Official website of the President of Russia

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Prime Minister Mikhail Fradkov On His Visit To Brazil and Argentina:

Mikhail Fradkov: Overall, the meetings, which took place at practically all levels – with the Presidents of the two countries, the Vice Presidents and the key ministers – were very productive, especially from the point of view of reaffirming our desire to cooperate and defining the priority areas in which we can best pursue our goals.

In Brazil we looked in detail at the issue of a technological alliance between our countries. Our talks coincided with a Brazilian cosmonaut’s stay on board the Russian section of the International Space Station. The country reacted positively to this and what was highlighted was that there is no distance between Russia and Brazil that would be an obstacle to our cooperation. We can work together in space and also in natural resources development, because Brazil has large reserves of mineral resources and oil. The upcoming trans-Atlantic gas project is also of interest to Russian companies, above all Gazprom. This is a gas project that would link Venezuela to Brazil, Argentina and Uruguay.

Another interesting project that we could launch is cooperation in aircraft manufacturing, including on the project discussed earlier on creating a joint venture or simply organising supplies with our participation of medium-sized aircraft (Brazil’s Embraer).

In Argentina we also discussed trade and economic cooperation. The potential there is not as great, but there are possibilities, above all in space and military-technical cooperation, that we could develop quite actively. President Kirschner gave direct instructions for the relevant ministries to activate this work.

We also discussed our traditional ties, of course, above all in agriculture and with regard to meat supplies from Brazil and Argentina which have been temporarily halted. We have already found the corresponding solutions. The general atmosphere was very positive and resulted in a number of documents being signed. We consider the Protocol on Russia’s Accession to the World Trade Organisation, signed by Russia and Argentina, to be very important. Overall then, I see the visit as positive.

Your greetings were received very warmly. The President of Brazil, Mr Lula da Silva, was very grateful for the invitation to take part in meetings at the G8 summit in St Petersburg. I think it would be good to choose a time and also invite the President of Argentina on a bilateral basis, outside the summit activities, to visit Russia, perhaps at the end of the year, to discuss the agreements reached during your meeting at the UN General Assembly – he recalled this meeting – and during the talks that we just held in Argentina. I think that we need to keep this region within our sights. The peoples and the leadership of the countries we visited reacted very positively to our cooperation proposals and we have the possibility of realising our goals.

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ECONOMIC DEVELOPMENT AND TRADE MINISTER GERMAN GREF ON MAIN DIRECTIONS FOR CUSTOMS POLICY FOR 2007–2009:

We will present to the government the main customs and tariff policy measures we intend taking over the coming three years. We plan to undertake regulational measures in two main areas:

The first area is the administration of the customs service itself and of the goods and services crossing the border. We have drawn up a whole series of proposals in this area such as amendments to the State Border Programme making it possible to speed up the installation of inspection and control facilities at all the key border crossings so that we will finally be able to administer the goods moving across the border.

With regards to key goods, the most sensitive groups of goods, we have set the goal this year of cutting off access to our market for so-called ‘grey imports’. This is a constantly changing group of goods but for the most part it consists of cheap products from China, Turkey and Vietnam and mostly enters our country via the borders with our CIS neighbours.

As from this year we will be making full use of the customs service’s new information system that can control price parameters. We will be introducing risk profiles, that is, price parameters for certain types of product. All products entering the country at prices lower than the set parameters will be subjected to more stringent inspection. This year the system will begin work on an experimental basis and as from next year it should start operating in full.

Regarding tariff policy, we plan to complete work next year on fully abolishing export duties, with the exception of duties on raw materials. We have already abolished export duties on a large number of goods and now have to complete this work. The second area where we have work to complete is regarding import duties: we have abolished more than half of the import duties on high-tech equipment, but discussions are still going on for around 700 different goods, and we must settle this question. I think that we will be able to decide the abolition of import duties on most of these goods by the end of this year and fully introduce the principle of localised customs tariffs, that is, the higher the good’s added value, the lower the import duty, and vice versa.

Regarding our accession to the World Trade Organisation, we must reformulate our legislation, which provides for the harmonisation of special regimes that we use for investors. Unfortunately, regimes such as lineassemblywork currently are not in conformity with the rules of the WTO, but we have to make the necessary amendments to our legislation that will enable us to make use of these kinds of regimes and special regimes regarding the introduction of limits aimed at protecting our domestic market. These are the main focuses of the customs policy document for the next three years that we will present to the government on Thursday.

