Goal: 43% Increase in Russian Exports to Azerbaijan

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The Trade Representative of Russia in Azerbaijan, Mr. Ruslan Mirsayapov, informs Azeri Observer regarding an Action Plan which should bring the bilateral cooperation to a higher level, the main trends in the trade between the two countries, and the most promising and beneficial joint projects ahead. He explains why the effect of the pandemic on the mutual trade turnover was limited, what are its main trading commodities and where the businesses of both countries can get support and consultations.

BY Oxana VALIYEVA

AZERI OBSERVER STAFF WRITER

Question: What is the focus of the activities of Russia’s Trade Representation in Azerbaijan?

Answer: There are over 50 Trade Representations of Russia in the world and our government defines their functions and goals. I would like to highlight three main goals: supporting Russian companies in their export activities, attracting foreign investments to Russia and developing long-term partner economic relations between Russia and foreign states. In 2020, Russian Trade Representations processed requests from thousands of entrepreneurs (including over 500 requests in Azerbaijan) and supported export transactions worth $6.4 billion (almost $30 million in Azerbaijan, which is a direct result of the work of the Russian Exports Support Group in Azerbaijan, created on the basis of the Russian Trade Representation and the Russian Export Center’s representative office). Every day we receive offers from Russian companies willing to export a wide range of products to the Azerbaijani market. Local entrepreneurs also contact us when they want to find reliable Russian suppliers, and we promptly provide them with information on the most promising Russian companies for cooperation. I would like to emphasize that the Export Support Group, based in Baku, is the best “starting point” for Azerbaijani businesspeople looking for reliable suppliers from the Russian Federation.

Q.: In 2018, the Presidents of Russia and Azerbaijan signed a Joint Statement on the Priority Areas of Economic Cooperation and an Action Plan for the Development of Key Areas of the Russian-Azerbaijani Cooperation until 2024. Tell us about the main trends in the mutual trade between Russia and Azerbaijan since the bilateral agreement came into force.

A.: Russia and Azerbaijan enjoy mutually beneficial relations of friendship, cooperation and partnership, based on the principles of good neighbourliness and respect for each other’s interests. The joint statement aims to bring our trade and economic cooperation to a new higher level and gives an additional impetus to the further development of the Russian-Azerbaijani relations in all spheres. The document includes five roadmaps, which envisage removing obstacles in mutual trade, developing transport infrastructure, creating joint industrial companies, exchanging experience in the fiscal sphere’s digitalization, and enhancing tourist exchanges and humanitarian contacts.

Within the first roadmap, the ministries of two countries hold consultations on topical issues of Russian-Azerbaijani relations, we exchange trade missions, the business councils and other business associations maintain a constant dialogue, and joint forums take place on regular basis. In line with the second roadmap, Azerbaijan and Russia interact to develop the International North-South Transport Corridor (INSTC). [Ed. note: INSTC is a 7,200 km long multi-modal network of ship, rail, and road routes for the transport of freight between India, Iran, Afghanistan, Azerbaijan, Russia, Central Asia, and Europe.] A road bridge across the Samur River has been built; we explore how we can speed up cargo handling procedures at automobile border checkpoints. A particular importance is attributed to the railway connection, development of transport corridors, and restoration of all economic and transport links in the South Caucasus region. Within the third roadmap, the parties work on joint projects in oil and gas equipment and pharmaceuticals production, in car assembly, as well as build a service center for helicopter maintenance and repair, and a polymer construction materials plant. The governments of Russia and Azerbaijan constantly control the implementation of the Action Plan measures aimed at the development of key areas of the Russian-Azerbaijani cooperation.

Q.: The outbreak of COVID-19 had a negative impact on the global economy. Many countries try to mitigate it with different initiatives of financial and budgetary policies. What measures have been taken to support the mutual trade between Azerbaijan and Russia?

