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REPORT OF THE CONFERENCE ON RUSSIA AND EU - PERSPECTIVES IN ECONOMIC AND LEGAL INTEGRATION |
St Petersburg, Russian Federation, 17 and 18 June 2004
Organization and opening of the Conference
Chairperson: Mrs Valentina Matvienko, Governor of St Petersburg
1. The Conference on Russia and EU - Perspectives in Economic and Legal Integration, held in St Petersburg on 17 and 18 June 2004, was organised by the Ministry of Justice of Finland and the Ministry of Justice of the Russian Federation, in co-operation with the Presidency of the European Union. The Conference was attended by Ministers and other senior officials, leading representatives of the business community as well as researchers, representing a wide range of fields and authorities involved in economic and legal integration. The Conference was also attended by representatives of the European Commission, the Council of Europe and the Council of the Baltic Sea States. (A list of the participants is provided in annex I.)
2. The Conference was opened by Mrs Valentina Matvienko, Governor of St Petersburg. Mrs Matvienko stressed the extensive positive development that had taken place in the Russian economy, a development that was clearly evident also in St Petersburg. This has been underpinned by the strengthening of the legal framework for economic development. She noted her conviction that the Conference would contribute to further integration of the Russian Federation and the European Union in all areas.
3. Minister Yury Chaika welcomed the participants to the Conference on behalf of the Ministry of Justice of the Russian Federation. He noted that the participants represented a number of governmental bodies, the business community, academia and intergovernmental organisations that are active in shaping and implementing the policies of individual countries and institutions in legal and economic development. The Conference should help to improve mutual understanding.
4. Minister Johannes Koskinen, in turn, welcomed the participants on behalf of the Ministry of Justice of Finland. Mr Koskinen expressed the view that the Conference would contribute to the strengthening of co-operation between Russian and the European Union, and stated that he looked forward to what promise to be thoughtful and pertinent discussions on matters of vital interest to all the countries represented.
Message from President Vladimir Putin
5. The following message from President Vladimir Putin was presented to the Conference: "My greetings to the participants and guests at the Conference. Your international forum has brought together representatives of State bodies, the business community and the academic world to discuss topical questions on legal and economic Russia and EU integration. An effective solution to these problems opens up new opportunities for all Europeans, making possible the improvement of the competitiveness of our economies, the certain fulfilment of the rights of persons and security on our continent.
6. I anticipate that the work of the Conference will be an additional real contribution to the multi-sided dialogue between Russia and its European partners and will contribute to the implementation in practice of the programmes and initiatives presented at the Russia - EU summits. I wish success and all the best in your work."
Message from President Tarja Halonen
7. The following message from President Tarja Halonen was presented to the Conference; "Finland and the Russian Federation have had a long and mutually beneficial relationship, as befits neighbouring countries. The mainstay has been our economic co-operation, which has greatly contributed to our well-being. With the expanding trade and, even more, with the direct ties that are developing between our citizens and our companies in many sectors, the need for ensuring a solid foundation for legal co-operation has received more and more attention.
8. The same is true on an even larger scale of the relationship between the European Union and the Russian Federation. The idea of creating the Common Space of Freedom, Security and Justice as well as the Common European Economic Space, binding our economies and our societies closer together, carries much promise.
9. This world, subject as it is to globalisation and other trends in international interaction, is developing rapidly. In such interaction, states, companies, associations and individuals need a basis that assures predictability and certainty. Such a basis requires the rule of law, good governance and mutual confidence.
10. May I take this opportunity to wish the participants at the Conference every success. Through economic and legal integration both the newly expanded European Union and the Russian Federation can build upon their strengths. Your discussions will show the way forward, and I shall be looking forward to the results.
European legal integration
11. In introducing the theme of European legal integration, Minister Yury Chaika noted the symbolism of St Petersburg as a bridge between East and West. A series of EU - Russian summits held in St Petersburg, Rome and Moscow have identified several objectives linked to the establishment of the Common European Economic Space and the Common Space of Freedom, Security and Justice. This opens the way for significant development of the economic and legal framework in the European Union and Russia, strengthening relationships and partnerships. Minister Chaika called for intensification of work on harmonising legislation in Russia and the EU. In this connection he noted the intense work that has been carried out in the Russian Federation in order to reinvigorate the legal and judicial system.
