Australia and Russia – today and tomorrow

Free trade is most importantly secure trade. Australia is gaining weight in the world military and political arena (Afghanistan, Iraq, Bali, Solomon Islands, UK terrorist traces…). Australia is becoming one of the most important members of the antiterrorist coalition in the Pacific region. What are the prospects for Australian-Russian dialogue in this area?

Australia has a number of long standing security and intelligence links with key strategic partners. For example, we have alliance relationships with the United States and New Zealand, and intensive security links with both Malaysia and Singapore. In addition to these formal arrangements, and Australia's bilateral defence and policing relationships in the Asia-Pacific region, we have established an extensive network of bilateral security dialogues. These dialogues help promote greater understanding and shared interests. They provide an opportunity to exchange views on international developments and major security issues. In the case of Russia, since 1999 we have held bilateral political-military talks, normally including both foreign ministry and defence/military representatives.

How did Australia, as a participant in the APEC trade organisation, change its policy, counterbalancing that of the united European market?

Since its genesis in 1989, APEC has become the Asia-Pacific region's leading forum, where economies strengthen regional links and pursue common trade and economic goals. Membership of APEC expands Australia's focus beyond the domestic market and provides tremendous opportunities to create jobs and income. Australian business has access to over 2.5 billion consumers and around 60% of global income in 21 APEC member economies. These economies also purchase around three-quarters of Australia's merchandise exports. In the last decade APEC exports have more than doubled to nearly AUS$5 trillion, and APEC economies have generated 195 million new jobs and 70% of the increase in the world's economic growth. It is not surprising, therefore, that Australia’s primary trade focus is on fellow members of APEC.

How would you evaluate the efficiency of the Australian governmental organisation Austrade? How would you characterise its activity in Russia?

The objective of the Australian Trade Commission (Austrade) is to help Australian companies win overseas business for their products and services. Austrade has 117 offices in 58 countries.

As a government organisation it has a strategy and yearly targets, and it is required to report on them to the government. Last financial year Austrade assisted over 4,400 clients. Very impressively, of those assisted, 1,800 were new exporters. At the same time, 2,600 established exporters recognised Austrade as having contributed to their success. The value of exports achieved by the companies assisted by Austrade is in the vicinity of A$18 billion.

Trade between Australia and Russia decreased after the collapse of the Soviet Union. With the decentralisation of foreign trade in Russia, Austrade has made enormous efforts to develop business relationships between Australian companies and Russian trading partners. Previously, most small Russian trading companies did not have experience in foreign trade, and the involvement of Austrade helped them towards a better understanding of the Western style of business and Australian business culture. The 1998 financial crisis also had a negative effect on Australian exports, and many Australian companies had to look to other markets. At present, trade and business between Australia and Russia is again growing.

Let me ask you for advice… What steps should the Moscow Chamber of Commerce and Industry undertake in order to increase the level of interaction between Australian associations, labour unions and Austrade in particular with Russian businessmen, MCCI members?

More regular contacts are critical. It would be of particular value to provide more information on how to do business in Moscow and Russia, and also on MCCI members, as this would help Australians to understand better the local business climate and to identify and introduce potential business partners to Australian companies. Good communication and active dialogue is essential, and this can be developed through visits to Australia and invitations for Australians to visit you here. Delegations and business missions are a proven method. That's what we say to our Australian companies: if you want to do business with Russia, you must start by researching the market, then communicating with potential partners, and finally by making visits and establishing direct links.

A year has passed since the last visit of the Russian Minister of Agriculture, A. Gordeyev. Are there any positive outcomes based on the outcome of this visit? What changes were the formal business relations between Russia and Australia subject to during this period of time? Are there any visits of Australian officials to Russia being planned for the immediate future?

Alexey Gordeyev’s visit to Australia in June 2004 was indeed an important event in our bilateral trade and investment relations. Mr Gordeyev had an opportunity not only to meet key Australian leaders but also to see some of Australia’s agricultural and farming system, and to gain first-hand knowledge of Australia’s very high standards of animal and plant health. Since then a lot of progress has been made towards finalising our bilateral Veterinary Cooperation Agreement, which we hope can be signed later this year.

We have had some very important visits to Russia in the meantime. Australia’s Head of State, our Governor-General, visited for the 9th May 60th anniversary Victory celebrations; a high-level Parliamentary Delegation, led by the President of the Australian Senate visited in April; and a Royal Australian Navy frigate, the ‘Arunta’, paid an official visit to the Port of Vladivostok late last year.

In the other direction, Mayor Yuri Luzhkov visited Australia recently with a large group of Russian businesspeople, and President Putin’s Economic Adviser, Andrey Illarionov, visited Australia in January this year. There have also been several high-level Russian business delegations visiting Australia over the past year.

Australian companies have become increasingly interested in collaborating with Russia. The Australian company BHP Billiton, the largest diversified mining company in the world, is expanding its operations in Russia. In the other direction, Rusal has made a major investment of several hundred million dollars in the Australian alumina industry.

A tremendous amount of work has been done in order to organise the Australia Week in Moscow in May 2005. Does this mean that Australia is more carefully considering Russia as a potential partner with respect to the middle and small business, or is it only about interest in larger oil and gas projects such as Sakhalin 2, 3...? What plans do you have for the year 2006?

Austrade has always considered Russia as a potential market for Australia. Australia Week in Moscow is just a new form of raising awareness in Russia about Australia. It was a very successful event, and we are already planning Australia Week 2006.

In planning Australia Week 2006, we need to bear in mind that mining and agriculture form the basis of Russia's and Australia's economies, and therefore are important potential areas for cooperation between our two countries. Russia has enormous resources and Australia has developed advanced technologies and expertise. We are currently running mining and oil and gas programs designed to help establish and develop contacts. Austrade represented Australian companies at MiningWorldRussia - 05 and Prodexpo - 05 and will be participating in PIR later this year and plan to participate in the same exhibition next year.

Other areas of potential are Environment, Energy Sector, Infrastructure, Franchising, Education, ICT, Medical and Pharmaceutical. In all these areas, Austrade is targeting small and medium enterprises, but also helping with large projects when required. It also has underway an Australian wine marketing program.

In your opinion what is the main subject of interest of Australian businessmen towards Russia "tomorrow"? What are they ready for "today"?

Australian mining and mining services companies are interested in prospects in the Russian far east, particularly Sakhalin Island's oil and gas projects. And many new and more sophisticated Australian products – ranging from processed foods to medical equipment, education, tourism and telecommunications products and services – have begun to penetrate the Russian market. Small and medium-sized Australian companies are now present in the market alongside large, well-established, multinational companies. Future developments will depend on various factors - market environment, investment climate, government policy – but I expect that the variety and the volume of our bilateral trade will continue to grow, and that we will see an expansion also of two-way investment.

Is there anything you would like to say to Russian businessmen, MCCI members or address them in any way?

During the course of this interview, I have identified some of the industry sectors of most potential in our bilateral trading relationship. The Austrade office in the Australian Embassy here in Moscow would be pleased to talk to any Russian company interested in a trading or investment relationship with an Australian company seeking to create business in Russia. I invite MCCI members also to visit the Embassy website at www.australianembassy.ru or the Austrade website at www.austrade.gov.au.

Foto:

Robert J. Tyson, Ambassador of Australia in Russia;

Suren O. Vardanian, MCCI Foreign Economic and Interregional Relations Department Director;

Gregory Klumov, Senior Trade Commissioner CIS;

Alexey V. Nesterenko, MCCI Commission on economic partnership with Australia and New Zealand.