A.: The pandemic undoubtedly affected the plans of businesspeople to increase the mutual trade between our states. According to our Federal Customs Service, the Russian-Azerbaijani trade turnover fell by 8.9% last year. For comparison, the overall decrease in Azerbaijan’s foreign trade hit 26.5% (according to the republic’s State Customs Committee) and Russia’s trade with foreign countries went down by 15.2% in this period. The Trade Representation interacts with the Azerbaijan Export and Investment Promotion Foundation (AZPROMO), the Trade Representation of Azerbaijan in Russia, customs authorities, and exporters on a daily basis in order to promptly resolve the emerging problems of Russian exporters. Our joint efforts helped to prevent a sharp decline in the bilateral trade turnover and we expect that the volume of mutual supplies will reach the figures of 2019 in the first half of 2021.The movement restrictions undoubtedly made it more difficult to solve many issues. The majority of Russians and Azerbaijanis value personal communication, and virtual negotiations cannot compare to personal contacts, so we hope for a gradual easing of the special quarantine regime and resumption of mutual business trips. With the quarantine restrictions, we promptly switched to online bilateral economic events. In 2020 and 2021, the Russian Trade Representation in Baku organized and took part in several dozens of online meetings between Russian regions and Azerbaijani businesses. Here, I would like to highlight our joint work with the Trade Representation of Azerbaijan in Russia. My counterpart, Trade Representative of Azerbaijan in Russia, Ruslan Aliyev uses every opportunity to provide consultations to Russian businesspeople “on the spot” in Moscow, and during his working visits to different regions of the Russian Federation.

Q.: What projects does the Russian Trade Representation implement and plan in Azerbaijan?

A.: A lot of Russian companies operate in Azerbaijan for a long time, many of them, such as Lukoil, KDV, VTB Bank Azerbaijan, are important local taxpayers and employers. It is planned to complete the construction of the R-Pharm drug plant in the Pirallahi industrial park (Ed. note: located near Baku) with a design capacity of 250 million packs per year and to start a full-scale production of “Made in Azerbaijan” medicines by the end of this year. The transfer of technologies allows the new enterprise to produce modern and highly effective drugs for oncological, hematological, autoimmune and endocrine diseases, HIV/AIDS, various types of viral hepatitis and other diseases. A joint car assembly plant of the Russian GAZ Group and Azerbaijani Azermash company in the Hajigabul industrial park [Ed. note: in Azerbaijan’s eastern part] with the annual production capacity up to 1,000 vehicles, will start producing light commercial vehicles quite soon. In the same region, it is planned to build a joint thermal insulation materials plant, which is also an important project for Azerbaijan, since its products will be used not just in the domestic market, but also exported to the neighboring states. A joint helicopter service center is under construction and Russian equipment was ordered for it in late 2020. Within two years, this center will be fully operational.

Russian companies are ready to work in Azerbaijan on a long-term basis, launch production facilities, create new jobs and pay taxes to the country’s budget. They feel the support from Azerbaijan’s leadership, and receive assistance in organizing production from Azerbaijan’s Economy Ministry and AZPROMO.

Q.: Russia has been the main exporter to the Azerbaijani market for years. In 2020, 18% of Azerbaijani import fell on Russia. What products does your country supply here?

A.: Russia is Azerbaijan’s third largest trade partner. Our export to Azerbaijan is very diversified both in terms of the range of products and the number of suppliers. According to the Russian Federal Customs Service, the trade volume between Russia and Azerbaijan amounted to $2.9 billion in 2020, including $2.1 billion Russian exports. One third of our supplies are dependent on food and agricultural products. Last year, the export of wheat, sunflower oil, margarine, sugar and sugar confectionery, chocolate, cereal products, flour, starch, milk and other food commodities to Azerbaijan exceeded $690 million. One fifth of all Russian export to Azerbaijan is machinery, equipment and vehicles, and the total cost of the passenger cars, subway cars, telephones, monitors, projectors, washing machines and refrigerators supplied in 2020 reached over $430 million. Exports of metals and metal products, including flat-rolled products, iron rods, hot-rolled rods, aluminum and aluminum products, amounted to $278 million in this period. It is also worth mentioning the supplies of Russian chemical products (universal and nitrogen fertilizers, plastics and plastic products), pharmaceutical products and detergents in the amount of over $270 million. The TOP-10 Russian exporters to Azerbaijan are the city of Moscow, Moscow region, Stavropol Territory, Chelyabinsk and Saratov regions, Krasnodar Territory, Tatarstan and the city of St. Petersburg.

Q.: What Azerbaijani goods are in the greatest demand among Russian importers and consumers? In your opinion, what are the prospects of Azerbaijani exports to Russia?