12. Minister Chaika also noted the importance of enhancement of co-operation in order to combat drug trafficking, money laundering, trafficking in persons, illegal migration and terrorism. In respect of terrorism, he stressed the importance of the initiative to develop a comprehensive Council of Europe Convention on terrorism, which would in turn provide further impetus to the corresponding work within the framework of the United Nations.
13. Co-operation is also important in civil, trade and family matters. Although in general the EU acquis could serve as the standard for developing such co-operation, the co-operation should not be one-sided. Also Russian experts should participate in developing common European standards. In this respect, the experiences of the other Republics in the CIS could also be of value.
14. Minister Chaika further noted the initiative of the Ministry of Justice of Russia regarding the establishment of a European register of normative instruments under the auspices of the Council of Europe. Minister Chaika closed by noting that enhanced EU - Russian co-operation on the ministerial level would help in achieving a new qualitative level in this relationship and in obtaining new deliverables. Along with a plan of action and a road map, new institutional arrangements should be considered in order to help address the key issues. For example, the work of Eurojust, Europol and the European networks for co-operation in civil and criminal matters could be enhanced through Russian co-operation.
15. Minister Johannes Koskinen noted that the Conference shows that the European Union and the Russian Federation have the common will and the means to develop a freer, more secure and more just Europe. Since the European Union is one of Russia's most important trading partners, and the significance of trade and economic relations has grown even more with the enlargement of the European Union, the economic relations between the European Union and Russia are of fundamental importance. Also legal integration has strengthened, both within the European Union and between the European Union and Russia. A sign of this is the strong support that the European Union has given to the entry by Russia into several multilateral criminal law and civil law conventions, and to Russia's application for membership in the World Trade Organisation.
16. Minister Koskinen noted that the next joint objective is the creation of the Common Space of Freedom, Security and Justice and the Common European Economic Space, as called for by recent EU - Russian summits. The purpose of the Common Space of Freedom, Security and Justice is to support the strengthening of democracy and the principle of the rule of law in the different sectors and on the different levels of the administration of justice. The purpose of the Common Space is to ensure balance in Europe between security on one hand, and freedom and justice on the other, based on shared values and rules in the EU as well as in Russia. Attention should be paid to problems in the administration of justice, the independence of the judiciary, the improvement of legal certainty and predictability, the development of the operation of the political system, work against corruption and organised crime, and constant monitoring of the legal development. He also called for increased effectiveness in the implementation of the European Union Action Plan on common action with the Russian Federation on combating organised crime (2000).
17. Minister Koskinen referred to the importance of continued co-operation between the European Union and Russia in combating terrorism. He noted that while effective legal means are needed in this work, political and economic stability, democracy and the securing of the human and fundamental rights of citizens together with an effective network for legal co-operation are powerful weapons in responding to terrorism.
18. Mr Koskinen further stressed the role of multilateral conventions in the development of legal co-operation and international legal assistance. In order to reach the goal, it should be possible to improve the work of the central authorities in particular in respect of civil law conventions. The structures of the Agreement on Partnership and Co-operation (PCA) provide a good framework for a dialogue in justice and home matters. Partnerships should be developed between legal authorities and regular meetings should be organised among high-level representatives of the Ministries of Justice, in order to discuss the strengthening of co-operation in criminal and civil law.
19. Minister Michael McDowell, Ministry for Justice, Equality and Law Reform, Ireland addressed the Conference on behalf of the Presidency of the European Union. He began by stressing not only the shared history and geography of Russia and the Member States of the European Union, but also their shared values, common interests and challenges, as well as the many trade, energy, economic and political links. He noted that, as holder of the Presidency of the EU, Ireland has worked to raise the partnership between the EU and Russia to a new level of trust and co-operation.
20. Minister McDowell reviewed the key steps in the development of EU co-operation in justice and home affairs, including the 1992 Maastricht Treaty, the 1997 Treaty of Amsterdam, and the 1999 European Council in Tampere. He paid particular attention to the adoption of a number of important instruments in line with the programme of work decided in Tampere. This work provides the background to the development of the Common Space of Freedom, Security and Justice between the European Union and Russia. The EU - Russian Common Spaces Action Plan agreed at the recent EU-Russia Summit in May provides for the development of co-operation in a number of areas with reference to specified objectives: the rule of law, human rights and fundamental freedoms; terrorism; border and migration management, asylum and the movement of persons; tackling organised crime and other illegal activities; and promoting judicial co-operation. In each area objectives are set and priorities identified for further EU - Russian co-operation.
