«The traditional form of trading is gone»: the Deputy head of Maximov Ministry of economic development of partnership of Russia with Asian countries

«The traditional form of trading is gone»: the Deputy head of Maximov Ministry of economic development of partnership of Russia with the countries Asiekierka link
6 September 2019, 23:54

Vladimir Agoev
In 2018, the volume of trade in goods and services between Russia and China amounted to $114 billion. Now, Beijing and Moscow have been discussing for more than 70 joint projects. In an exclusive interview with RT on the sidelines of the WEF-2019 Deputy Minister of economic development Timur Maximov spoke about the strengthening of Russia in the Asia-Pacific region and explained why the traditional form of trade when countries sell each other goods — has largely gone.

  • RIA Novosti
  • © Grigory Sysoev

— China is now the largest trading partner of Russia in Asia. In 2018, the mutual trade turnover between the two countries totaled $108 billion, and, as previously stated, the 2024-mu amount must reach $200. Timur Igorevich, whereby it is planned to double the volume of trade in those six years?

— In our view, it is important to assess economic cooperation with China as part of trade not only in goods but also services.

Thus, if we consider services, for the year 2018, the volume of trade between countries is not a $108 billion and $114 billion.

When Prime Minister Dmitry Medvedev has instructed us to prepare an action plan to increase mutual trade to $200 billion, we proceeded from the fact that this figure will also include a comprehensive scope of services trade.

In June, during the visit of President XI Jinping to Russia, we with our Chinese colleagues have prepared and signed a framework document on the promotion of bilateral trade. Now work hard to ensure that for each line block to prepare a concrete list of decisions and deadlines.

— At what stage is the discussion? Which industries will be a priority in work with China?

— Already discussed with the Ministry of agriculture of China cooperation in the agro sector. The same work is conducted through energy cooperation, industry and services. First of all we are talking about transportation, tourism, and partnership in the field of information technology and communication.

In September the planned visit of the Premier of the state Council of China Li Keqiang in Russia. During a joint meeting with Dmitry Medvedev will discuss the specific action plan.

— As is now developing partnership with China in the field of investment? Amount that Moscow and Beijing intend to invest in joint projects in the coming years?

— Investment on line we have also established ongoing work with our Chinese partners. There is a specially created intergovernmental Commission. Its purpose is the selection, monitoring and support major investment of the Russian-Chinese projects. The list we formed, there are already more than 70 projects totaling $120 billion.

  • Timur Maximov on joint investment projects in Russia and China

In particular, one of the projects that we recently discussed in detail is the construction of a highway «the Meridian» on the route Europe — Western China. Private road will connect China, Kazakhstan, Russia and farther to go to Europe. The Chinese partners have an interest in this project. Moreover, it perfectly fits into the logic of the Chinese initiative «One belt and one road» for transport connectivity of countries in the region.

— How much money you plan to invest in this project?

— According to preliminary estimates, the volume of investment is $9 billion, it is Clear that the forces of one country to Finance such a complex construction would be difficult and wrong. The main economic parameter which will output the project to an effective level, is a cargo base. It must provide all involved parties.

Together with China in the list of the largest trading partners of Russia in Asia Pacific also includes South Korea, India and Japan. The share of these four countries today account for almost 25% of Russian trade turnover. Why the interest in Asian markets? How Russia is going to strengthen its position in the region?

— In the next 15-20 years, the region will be one of the main engines of the global economy. Today it is a growing market with great potential and consumer demand, so Russia will continue to pay attention to the development of bilateral relations with the Asia Pacific region.

On the sidelines of the WEF, we have held talks and consultations with our colleagues. Almost all the aforementioned countries, we have ambitious plans.

For example, with India plan to increase trade to $30 billion and increase bilateral investments to $15 billion in each of the sides.

  • Maksimov on the strengthening of trade partnerships with Asia-Pacific countries

Similar plans are now discussing with colleagues from the Republic of Korea with the ASEAN countries. Engaged in dialogue about improving access to our markets for goods, services and investment. In addition, there is an agreement on free trade area (FTA) with Vietnam, and we are now completing negotiations on a FTA with Singapore.

— Than Russia today might be interested in Asian markets? What are the advantages of our products and services?

One of the key factors is the competitiveness of our products and a high enough technological level.

The main competitive advantage that we have is not cheap labor, namely products research intensity, i.e. the ratio of the cost of development and production. The backlog that we have and was created in the Soviet era, allows us to use this advantage and increase the share of goods with high added value in trade with Pacific rim countries.

For example, our trade with India, ASEAN countries or Vietnam shows that we supply engineering products and services have a high added value. States in the region are well aware of our products and the quality that we offer, so actively consume Russian goods and services.

— You mentioned that you’re nearing the end of negotiations with Singapore on the establishment of a free trade zone. When it is planned to sign the contract?

We completed the entire negotiation process on the agreement on free trade in goods. On October 1, a scheduled meeting of the Supreme Eurasian economic Council, which is expected to sign the document.

  • Timur Maximov on free trade zone with Singapore

In parallel with Singapore, we are now working on a similar agreement in services and investment. I think by the end of 2019, the negotiations will be completed. So, in 2020 it will be possible to sign and ratify the entire Treaty on the free movement of goods, services and investment.

— What other States in the near future it is planned to sign a similar agreement on free trade zone within EEU?

We have several meeting areas with a number of countries. The discussion started, and in the near future they will need to be completed. Referring to Israel, Egypt, and India.

— The main share of our supplies in the countries of the Asia-Pacific region accounts for commodities. What is the reason? As the trend may change in the coming years?

Today in global trade it is not on the supply from the finished product to the destination market. The world today lives in the context of global value chains. Firms from one country may enjoy a competitive advantage of other States and to create a joint production cycle. This allows you to make a successful product for further supplies to the global market.

The traditional form of trade, when countries sell each other commodities already largely gone. Today the volume of trade in intermediate goods is about 70% of world trade. This is a key factor that we must consider.

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