The practical implementation of the Russia-EU Common Economic Space through dialogue

1. European Commission Enterprise and Industry Directorate-General The practical implementation of the Russia-EU Common Economic Space through dialogue International Conference: “International Standardisation – the effective instrument for raising the competitiveness of Russian industry” Moscow, 10 April 2007 Nick Burge Relations with Russia and CIS countries International Unit DG Enterprise and Industry European Commission

2. Political and economic perspective (1) • Russia is the 3rd largest EU trade partner (8,4%) after the USA (17,9%) and China (10,3%) • The EU is Russia's main trading partner, accounting for 51,5 % of its overall trade turnover in 2007 • EU’s exports to Russia are diversified: e.g. machinery and transport equipment (46%), chemicals (15%), manufactured goods (13%), food and live animals (7%) • EU’s imports from Russia are mainly energy/mineral fuels (67%). Other imports include manufactured goods (10%), primary products (6%) and chemicals (3%) • EU-Russia trade expanded by 17,6% in 2007 • Conclusion: growing economic interdependence from which both sides can benefit

3. Political and economic perspective (2) • Common Economic Space Roadmap – May 2005 • Aims: • Open and integrated market between EU and Russia; • Put in place conditions to increase opportunities for businesses on both sides • Promotion of trade and investment and enhance competitiveness of Russian and EU economies • Strengthen economic cooperation • Methodology: regular formal dialogues • 16 government-to-government dialogues now established • including a Regulatory Dialogue and a Dialogue on Industrial and Enterprise Policy

4. Political and economic perspective (3) • WTO Accession • Includes obligations to comply with Technical Barriers to Trade (TBT) Agreement • TBT is basis for Russian and EU legislation on technical regulations and standards: in Russia has helped to drive reform • Future EU-Russia Agreement: • Will take forward CES aims (as minimum) • Likely to continue and develop structure of dialogues • i.e. Regulatory cooperation between EU and Russia expected to remain a long term feature of relationship • Possible future agreement on trade and investments ? • TBT + • Should contain significant non-tariff elements (i.e. regulatory convergence)

5. Regulatory and Industrial Policy dialogues (1) • Established Dec 2005: Minister Khristenko and Vice President Verheugen • Objectives (summary): • Achieve more compatibility between Russian and EU technical regulations, standards and conformity assessment procedures, including convergence where possible; • Enhance transparency of regulatory activity; • Promote the use of international standards; • Improve regulatory and administrative environment for businesses to enhance competitiveness. • Parties involved: • European Commission (DG Enterprise and Industry) and RF Ministry of Industry and Energy • Other interested Ministries and DGs • Business (Russian and EU) • Other interested parties (standardisation bodies, technical institutes)

6. Regulatory and Industrial Policy dialogues (2) • 12 sectoral subgroups established Regulatory Dialogue subgroups Automotive Industry Textiles ICT, Radio and Telecom Pharmaceuticals Conformity Assessment and Standardisation Forest-based Industries Construction Products Machinery and Electrical Equipment Industrial Dialogue subgroups Automotive Industry Textiles Industry Mining and Metals Chemicals Industry SMEs and Enterprise Policy Aerospace Industry

7. Regulatory and Industrial Policy dialogues (3) • Methodology: • Meetings 2-3 times a year • Work on basis of agreed work programme • Business fully involved in subgroups • Plenary meetings twice a year (next in Brussels May 21-22) • Regular reports to political sponsors and EU-RU Summits • Comments: • First time such regulatory cooperation attempted between EU and Russia • Exchange of information and regular contact positive in itself • Cannot expect every sector to deliver same level of results or work at same speed • Medium to long term process

8. Some examples of regulatory cooperation so far • Considerable efforts made to explain REACH (new EU chemicals legislation) • Good level of coordination and cooperation between EU and Russia on international automobile standards and regulations at UNECE • Russia willing to allow regulatory dialogue to support its programme of reform of technical regulations and standards • IMEI codes (identification numbers for mobile phones) : legislative requirements now harmonised • Dialogue has contributed to the resolution of the TBT section of Russia’s WTO accession Working Party Report • Good working atmosphere and relationships mean that trade disputes in sectors covered by dialogue less likely to occur

9. Future developments • Important that dialogues lead to concrete outputs • Therefore, in 2007 it was agreed that: • Dialogues would support Russia’s programme of reform of its technical regulations and standards: subgroups to be consulted on draft legislation • Each subgroup to identify the 2 or 3 most important issues to resolve in their sector and make joint recommendations for their resolution • These recommendations to be reviewed by Vice President Verheugen and Minister Khristenko in 2008

10. Next steps • Meeting between VP Verheugen and Minister Khristenko to review progress, May 15-16, Moscow • Meeting of Dialogue Working Groups (plenary session) May 22-23, Brussels • Seminar on standardisation and conformity assessment, June (Moscow) • New technical assistance project to begin: to support Russia’s reform of technical regulations and standards

11. Future challenges • Explore possibilities for mutual recognition: • More tricky than it sounds: EU has had mixed experience of mutual recognition agreements • Requires much more than just a legal agreement: needs shared legislation and standards, similar methods of implementation, dispute resolution mechanism and mutual trust • Tackle the major differences in current EU and Russian approaches, i.e.: • Voluntary or mandatory use of standards • Conformity assessment by certification; or by supplier declaration of conformity (SDOC) supported by market surveillance • These different approaches require different institutional and administrative structures to implement and manage the legislation

12. Thank you for listening Nick Burge Relations with Russia and CIS countries International Unit DG Enterprise and Industry European Commission