21. Of these themes, terrorism remains a key concern of the European Union. The Action Plan makes the identification of ways to work together to prevent and combat terrorism a key objective, in full respect of international human rights obligations. Implementation of the Europol - Russian Agreement and the development of co-operation between Eurojust and Russia will be important parts of that objective. The development of links between Eurojust and the Russian General Prosecutor's Office is also seen as a key measure for the purpose of promoting judicial co-operation between the European Union and Russia more generally. Other priority areas to be examined include the possible development of an EU - Russian agreement on mutual legal assistance and extradition and common recourse to existing international co-operation instruments in both the civil and criminal field.
Co-operation between the European Union and Russia in home and justice affairs
22. Mr Jonathan Faull, Director General of Justice and Home Affairs DG, European Commission, addressed the issue of co-operation between the European Union and Russia in home and justice affairs. The Russian Federation and the EU face common challenges in this field. One such challenge is terrorism. Key aspects of fighting terrorism include preventing money laundering and related terrorist financing as well as improving document security. The second challenge is fighting organised crime, In this respect, Mr Faull referred to the 2000 Plan on Organised Crime, the regular meetings of EU and Russian Ministers, and the network of EU and Russian liaison officers.
23. Mr Faull cited examples of concrete action taken, such as in the fight against money laundering; the strategic agreement between Russia and Europol and the consideration of a second, operational, agreement; contacts between Eurojust and Russia; and the work to exchange liaison magistrates between EU Member States and Russia. He noted several issues in respect of sound management of migration and movement of persons where work is underway or planned; examples include the work on a readmission agreement between Russia and the EU, and negotiations between the EU and Russia on visa facilitation. In noting the fundamental necessity of for example democracy, pluralism, respect for human rights, civil liberties, the rule of law, core labour standards, an appropriate political, regulatory and trading framework, and transparent and non-discriminatory application of laws by the law enforcement authorities, he paid tribute to the commitment that Russia has demonstrated in the fight against corruption. He also gave examples of the significant judicial reforms that have been carried out in Russia over the last few years. He stressed the importance of the independence of the judiciary, the training of judges and prosecutors, establishing the appropriate jurisdiction for courts, the procedural standards in criminal cases, and ensuring the resources that a court needs to act properly.
24. A more effective judiciary will also lead to more efficient judicial co-operation between the EU and Russia. Contact and dialogue between Russia and EU Member States could be enhanced through Eurojust and the European Judicial Network. This interaction is considerably facilitated by the fact that the EU and Russia are already parties to a series of international agreements that allow for judicial co-operation. Mr Faull noted several other instruments that the Russian Federation should consider ratifying. In summarising that co-operation on terrorism, organised crime and other illegal activities, illegal migration, border management, visa issues, rule of law, human rights and judicial co-operation are the main elements considered to be necessary for setting up a common EU - Russian area of Freedom, Security and Justice, Mr Faull cited how the Commission is using the Tacis funding programme to facilitate this.
Legal protection of market economy and development of economic justice as part of the Russian reforms
25. Mr Veniamin Yakovlev, President of the Supreme Court of Arbitration of the Russian Federation, spoke on the theme of the legal protection of market economy and development of economic justice as part of the Russian reforms. He reviewed the extensive reforms that have taken placed over the past decade in all sectors of Russian society and state, including the economic and legal sectors. He stressed the linkage between economic development and clear normative regulation of the economy, as well as the importance of a smooth system for enforcing such regulation. Mr Yakovlev described the development of the role of courts of arbitration in the Russian Federation and noted more generally the role of alternative ways of regulating disputes through pre-trial and out-of-court procedures and mechanisms.
