President of Russia Dmitry Medvedev: Good afternoon, colleagues.
Lately we have been concentrating a lot on the current problems, the emergency situation we have had to deal with, and the crop harvest taking place in these difficult circumstances. But we also have to continue too with the regular work we have been carrying out over this recent period. I propose that we discuss the investment climate in particular today. We all know that a number of different factors all have an effect on the investment climate. This includes political, administrative, and of course economic factors. At the same time, investors are constantly assessing these factors in combination, analysing the possible risks, looking at the existing conditions and at the situation the future could bring. Our task is to make timely responses to the demands taking shape on the investment market.
The creation of the Customs Union is one of the factors affecting the investment climate. The agreement on the union’s Customs Code came into force almost six weeks ago now, launching a new stage in Russia’s, Kazakhstan’s and Belarus’ economic integration. A lot of lawmaking work and efforts to enhance the way laws are applied preceded this event. This is something I discussed earlier with the agency heads here.
So far, the work is going according to plan without any serious glitches, but there are more than enough difficulties to address nonetheless, because this is a very big project, after all. We have never yet had to resolve these kinds of issues in our recent history, and this, of course, complicates our work. Equally important is that the authorities and business need to learn now how to work in this new environment, work under the Customs Code’s provisions.
I want to say once more something very clear and evident, namely, that this process of establishing new instruments and inter-state mechanisms is not an aim in itself. It is only a means. These mechanisms and instruments must ultimately serve to help create a favourable environment for doing business, and this is probably the most important thing of all.
I remind you that Belarus and Kazakhstan account for a very large share of our foreign trade operations. For this reason alone we need to pay heightened attention to this factor. In any case, removing excessive administrative barriers, unifying tariffs and non-tariff regulations will benefit our own companies above all.
The Customs Union also aims to make our economies stronger and more stable in an environment of increasing regional and global competition. We need to work together to ensure comfortable conditions for investors’ work, including for investors from other countries. Our foreign trade partners are showing considerable interest in the Customs Union because it represents a promising and fast-growing big market with a combined population of 175 million people, all potential consumers. In our work on the Customs Union’s rules and regulations we based ourselves above all on the basic rules of international trade.
At the same time, we still have a lot of problems to resolve, and all investors recognise this. The costs involved in crossing the customs border, for example, are sometimes unpredictable and discourage investors from opening new production facilities in Russia. Such cases do happen.
These problems affect our own producers too, including potential exporters of high-technology products. The financial burden of export procedures, the time it takes to do all of the paperwork, and the export and currency control mechanisms all put us in a difficult situation in which we lose in comparison to our competitors.
I have issued a series of instructions. I will not go into them right now, but we will return to them during our discussions. We all know that the customs services of the union’s three member countries have intensified their work since July 1. This work is not just about organising cooperation. It is a part of competition and the battle for economic actors. If trade flows start to follow new routes – and this is entirely possible in this situation – they are followed by the logistics business chain, and later by production development. This is a new set of circumstances, and we cannot resolve this issue by taking prohibitive measures. Foreign economic actors naturally go wherever customs procedures are the clearest and most transparent, and where the associated financial burden is the lightest. We cannot blame anyone else for the problems we face, and for the fact that we still need to work on adapting to these new conditions. After all, no one forced us into the Customs Union. It was our own choice. It is a choice that does involve difficulties and costs, but we – the President, the Government, and the economic actors – all agree that this is a project of interest to us, a project that can radically transform our countries’ economic lives.
The regulatory and supervisory authorities also need to act in this logic. This calls for personal responsibility on the part of the officials responsible for drafting inter-state agreements. It is absolutely clear that our new international legal rules should not reproduce the restrictions and barriers that existed in our countries: in Russia, Kazakhstan and Belarus. On the contrary, we need to get rid of these barriers from our national legislation.
I would like to hear about how the work is going on improving the Customs Union’s legal foundation. I know that our colleagues in the Economic Development Ministry and other agencies and in the Government have discussed these matters on various occasions with our business community. It is very important to hear their views when making decisions in these areas. This also concerns the draft law on customs regulation in the Russian Federation. We tried to speed things up a bit, but unfortunately, for understandable reasons we will not be able to pass this law before the autumn. There is at least one positive aspect in this situation, however, and that is that it gives us a bit more time, which we need to put to the best use. Along with the basic law we also need to pass a package of essential Government regulations at the same time. This goes without saying, really, as we simply cannot separate adoption of the law and adoption of the associated bylaws.
There are several tasks we need to resolve. First, we need to minimize the number of indirect provisions, blanket provisions and provisions in the law referring to other provisions elsewhere, and reduce the overall customs burden on foreign economic actors.
Second, we need to ensure a ‘green corridor’ for the export and import of high-technology goods.
Third, we need to create the conditions and mechanisms for effective interaction between the customs authorities and the participants in trade.
Fourth, we need to ensure analysis of the influence customs and other supervisory agencies have on increasing trade and business activity. Today, we will talk about what the Federal Customs Service is doing to introduce and spread the use of modern technology. I hope to hear about this work in the report. I am referring to the electronic declaration, for example, the advance notification system that usually makes a big difference in speeding up customs procedures. We also need to talk about criteria for evaluating customs’ effectiveness – the effectiveness of our own customs system, and those of our partners.
Over these last years, in discussions with Mr Belyaninov [Andrei Belyaninov, head of the Federal Customs Service] and other colleagues, we have noted that the task of collecting more money always comes to the fore. This is important, of course, as is fighting infringements of customs rules. But this is not all. I have talked with the Federal Customs Service head about the fact that the customs’ task is not just about collecting money, and given the amounts of goods going through customs, its responsibilities go far beyond purely fiscal concerns.
Another matter is the time it takes to complete customs formalities. Unfortunately, we have seen almost no decrease here. There is little mutual trust between customs and the foreign economic trade participants. This is reflected in the fact that only half a percent of participants in foreign economic activity currently use the special simplified procedure. All of the others go through the whole procedure. These are the statistics I have, anyway. This means that practically all economic actors are forced to go through the complete list of formalities set by the law with no possibility of simplification, and this is not good. These are the issues on our agenda today, and this is quite enough.