A.: Russia was among the TOP-3 importers of Azerbaijani products in 2020 compared to 7th place a year earlier. Almost 100% of our trade, including Azerbaijani exports to Russia, is based on non-primary non-energy products. Therefore, it has been less affected by the world energy prices and the fluctuations in demand for hydrocarbons. Thanks to the high quality and attractive prices, Azerbaijani products meet a steady demand in Russia. Azerbaijan mainly exports fruits and vegetables, which are supplied to different Russian regions. The number of consumers of Azerbaijani products in Russia grows year-over-year. For example, Russian KDV company, the owners of a supermarket chain Yarche! in the Moscow, Kemerovo, Tomsk and Novosibirsk regions and Altai Territory, are looking for reliable suppliers in Azerbaijan to fill their supermarkets with Azerbaijani goods. AZPROMO and the Trade Representation of Azerbaijan in Russia play an important role in promoting Azerbaijani products. Every year they support the opening of “Gifts of Azerbaijan” stands, presenting “Made in Azerbaijan” products in different large retail trade areas in Russia. Azerbaijani wines, canned food, tea and sweets are in demand among Russian consumers.

Q.: What regions of Russia stand out in cooperation with Azerbaijan?

A.: As many as 72 federal entities of Russia maintain trade and economic contacts with Azerbaijan. The city of Moscow, Moscow region, the city of St. Petersburg, Chelyabinsk, Volgograd, Saratov, Nizhny Novgorod, Astrakhan and Sverdlovsk regions, and Stavropol and Krasnodar Territories make a special contribution to our cooperation. The visits of delegation from different federal entities to Azerbaijan were quite frequent before the quarantine restrictions. Dozens of bilateral business forums took place annually. Since spring 2020, all the communication has switched to a digital format. Now, in cooperation with the Trade Representation of Azerbaijan in Russia, business councils, and with the support from Russian Ministry of Industry and Trade, we organize online consultations for different regions of Russia and bilateral business meetings almost every week.

It is obvious that different Russian entities have different economic and export potential, but Azerbaijan is a key partner for many of them. Regional authorities are focused not only on trade and economic projects, but also in the humanitarian and educational cooperation. In this area, a lot is done by the representative office of Rossotrudnichestvo [Ed. note: the Russian Federal Agency for the Commonwealth of Independent States Affairs, Compatriots Living Abroad, and International Humanitarian Cooperation] and the Russian Information and Cultural Center in Baku. The role of Russian regions in the Russian-Azerbaijani cooperation will steadily increase, since they aim for the further development of ties with Azerbaijan.

Now the federal entities of Russia prepare for the next annual interregional forum. I was lucky to take part in the 2019 forum, which took place in Moscow even before my appointment as a trade representative. The forum was a great success and it coincided with the opening of the Azerbaijan pavilion at VDNKh [Ed. note: the Exhibition of Achievements of National Economy], which was attended by the First Vice-President of Azerbaijan, Mehriban Aliyeva and the Chairwoman of the Russia’s Federation Council, Valentina Matvienko. Last year, the forum was canceled due to the quarantine restrictions.

Q.: To finalize the interview, could you give us a brief outline of the prospects of the Russia-Azerbaijan trade and economic ties’ further development?

A.: In late 2020, Russian Minister of Industry and Trade, Denis Manturov, approved the Action Plan for the development of trade between Russia and Azerbaijan for 2021-2023, prepared by the Russian Trade Representation in Azerbaijan. The main goal of the Country Action Plan is to increase the volume of Russian exports to Azerbaijan by 43%. It defines mechanical engineering and its component, pharmaceutical industry, food industry, timber industry and construction materials, logistics and digital technologies as the priority sectors for the export of Russian goods and services to Azerbaijan. Azerbaijan is going to implement very important and ambitious projects in the coming years, and Russian companies are definitely ready to participate in them. The Russian Embassy in Azerbaijan, the Russian Trade Representation, and the Russian Export Center’s representative office will provide comprehensive assistance to the business community for the development of mutually beneficial trade, economic and investment cooperation. There are no doubts that Russian business is interested in developing economic cooperation with Azerbaijan. Every day the Russia Trade Representation gets offers for the provision of services, and the supply of goods and technologies for infrastructure development, industrial and civil construction, arrangement of transport corridors and other spheres. Only together, basing on mutual benefits and long-term cooperation, we will be able to achieve maximum success in line with the instructions of our leaders – the respected Presidents of Azerbaijan and Russia.