26. Mr Yakovlev observed that economic and legal integration into the world economy is a prerequisite for sound development. Russia has made considerable progress in this respect, although further integration is needed in the judicial sphere. Moreover, the legal protection of the rights and interests of foreign investors in Russia and of Russian entrepreneurs abroad should be assured. Article 98 of the 1994 co-operation agreement between the Russian Federation and the EU provides the framework obligation of the parties to assure non-discriminatory access of individuals and legal entities to competent courts of the parties in order to protect their rights. More concrete mechanisms for judicial co-operation between the two are provided by the Hague Conventions. Consideration should be paid to the possibility of additional instruments between Russia and the EU that would parallel the 1968 Brussels Convention and the 1988 Lugano Convention, on the recognition and enforcement of foreign court decisions in civil and commercial matters. Mr Yakovlev further suggested that an agreement is needed between Russia and the European Union on co-operation in the energy sector, and in the transport sector, specifically in respect of Kaliningrad. He noted that such agreements would not only help resolve the current problems, but also form the necessary framework for co-operation.
Towards a Common European Economic Space, the significance of the WTO and the enlargement of the European Union
Chairperson: Minister of Justice of the Russian Federation Mr Yury Chaika
27. Ms Yelena Danilova, Director of the Department of External Economic Relations of the Ministry of Economic Development and Trade of the Russian Federation, noted that the Russia - EU summit in Moscow marked an entry into a qualitatively new stage in co-operation. Both sides have much to offer one another, in a complementary manner. The objective is to create a legal and economic environment that favours the development of business, commodities and investment flows. Ms Danilova noted her agreement with the view of the EU Commission that the effect of EU enlargement will be highly favourable; after all, Russia has close economic ties with the new EU Member States, and so EU enlargement will consolidate economic relations between Russia and the EU in general.
28. Major progress has already been achieved in dealing with some potentially difficult issues. For example, a protocol has been signed on expanding the PCA agreement to include the ten new EU Member States. However, a number of concerns remain. Among these are the need to implement the arrangements incorporated into the protocol; the need to sign an appendix to the agreement on steel that takes into consideration the enlargement of the EU; the need to consider measures in respect of anti-dumping; and the need to discuss implementation of long-term contracts and co-operation in the nuclear field with several central European countries. There are also negative signals from Kaliningrad regarding transit of goods. All in all, there is a need for a joint examination of the problems that have arisen following EU enlargement. It may be that no new legal instruments are needed, just better dialogue and co-operation.
29. Work is now underway on the creation of the common European spaces identified by the EU - Russian Summit in Rome. The Commission's views on co-operation in the four spaces are currently being examined by the Russian side. A study conducted jointly with the EU has demonstrated that EU and Russian economic mechanisms were quite compatible at the legislative and regulative levels. A Common European Economic Space can incorporate elements developed in other fora, such as the dialogue in the sphere of energy.
30. The issues of globalisation and regionalisation are highly topical along with the new round of WTO negotiations. The WTO provides a number of instruments and a legal framework that opens up new opportunities. The global WTO instruments, however, can co-exist with regional agreements, such as that on co-operation among Russia, Belarus, Kazakhstan and Ukraine, and the plans for a Common European Economic Space. Such regional agreements simply provide new ways of dealing with problems that cannot be solved globally. This can be seen as a bottom-up approach, with due regard to the interests and concerns of the States concerned. EU enlargement is a challenge both for the EU and for Russia. Russia has good manpower and a technological infrastructure, while the EU has rich experience in financial and other areas. Russia and the EU should join forces in order to produce highly competitive products not only for the Russian market but also for other, rapidly growing markets, such as in the Pacific.
31. Mr Miroslaw Franciszek Zielinski, Under-Secretary of State at the Ministry of Economy and Labour of Poland, noted the recent expansion in the amount of economic regulation. The legal environment and business are closely related. The rapid development in Russian legislation is very impressive. Now, after EU enlargement, the European Union has moved closer to Russia. The number of decisions and regulations, and even the construction of some legal instruments, already reflects the involvement of the new Member States.
32. There have been difficulties involved in the process. For example, the talks on extending the PCA to the ten new Member States have been complex. Polish foreign trade is growing very rapidly; 30% over all. The growth in trade with Russia has been ten percentage points, and the growth with Belarus and Ukraine has also been considerable. The PCA should prove to be very effective. Enlargement means more economic opportunities for Russia.
