OREANDA-NEWS.  Vladimir Putin met with Chairman of the Eurasian Economic Commission’s (EEC) Board Viktor Khristenko, who briefed the President on the Commission’s work to carry out integration projects within the Customs Union.

Mr Khristenko noted in particular that the EEC plans to draft by the end of the year roadmaps for Kyrgyzstan’s accession to the Customs Union.

Mr Khristenko also said Ukraine and Armenia are showing interest in cooperation with the EEC.

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PRESIDENT OF RUSSIA VLADIMIR PUTIN: Mr Khristenko, let me ask the traditional question: what is the state of progress of our most successful integration projects of late – the Customs Union and the Common Economic Space? How are the relations between these organisations and potential outside partners beyond our common borders developing?

A number of countries in the post-Soviet area have been showing interest in developing relations with the Customs Union and the Common Economic Space. Countries in other parts of the world are showing interest too. I have had quite a few discussions on this matter. 

I know that you are working on all of this and are in constant active contact with our partners, so, let’s start with this and then move on to other subjects.

CHAIRMAN OF THE EURASIAN ECONOMIC COMMISSION BOARD VIKTOR KHRISTENKO: Mr President, to put developments in perspective, we have entered a difficult year. The continued global crisis inevitably affects the Customs Union economies too. Of course we are already seeing signals in the form of slowing growth rates and in some cases drops in industrial growth and growth in other economic sectors. Even foreign trade, which had been consistently on the increase it seemed, has dropped too over the first months of 2013.

Trade between the three member countries was growing at a rate more than double of trade with the rest of the world last year, but this rate has slowed down now for trade both between the member countries and with outside countries. Taking a closer look at the situation, we saw that fuel and energy sector goods, which are the most vulnerable in terms of market fluctuations, are considerably distorting the picture.

The member countries’ reciprocal trade structure is much healthier and more rational than our foreign trade structure. Fuel and energy sector goods account for three quarters of overall goods in the foreign trade structure, but for around a third of goods in the member countries’ reciprocal trade. If we leave out energy resources (oil and oil products) and look at the other sectors of biggest interest such as machinery equipment and so on, we see that our reciprocal trade structure actually has a positive lean of around 6 percent since the start of 2013. The situation is different on the export markets, where our countries have had a drop in these sectors of more than 12 percent.

I think this demonstrates that our integration is clearly producing an effect and that removing the borders and letting goods move freely is already creating big opportunities for our traditionally strong economic sectors to develop the domestic market.

VLADIMIR PUTIN: Essentially, there has been an increase in domestic demand.

VIKTOR KHRISTENKO: Yes, domestic demand has increased and, more importantly, our own industry is able to satisfy this demand. This is a positive result of integration.

We ended up having to liberalise access to the market last year. We lowered our duties by two percentage points after Russia joined the WTO. But even so, we are still feeling the benefits integration has brought. In part, we are probably also learning bit by bit to better protect our market.

The Commission has had full responsibility since July 1, 2012, for conducting investigations and taking protective measures on the market. Over this time we have taken ten measures to protect all three countries’ markets. These measures apply to our common market.

Over the last 7 months of work, we conducted investigations and took 7 new protection measures. The distinctive and interesting thing to note in respect to these measures is that two of them (on combine harvesters, for example), were taken as preventive steps.

The start of the investigation had already made clear that there was obvious damage to the sectors concerned, and so we decided to impose a higher import duty that would remain in place until the end of the investigation. If the investigation conclusively confirms these conclusions, the higher import duty will remain in place.

A relatively swift mechanism of protective measures will probably help us, as markets continue to liberalise, to protect our markets from unfair competition, dumping and so on. We have already sensed though, that the Commission’s active stance is causing some irritation abroad.

We are training our personnel, including through special educational programmes, so as to prepare them to be able to defend in the World Trade Organisation bodies and in courts our actions as fair investigations conducted in accordance with all the rules and regulations.

Even with all of current economic difficulties, integration is clearly having benefits, and we need to build on this.

The question is how best to do this. Acting on the instructions issued by the three presidents in preparation for the summit that will take place at the end of May, we are working together with the three governments on drafting a package of measures to develop and deepen integration. This process involves a big and detailed discussion of what we have not yet managed to do over the preceding phases of our work, what tasks are most urgent, what can be done over the medium-term perspective, and how to package all of this into the agreement on the Eurasian Economic Union.

This discussion is underway actively now. We will have its conclusions ready for the presidents to discuss at the summit, and ready to give a further boost to this process and giving it actual form.