"Russia and Azerbaijan are looking at non-primary component in trade"

Recently, Moscow hosted constituent meeting of the Russian-Azerbaijani Business Council, which will determine the business agenda in bilateral relations, which should lead to an increase in export and trade indicators of contacts between the countries. Russia remains one of the leading trade partners of Azerbaijan. 90% of Russia's export falls on the products with high degree of processing. It is based on machines, equipment and transport, food products and agricultural raw materials, metals and metal products, wood and pulp and paper products. Import is dominated by food products and agricultural raw materials, mineral products, mineral fuel, oil and products of its distillation.

Production of "AvtoVAZ" company is in demand on the Azerbaijani market. A year ago, "KAMAZ" company launched a line of trucks manufacturing at the Ganja Automobile Factory, with the prospect of supplying them to third countries. At the same time, Scientific Production Corporation "Uralvagonzavod" started supplies of 2900 freight cars of different models to Azerbaijan under the contract with "Azerbaijan Railways".

Last year, the Working Group for agricultural cooperation and carrying out agricultural supplies was created. Then, the Azerbaijani side confirmed its willingness to intensify export of its products, adapting it to the requirements of the Russian market and forming cooperation in this field on a long term basis.

600 joint ventures and enterprises with 100 percent Russian capital are operating in the Azerbaijani market. They account for 8.5% of the total workforce of companies with foreign capital there. The interaction is carried out in the framework of contractual obligations of the parties and their participation in the implementation of joint projects. "LUKOIL" company, which is a participant of billion dollar project "Shah Deniz", holds the most stable positions in the fuel and energy sector of Azerbaijan. According to the agreement on production sharing in Shah Deniz, Russians own 10%, LUKOIL's investments to this project are estimated at 700 million dollars. The Russian company also has an extensive network of gas stations in Azerbaijan. In February of 2014, "Transneft" company signed a contract on pumping of Azerbaijani oil through "Baku-Novorossiysk" pipeline with SOCAR. Exchange of electricity between the two countries continues in peak situations.

"AzRosPromInvest" company (a leader on the CIS market of bentonite), "Baltika-Baku" brewery (the largest company of its kind in the region), "Soglasie" insurance company, "Dobromed" clinic are operating in Azerbaijan. Cooperation between "Metrovagonmash" company and Baku Metro continues. In April of last year, Baku opened an office of "Vostok - Service" company.

Azerbaijan supports interregional ties with 72 of 85 subjects of the Russian Federation. Regions of the North Caucasus, Ural and Volga Federal Districts are the most active. Dagestan and Tatarstan representative offices are operating in Baku.

As the managing director for non-financial support of the JSC ‘Russian Export Center’, Konstantin Evstyukhin, stated in an interview to Vestnik Kavkaza, it is hard to overstimate the importance of creation of the Russian-Azerbaijani Business Council: "The creation of the Russian Business Council with Azerbaijan is now an extremely urgent topic. During the preparation of the founding congress we did not expect such an interest that was expressed by our enterprises. This is important for different sectors of the economy. And the agricultural machinery, banking, financial and pharmaceuticals spheres, and so on. Now it is necessary for us to diversify and develop the bilateral agenda in every possible way."

The expert said that one of the goals of the Council’s timely creation is an increase in the export of Russian products: "According to the statements of our various associations, the potential is large. That is, indeed there are prospects to increase several-fold the exports of our high-tech and engineering products. And in general, to increase also the supply of Azerbaijani products to Russia. So we certainly pin our hopes on the Business Council, which will create exactly the business agenda to entail and increase the export and trade figures between the two countries."

According to him, "taking into account what is happening on the foreign markets, of course, the parties – Russia, and Azerbaijan – are looking primarily at the non-primary component, the share of which was small in trade turnover. That is, indeed, the structure of the economy should be reconstructed, as oil prices has fallen heavily, this trend is quite protracted. The time has come to move towards high-tech exports, high-tech trade, and not in the raw materials’ direction."