Agreements on free trade improve investment climate

4 june 2015

The Analytical Center for the Government of the Russian Federation and The Foreign Trade Information Analysis Centre of the Ministry of Industry and Trade of the Russian Federation carried out the Expert Discussion "Establishing Russia-Israel Free Trade Area: viability and terms". Important aspects of negotiations on establishing the Russia-Israel free trade area and the impact on Russian producers were discussed.

The Head of the Department of International Cooperation of the Analytical Center Denis Yershov reminded that a few weeks ago the similar agreement between the Eurasian Economic Union (EEU) and Vietnam was signed, and it should positively effect national economy. "As a result the trade turnover may increase from $4 to $10 billion, also signing of the agreement will allow to solve a problem of the EEU accession to integration processes in the Asia-Pacific Region", considers the expert of the Department for Sectors of Economy of the Analytical Center Inna Dudykina.

Experts believe that the practice of signing up the agreement establishing a free trade area with Vietnam should be used in negotiations with Israel. "We have an experience of signing up agreements on free trade area, and it cannot be done quickly," said the Head of the Foreign Trade Information Analysis Centre of the Ministry of Industry and Trade Roman Lyadov. In his opinion, it is important for domestic companies to get in such negotirations at the earliest stage. "We are planning to set a line of Russian producers in October-November. It is necessary to review what they deliver to Israel, what companies they work with," said the expert.

Israel is not the main trade partner of Russia, according Mr. Lyadov. In 2014 commodity turnover accounted for $2,3 billion, and export practically twice exceeded import. "The main share of export is occupied by oil products, then there is agro-industrial production, forest products and metals", said the expert. "For producers the most interesting import sectors are medicine, cosmetics, vegetables and fruit."

The Adviser to the Department of Organization and Analytical Support of Negotiations of the Trade Policy Department of the Eurasian Economic Commision Vitaly Ponomarev talked on legal sources and basic provisions regulating the establishment of the free trade area: "The joint research group – the JRG - is being created to determine viability of the free trade agreement. The decision on negotiations on agreement is made by the Supreme Eurasian Economic Council, and negotiations are conducted by representatives of the Eurasian Economic Commission and states - members of the Union".

Mr. Ponomarev noted some advantages of the free trade regime, among them strengthening of export potential, diversification of production and optimization of the economic development model, trade liberalization with preservation of the protection level for sensitive goods, increase of competitiveness of national products and improvement of the national legislation.

Participants agreed that free trade agreements strengthen international cooperation, facilitate access to the services market of partner states and in general improve the investment climate.