33. The role of the WTO is very important, since it provides a set of rules and principles that cover trade and goods as well as intellectual property. Mr Zielinski expressed his satisfaction with the recent signing of the EU - Russian protocol on promoting Russia's membership in the WTO. Such membership will result in the adoption in Russia of instruments that have been worked out in the WTO system.
34. Mr Zielinski closed by noting that the Common European Economic Space is also evolving, and there is a need for the definition of goals. The Tacis programme is very important in providing financial support for achieving these goals.
35. Mr Mauri Pekkarinen, Minister of Trade and Industry of Finland began by noting that from a historical, cultural and economic perspective, the EU and Russia are natural partners, and therefore co-operation between the two is bound to succeed. The market economy has developed rapidly in Russia. The stabilisation of political, institutional and social conditions has streamlined the production structure in Russia and speeded up economic growth. An important question is whether the Russian Government's commitment towards the liberal market economy and increased international exchange will continue. Liberalisation of trade, the development of legislation and more efficient enforcement of law facilitate imports and foreign investment. An increase in foreign investment would be extremely important to Russia, because in this way technological and business know-how could be transferred to the country.
36. On the other hand, uncertain operating conditions, lack of predictability in development and in the enforcement of legislation do not encourage long-term investment. Granting foreign investments national treatment and applying the principle of most-favoured-nation treatment would make Russia more attractive as an object of foreign investment. The European Union should support Russian efforts to create a more favourable investment environment. The future membership of the WTO will increase Russia's attractiveness as a trading partner. Endorsement of some other principles of international agreements, such as the Kyoto Protocol, the energy co-operation agreements and rules on safety at sea and nuclear safety, is also of the utmost importance.
37. The enlargement of the EU has brought the European Union and the Russian markets closer together, which makes more intensive co-operation possible in the future. When the new EU Member States begin to apply the common commercial policy of the EU, a larger part of Russian exports will be subject to harmonised trading rules, which accentuates the positive effects of the EU enlargement on Russia. The sooner Russia aims towards international norms and standards, the more the competitiveness of its industry will increase.
38. In the future, the economic relations between the EU and Russia will, to a larger extent than before, be part of a global network of economies. Ensuring effective and appropriate international rules and a functioning global market economy, including contractual arrangements, requires intensive co-operation between the countries concerned. The objective of the co-operation between the EU and Russia is economic and legislative integration leading towards a common European market area that promotes economic growth, investment and a balanced development of societies and ensures implementation of the principles of freedom, security and justice.
39. Dr Pekka Hallberg, President of the Supreme Administrative Court of Finland, referred to Mr Faull's comment that a fair judicial system is the cornerstone of democracy and the rule of law. The need for a functioning legal system is a basic one, a need that concerns everybody in day-to-day life. In the negotiations on enlargement, perhaps four issues have been at the core: corruption, the protection of minorities, the judicial system, and public administration. In these respects, problems continue to exist also in the old Member States, for example in the protection of minorities. It is perhaps too simple to say that the EU is a confederation, a legal construction based on the separation of powers and certain legal principles. At the same time, the EU is a very dynamic and evolving entity, and it is not possible to establish once and for all what the European Union is. In the discussions in the EU, stress has been given to the view that the relationship between the law and the economy is fundamental. A well-functioning rule of law and the quality of legislation are also factors in competitiveness, something that must be developed constantly.
40. Studying the rule of law on the basis of bottom-up support theory on the national level and on the global level is essential for integration, We need to be competitive on the global level: we need well-functioning rule of law provisions on the national level. There is no non-governmental organization or other body that could take the place of national decision-makers in establishing and protecting rule of law principles.
41. President Hallberg noted the interest that had been shown at the Conference in the economic legislation adopted in the Russian Federation, and for example the voluntary codes of conduct that have been adopted by many companies. Rule of law principles are common values that are shared by Russian and the EU. The European Union is happy to join with the Russian Federation in building up rule of law principles. Mechanisms for this include the exchange of information, the establishment of best practice and the development of data banks containing norms and court decisions.
The legal basis of market economy and economic integration
42. Mr Leif Sevón, President of the Supreme Court of Finland, noted that the legal system as a whole reflects the market economy. Legislation provides the necessary underpinning, but how the legal system operates in practice also needs to be examined: can one rely on the operation of law, on the operation of courts, and on the enforcement of court decisions? Only if these are in order, can the system provide the effective basis for a market economy.