Vladimir Putin: When will we put the border in order? When will we end this practice where we have the customs authorities and business organisations living happily in each other’s pockets at most of our border crossings?

German Gref: This is precisely linked to implementing the series of measures I just spoke about. We adopted the customs administration concept this year and the government approved it. But so long as the human factor remains dominant on the border, so long as the technology is not in place…

Vladimir Putin: But this is not the only problem. You know, after all, that the customs authorities make use of business organisations to organise the transit of freight across the border. If we want to stop this from happening, we need to allocate the customs authorities the money to install all the equipment they need themselves at the border crossings. This is where the problem lies. Until such time as you do this, they will continue saying that they have no money and that they have no choice, therefore, but to make use of business organisations’ services, and the business organisations, in turn, begin making use of the customs authorities’ services, and this is often contrary to the law and to the economic interests of our country.

German Gref: Yes, this is absolutely right. The State Border Programme initially proposed a very gradual programme of equipping the border crossing points that would run through until 2010. This is completely unsatisfactory because in practice we see that as soon as one border checkpoint gets modern equipment, flows of smuggled goods simply move to other checkpoints that are not yet equipped. We therefore propose equipping all the key checkpoints at the same time with the necessary inspection equipment so as to put an end to this practice.

Vladimir Putin: How much time do you think this will take and how much money will it require?

German Gref: We have approved all our calculations with the Finance Ministry. This work will require quite a large amount of money. Equipping one inspection facility, buying one inspection system allowing rapid inspection of railway wagons and also able to work in sea ports requires from $50 million-$70 million.

Vladimir Putin: And how long will it take to put all of this into operation in practice?

German Gref: Our plan is to complete this work within three years. We want to close all the key checkpoints and introduce a practice that exists in a number of countries and that makes it possible to open a checkpoint only once it is fully equipped with all the necessary programme, technical and inspection equipment.

Vladimir Putin: But what about this practice where businesses practically own the checkpoints?

German Gref: The programme sets a two-year timeframe for ending this practice completely. We either have to build alternative checkpoints or we have to buy from these businesses the premises occupied by the border guards.

Vladimir Putin: Why two years? Why so long?

German Gref: Vladimir Vladimirovich, it is not easy to do it any faster.

Vladimir Putin: It must be done. You do realise, after all, the extent of the losses this causes the country’s economy? These are huge losses, immense losses. Why two years?

(Addressing Mikhail Fradkov) Mikhail Yefimovich, I have a big favour to ask you. Please examine this question separately.

Mikhail Fradkov: Yes.

Vladimir Putin: It’s true this is not a simple issue, but it is an issue that can be resolved, and it can be resolved a lot faster. We also have a lot of different organisations present on the border. We have already talked about this many times.

German Gref: The government has already taken all the decisions in this area. We are now in the process of completing the approval of a draft law and several government regulations that will introduce new administration procedures on the border, where we will now have only two agencies present. All the other control agencies – and there are currently seven of them – will be withdrawn from the checkpoints.

Vladimir Putin: When do you think this approval process will be complete?

German Gref: The Prime Minister set the deadline of a week at the last border commission meeting.

Mikhail Fradkov: We’ve already passed the deadline.

German Gref: I think the package has already been approved and we just need to release it now.

Mikhail Fradkov: The border commission’s last meeting was devoted only to this issue and was tough in tone. We gave just a few days to get everything settled.

Vladimir Putin: Mikhail Yefimovich, let’s agree that next Monday we will be able to note this work as having been completed.

Mikhail Fradkov: Yes.

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Defence Minister Sergei Ivanov About Meeting of the Commission On Export Controls:

Sergei Ivanov: Yes, the Inter-ministerial Commission on Export Controls, which I head, held its latest meeting last week. We examined the practical aspects of how our national export controls system functions, including mechanisms for improving licensing for foreign trade activity involving dual purpose goods subject to export controls.

There is a positive trend with regard to issuing licenses for trading in dual purpose goods. We issued 1153 such licenses last year. There are also cases – and this is normal — when for various reasons we choose not to authorise the issue of a license.

Exports of goods subject to export controls came to $3.8 billion last year. Growth is evident in this sector. Most of the dual purpose goods exported by the Russian Federation go through Rosatom. This includes fissible material and dual purpose technology and equipment in the machine-building sector.

