BOSS (Moscow) - December 23, 2008.

The Russia-South America: Strategic Partnership and Profitable Investment international business summit was organized by RBC in Chile and Argentina on November 1-8.

The summit was held as part of the official program of Russia Days in Latin American countries, organized under the patronage of the Presidential Executive Office of Russia, the Foreign Ministry of Russia and Russia's International Center for Scientific and Cultural Cooperation. Among the conference's partners are Russian Embassies in Chile and Argentina, Consejo Empresario Argentino-Ruso (CEAR), Chile's Ministry of Public Works, Central Bank of Chile and Chilean-Russian Chamber of Commerce.

Participants of the business leaders' summit discussed in both Santiago (Chile) and Buenos Aires (Argentina) the potential of trade and economic relations between Russia and Latin American countries in the following economy sectors: fuel, energy, financial, transportation, food and processing industries. The event gathered together nearly 200 participants, among whom were top government officials from Russia, Chile and Argentina, chiefs of major companies, and public officials. The conference was attended by Ambassador Extraordinary and Plenipotentiary of Russia to Chile Yury Filatov, Ambassador Extraordinary and Plenipotentiary of Russia to Argentina Yury Korchagin, Head of Federal Service for Veterinary and Phytosanitary Surveillance of Russia (Rosselkhoznadzor) Sergei Dankvert (who is also Chairman of the intergovernmental commission on cooperation with Chile and Argentina), Chairwoman of the Federation Council Information Policy Commission Lyudmila Narusova, Chairwoman of the Russian Presidential Council for the Development of Civil Society Institutions and Human Rights Ella Pamfilova, President of the Association of Russian Banks Garegin Tosunyan, General Director of the Moscow International Business Association Alexander Borisov, President of the Russian Financial Corporation Bank Andrei Nechaev, and Vice President of the Independent Association of Machinery Manufacturers (NAMS) Alexei Eryomenko, to name just a few.

When addressing the conference's participants, representatives of Chile and Argentina repeatedly stressed the fact that the world required a multi-polar system to build a foundation for the new global financial architecture through collaborative efforts. "The crisis has proven that the world is already on its way to creating a multi-polar and multicultural model, which will help all nations overcome the crisis," Jorge Enrique Taiana, Argentina's Foreign Relations and International Trade Minister, stated. "Today we must offer solutions to the world that incorporate a large number of factors." In its part devoted to Chile, the summit's program was very eventful. While pondering the potential for Russian companies' work in the republic, Chilean participants suggested that Russians pay special attention to the agricultural sector, energy, metallurgical, and mining industries, as well as tourism. Chileans believe that investments in these sectors are likely to be the most lucrative.

Meanwhile, Executive Vice President of the Chilean Economic Development Agency (CORFO) Carlos Alvarez pointed out that the country had created a very comfortable environment for foreign businesses: low customs duties, low level of protectionism, and zero tariffs on imports. Furthermore, both foreign investors and national entrepreneurs enjoy the same business conditions. Head of the Russian office of Mr. Fernando Belloni, director of the Commercial Representation at the Chilean Embassy, said the following about the potential cooperation between the two countries: "We should be a platform for Russia entering Latin America, and Russia may open its doors for Chilean businessmen to work in the CIS. According to forecasts of the International Monetary Fund and the World Bank, economic growth in Chile and Russia is estimated at 3.5 and 5.5 percent, respectively. With this in mind, we must use this opportunity to promote work on devising a memorandum on free trade." At the same time, Sergei Dankvert indicated that it was important for Russia that its electrotechnical, mechanical and mining equipment was well-known in Latin America, meaning that it should also enjoy high demand on the Chilean market. "Furthermore, we would like to supply aviation equipment to this market and establish assembly plants in Chile," the head of Rosselkhoznadzor and Chairman of the intergovernmental commission on cooperation with Chile and Argentina observed.