43. The cornerstones of a market economy include private property, freedom of contract, the right of establishment, and competition. Private property forms the basis for economic activity. The legal system must enable ownership and a sufficient degree of transparency in order to ascertain who owns property and what other rights are involved. The legal system must also provide rules on what economic operators may do with their property, and on how changes in ownership can be brought about. This leads to the second cornerstone, freedom of contract. This basically implies that one may choose whether to enter into a contract, with whom and under which conditions. Should there be the risk that the contract will not adequately be fulfilled, the functioning of the legal system in question must be assessed: how well do the courts function, and how well are judgments and awards enforced.
44. The third cornerstone is the freedom to establish businesses. There is a need for rules on various types of business entities and on the relation between owners of the entities, the directors, the creditors and certain other stakeholders. In respect of corporations a market economy presupposes a number of clear and stable rules, for example on an adequate variety of legal entities, and on an adequate protection of the interests of investors. The fourth cornerstone is competition. This presupposes legal rules at the national and the international level as well as at the level of regional economic co-operation. It is essential that rules on competition apply to all operators, including State monopolies and other public undertakings or undertakings to which special or exclusive rights have been granted.
45. The rules on competition must be supported by an authority with sufficient resources and powers, and there must be sufficient means to discourage economic operators from abusing the rules, including incentives to reveal abuses.
46. President Sevon concluded by noting the importance of predictability as to the contents of the legal environment in which the operation is carried out. Major concerns in this respect are taxation, and the rules applicable to different aspects of imports and exports such as customs duties and rules concerning formal aspects on such operations.
Challenges of the Common Space of Freedom, Security and Justice
Chairman: Minister for Justice, Equality and Law Reform of Ireland Michael McDowell
47. Mr Andrey Denisov, Deputy Minister for Foreign Affairs of the Russian Federation, observed that the creation of a European Space of Security brought forth a number of challenges, such as the need to develop a road map for a visa-free regime between the EU and Russia, and the need for strict compliance with all provisions related to the priorities areas indicated in the 2000 Action Plan regarding organised crime, including money laundering, tax fraud, terrorism, drug trafficking, and trafficking in stolen motor vehicles.
48. Another priority is ensuring basic rights and freedoms, including those of ethnic minorities whose language is not that of the majority in the country. Deputy Minister Denisov noted that this is a sensitive issue for the counterparts in the European Union. No reasons, including those relating to the weight of history, should allow infringement against the rights of persons. Deputy Minister Denisov expressed the hope that the EU would be as consistent in supporting these rights as it has in respect of other rights.
49. There is a need for co-operation between the law enforcement bodies of the EU and Russia. In this respect, Deputy Minister Denisov noted the importance of the network of contact points, and of the agreement between the Russian Federation and Europol. The sharing of personal information and of operational data should be made possible as soon as possible. There is also a need for improving co-operation between Russian prosecutors and Eurojust. He noted as an example that the bilateral co-operation between Russia and Finland has been good; this example of Finland shows that active co-operation in regional (EU) co-operation does not hamper bilateral co-operation.
50. Deputy Minister Denisov closed by recalling Deputy Minister Zielinski's reference to the future being bright, and added in the words of Mao Tse Tung: the prospects are bright but the road is winding.
51. Mr Ken-Marti Vaher, Minister of Justice of Estonia, emphasised that building up and maintaining a successful partnership is a long-term activity, one that requires understanding, mutual trust, a long-term commitment and above all a vision of what is wanted from the partnership. Creating a common space of justice calls for mutual trust and understanding, and an ability to make compromises. Europe has had a troubled past, and we have in some sense remained a prisoner of images based on history, images which form barriers to further progress. We should start with bilateral dialogue. For example the Baltic countries are seeking a common understanding of the tragic events of the past.
52. A major transformation in still needed in our thinking and in our policy. The need to counter terrorism has received much attention, and the action plan on organised crime provides a good basis for work. A strong border regime and effective co-operation that seeks to destroy trans-border organised crime is in the interests not only of Estonia and the EU at large, but also of Russia. In particular action against drug trafficking, as the most dangerous crime affecting different sectors of society, should be a real, concrete priority.