Looking at the geographic distribution of our exports, the clear leader is the European Union – exports to EU countries account for more than $1.5 billion. Second is the United States – exports here are above all as part of the HEU-LEU Programme. Ukraine, South Korea and Kazakhstan have all also added to the geographic distribution of our exports.

We are constantly examining the licensing issue in an effort to reduce to a minimum the red tape involved. Over the last years we have organised effective cooperation at regional level between the three executive branch agencies responsible for this licensing. They are, first, the Federal Service for Technology and Export Controls, which was set up as part of the administrative reform of 2004, the Federal Security Service and also the Federal Customs Service, which issues and also approves licenses. This is the first matter that the meeting last week examined.

Furthermore, we adopted for the first time a control list or national list of foreign organisations that, according to our information, are involved in military programmes in the nuclear, chemicals and biological industries and in missile building. All civilised nations have such lists, draw them up and approve them. This list, the first that we have examined and approved, is based on information received through our Foreign Ministry, through our intelligence community and also through the information exchanges that we have developed over recent years with the leading countries in the combat against the proliferation of weapons of mass destruction. This list contains 1152 organisations from 51 different countries.

I want to make clear right from the start that is not some kind of black list. This is a list of foreign organisations in our dealings and our foreign trade activities with whom we need to be particularly careful. Trade with these organisations cannot be carried out without a license. Furthermore, the Russian Federation reserves the right in its foreign trade dealings with these organisations to carry out post-delivery checks to ensure that this or that technology or goods are being used only for the purpose that was declared. And of course, it is also mandatory to have a certificate from the final consumer in these cases.

I think that this list will be of help in preparing an open report for the G8 summit in which we will explain our export controls system, detail what Russia has done over recent years in this area, and evaluate the activities of a number of foreign organisations and countries in combating this serious threat. We are preparing an open report.

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INDUSTRY AND ENERGY MINISTER VIKTOR KHRISTENKO ON THE SITUATION WITH THE PREPARATION AND SIGNATURE OF THE MAIN PACKAGE OF ACCORDS ON CREATING THE COMMON ECONOMIC SPACE:

Viktor Khristenko: In accordance with the Presidents’ decision, the first package consists of 38 agreements, the main aim of which is to lay the full foundation for forming a customs union between the participant countries. The negotiators have already completed work on this package. Essentially, there just two or three outstanding questions that the negotiators need to reach a final agreement on. Each of the participant countries is now putting the package through its own internal examination. These procedures give rise to certain clarifications and comments, sometimes regarding drafting, and sometimes regarding more than drafting, and this requires the participant states to meet together once again to confirm the final draft of the texts. This will take place at the next meeting of the High-Level Group in Minsk on Friday. Representatives of all four countries, including Ukraine, are working on the 38 agreements, though our Ukrainian colleagues are keeping to their position that they will sign less than half of the documents in the first package, which goes against the principle of the documents being taken together as a single package. Aside from the first package, the 38 agreements, the negotiators are also working on the whole spectrum of documents. There are 95 documents in all, but the work carried out has already given some structure to them and some of them have been merged so that we now have 85 documents, most of which have already gone through expert-level negotiations and are now also being internally examined by the participant countries. Negotiations are continuing on around 10 of the 85 documents.

Looking ahead at the prospects for ending the negotiations, I think that the entire negotiating process on the 85 documents should be completed by the end of this year.

Regarding our priority tasks, on Friday the national representatives in the High-Level Group will meet to discuss the final drafting and other changes to the texts following the internal state procedures. The comments that have come up are partly linked to the problems the participant countries have in their negotiations with the World Trade Organisation.

Vladimir Putin: Viktor Borisovich, I draw to your attention that the President of Kazakhstan and the President of Belarus both think that the package should be signed already. You have broken the deadline that we agreed on earlier – the end of March. Now it is April and the package of 38 documents has still not been signed. That is the first point I want to bring to your attention.

Second, our Ukrainian partners know at both expert level and at the level of the country’s political leadership that joining the Common Economic Space requires signing the entire package of agreements and not just part of it. But, as we agreed, our Ukrainian friends and partners will continue to take part in the negotiations and will sign only those documents they consider acceptable at this stage. This is a positive process but results will be achieved only by signing the entire package. Three countries, meanwhile, Russia, Kazakhstan and Belarus, are already prepared to sign the package. I ask you to speed up this work.

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