For the moment, however, despite the constantly rising trade between Russia and Chile, there is still room for improvement in trade relations between Russia and Chile. "Russian-Chilean relations are currently developing at a pace slower than we would actually like. Trade between the two countries jumped five times over the last six years - from $50m in 2001 to nearly $300m in 2007, but mutual investments stood at a meager $60m," according to Chile's Minister of Public Works Sergio Bitar. Russia's Ambassador Extraordinary and Plenipotentiary to Chile Yury Filatov attributed such low figures to a lack of information about opportunities in both countries. "Do we see any efforts on the part of marketing and advertising specialists?" he exclaimed. "Interbank cooperation is poorly developed, and thus there can be no large-scale projects." Garegin Tosunyan stepped forward on behalf of the Russian banking sector, however.

According to President of the Association of Russian Banks, investors were the key driving force for the development of trade and economic relations between Russia and other countries. "The primary interest of major players is certainly European partners, as they are located closer to Russia," he stated. "Latin America is currently playing a secondary role. We do not travel there often and rarely get a chance to meet face to face with their entrepreneurs. In terms of government support for exporters, I must admit that unfortunately, in Russia, this does not apply to Latin America." Sergei Dankvert, however, stressed several times during the conference that the Russian government was poised to create long-term and mutually beneficial relations with Latin American countries. "These markets are very important for us," said head of Rosselkhoznadzor. "Both Chile and Argentina are major suppliers of agricultural products to Russia. It is also important that these countries compete with agricultural suppliers from Europe and the U.S. thanks to the high quality of their products, rather than government support."

The Argentine part of the summit was devoted to investment opportunities in this country and the problems of trade and economic cooperation between Argentina and Russia. Beatriz Nofal, President of the National Agency for Development in Argentina, pointed out that Russian businesses should direct their attention to the country's energy system, oil and gas sector, railroad construction, production of food products and bio-fuel, biotechnologies, the car industry and agricultural supplies, as these sectors boasted the greatest potential. The Argentine government guaranteed security for investments, expatriation of revenue, the possibility to secure internal loans. Foreign investors enjoy the same rights and benefits as local entrepreneurs: a decrease in taxes during the first stage of work, benefits provided to companies working in specific sectors, like the timber industry, tourism, car manufacturing, as well as region-related benefits.

Trade between Russia and Argentina exceeded $1.3b in 2007, but there is a major problem in trade relations between the two countries: Argentina has yet to recognize Russia as a market economy. This is obviously merely a technical decision based on the notion that Russia is not a member of the WTO. The Russian economy's current status, however, has resulted in Argentina's use of anti-dumping measures against Russia's imports (regarding Russia's steel, for instance). At the same time, Sergei Dankvert indicated that many Argentine products in Russia were subject to a 25-percent discount on import customs tax in accordance with an agreement on mutual trade preferences from 1993. What is more, the discount applies to Argentina's key export items - food products. "Why don't Argentines comply with the agreement from 1993? Shouldn't our government remind the republic's government about existing documents by, say, changing the discount to 10 percent?" Dankvert asked rhetorically, off the record.

Meanwhile, all these problems of economic cooperation between the two countries will be solved in early December, when a delegation of Argentine businessmen visits Moscow together with President of Argentina Cristina Fernandez de Kirchner. Speaking of the upcoming visit, Argentina's Foreign Minister Jorge Enrique Taiana pointed out that it would promote the development of political, legislative, and taxation aspects of relations between the two countries. Summing up the results of the conference, its participants observed that this was the first time ever that such a high-profile and diverse delegation from Russia visited Latin America. Furthermore, President of the intergovernmental commission on trade, economic, scientific and technical cooperation with Russia Carlos Furche drew the attention of the conference's participants to the fact that the forum was held prior to the Asia-Pacific Economic Cooperation (APEC) summit in Lima scheduled for November, in which Russian President Dmitry Medvedev was expected to participate. With this in mind, the discussions on trade and economic-related topics that were launched at RBC's conference would continue during Argentina's visit to Russia on December 8-10, 2008. "Taxation matters in Russian-Argentine relations will be the key topic for discussion during the meeting of presidents in Moscow," Taiana stated.

In general, all the participants of the forum agreed that the summit of business leaders in Chile and Argentina was a notable and important event that had undoubtedly set out new prospects for cooperation between Russia and Latin American countries.