53. The PCA is the legal basis for EU - Russia co-operation. In addition, some 30 bilateral agreements exist between EU Member States and Russia. Minister Vaher welcomed the accession of Russia to many multilateral conventions, and noted that he had been informed that Russia plans, perhaps by the end of 2004, to sign the Council of Europe convention on the transfer of prisoners.
54. In noting the need to discuss practices that run counter to European values, Minister Vaher referred to many practical examples of constructive co-operation, based on shared values and common interests. He cited in particular the work of the Council of the Baltic Sea States, which is currently chaired by Estonia.
55. Mrs Jole Santelli, Deputy Minister of Justice of Italy noted that the common space of freedom, security and justice must take into account cultural differences, even before taking into account legal differences. There is a need to select the instruments that would best help in achieving the objectives at hand. In this, there is no need to go so far as to seek uniformity, since what is not homogeneous is not necessarily incompatible. There is also a need for in-depth reflection, for example regarding the common roots of our culture. Considerable progress has been achieved in a short time. For example, a single currency has now been implemented in twelve countries. Even the idea of a Common European Economic Space would have been unthinkable earlier; the closer legal co-operation that has developed has made this objective feasible.
56. Economic integration is faced with new challenges, such as enlargement, which has brought into the EU new states with different systems. Closer co-operation with Russia is inevitable, a need that goes far beyond the PCA. Deputy Minister Santelli emphasised that there is a stronger need for common action with Russia, and she noted with appreciation the will of the Russian Federation to join the WTO. Citizens of all part of Europe should enjoy a high standard of living. The EU and the Russian Federation are close not only geographically and in terms of borders, but also in the sharing of the same challenges.
57. Mr Thomas Bodström, Minister of Justice of Sweden, focused in his presentation on organised crime and terrorism. For example trafficking in human beings and drug trafficking pose a serious threat. The recent Nordic-Baltic campaign against trafficking in human beings provided a good example of what practical co-operation can be undertaken. Also other projects and initiatives show the importance of a common understanding of the problem at hand, and of co-operation. Terrorism, in turn, is not a new phenomenon, but the recent examples of its manifestations have been shocking. These examples show how important but also how difficult it is to protect our citizens. Minister Bodström noted that many steps have been taken to counter terrorism, but we cannot be satisfied with what we have done so far. Legal and human rights should be the basis in the fight against terrorism. Key elements include access to justice, the principle of fair trial and the presumption of innocence. Now more than ever we must live up to our commitments and ensure the strength of our society.
58. Organised crime and terrorism are complex phenomenon that must be fought at different levels. One importance element is an independent, reliable judiciary that has the confidence of society. There is also a need for national and European co-operation, which can and should take many different forms of co-operation, depending on the circumstances. We need to learn from one another, as is done for example within the framework of the Baltic Sea Task Force on Organised Crime. The Task Force has demonstrated the importance of clear mandates and clear goals. Effective regional co-operation can also affect the level of criminality outside the region in question. Minister Bodström argued that there is no contradiction between regional and European co-operation.
59. Mr Sylweriusz Królak, Deputy Minister of Justice of Poland, began by noting that the brief experience of Poland with EU co-operation, both before and after enlargement on 1 May 2004, was even more favourable than expected, in particular in respect of police and judicial co-operation. This good experience stimulates further development of neighbourly contacts, beyond the strict and formal framework of traditional international diplomacy. The relations between the EU and the Russian Federation require a new impetus. The basis of the security of the EU lies in good relations; this provides protection against external threats connected with destabilisation of the political situation in other regions, as well as with increasing internal threats. Special challenges relate to the most basic threats of internal and mixed origin, among them terrorism, organised crime, money laundering and corruption. The many multilateral conventions, including many that have been signed by Russia, create a substantial capacity to respond jointly to such threats. This capacity is enhanced by practical co-operation, including through Interpol and regional contacts. Further work is needed. One of the solutions that can be suggested is to elaborate and implement good practices complying with the specifics of the legal systems of the Russian Federation and the European Union.
