is currently analysing the whole range of questions regarding this subject. I think that a serious and far-reaching discussion of these matters will give impetus to taking the necessary decisions and will help resolve a number of concrete issues linked to joining the WTO, including issues affecting the processing sector.

During our discussions today, I would like us to look at both general, strategic issues, and also at the question of how ready the processing industry is to work in the modern world market.

Thank you for your attention, and I would now like to invite you to begin a free exchange of views.