60. A second challenge is connected with the necessity of providing business operators with a proper legal environment to conduct their activities. Mutual trade relations are a significant factor for economic growth, both in the EU and in the Russian Federation. These economic relations will moreover be intensified when Russia joins the WTO. This development requires, however, security and certainty of legal transactions. A significant issue is the recognition and enforcement of foreign judgments. The existing mechanisms create a proper capacity, which so far has not been fully utilised to its greatest advantage. Bearing this in mind, it is especially advisable to support the willingness of the Russian Federation to join the Lugano Convention of 1988 on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters. We should also seek decentralisation where possible of the conducting of mutual legal assistance, especially in sectors involving a large volume of cases.
61. Minister Królak underlined that the Russian Federation and the European Union are equal partners. To an extensive degree, the two share traditions and a culture. This creates a good basis for a deep and mature dialogue with mutual respect of both parties. Such an approach should make it possible to face even the most difficult challenge connected with the area of freedom, security and justice. Moreover, this should bring measurable economic benefits for both parties.
62. Mr Karl-Heinz Oehler, Head of the EU Division of the Ministry of Justice of Germany, recalled that accession to and implementation of multilateral conventions would facilitate legal co-operation and at the same time strengthen international standards. In this way we can live up to our commitments and ensure the right of access to justice, fair trial, and the presumption of innocence. For example Russia's accession to the Lugano Convention should be promoted. Mr Oehler also suggested as a practical step that the Russian Federation should designate a central authority for implementation of the Hague Convention on the Service of Documents.
63. Mr Oehler described the work of the German Foundation for International Legal Co-operation, which is affiliated with the Federal Ministry of Justice and actively supports legal reform. The Foundation has promoted activities such as seminars for judicial practitioners in administrative procedural law, constitutional law and economic law; one of the more recent such seminars was held in St Petersburg just a few weeks ago. At first, the focus had been on lectures from experts but now there has been a shift in format towards seminars and the exchange of views. Mr Oehler view such a practical mode as a model for co-operation.
64. Mr Joao Luís Mota de Campos, Deputy Minister of Justice of Portugal, began by noting that the EU is going through many exciting developments. At the time of the Conference, European leaders were trying to open the way to new constitutional developments. The relations with Russia cannot remain untouched by these developments, as has been shown by the agreement to create four common spaces, among them the Common Space on Freedom, Security and Justice. The next challenge is implementation, the elaboration of plans of action. He noted the importance of emphasising a commitment to mutual values and respect for the rule of law and human rights, as reflected in the statement of the St Petersburg summit. The co-operation between Russia and the EU should reflect the balance between the need for security, and the need for justice and freedom.
65. Deputy Minister Mota de Campos noted that among the issues to be tackled were the fight against international organised crime, terrorism, money laundering, trafficking in human beings, drug trafficking, and corruption. A common action plan on organised crime has already been adopted, and work is proceeding on such matters as the training of judicial and law enforcement authorities, the development of the institutional basis, and the development of EU - Russian co-operation in investigation and judicial matters. Among the steps being taken were agreements between Europol and Russia, the creation of financial intelligence units, and the reinforcement of the network of liaison officers. Since the challenges in the implementation of the Common Space of Freedom, Security and Justice are significant, there is a need to identify the main areas of activities, notably the rule of law and human rights.
66. Deputy Minister Mota de Campos also stressed the importance of ratifying international instruments, such as the United Nations Convention against Transnational Organized Crime and its protocols, and the United Nations Convention on Corruption. Judicial co-operation should be improved by contacts between Russian central authorities on one hand and Eurojust as well as the European judicial network on the other. The possibility of an EU - Russian agreement on judicial co-operation should be considered. One step that would strengthen cooperation would be Russian accession to additional Hague conventions, such as the convention on child abduction.
67. In the discussion, reference was made to the work of the Council of Baltic Sea States. The work of the Council was described. In addition, reference was made to the role of Parliaments in promoting economic and legal integration between Russia and the EU. Emphasis was laid on the need to ensure consistency between the views of the executive and the legislature. Developing investment policies and protection of property rights and the role of employers' organizations in development of a Common European Economic Space
68. Mr Vladimir Isakov, Vice President of the Chamber of Commerce and Industry of the Russian Federation, described the work of his organization. The Chamber of Commerce and Industry, which is a non-profit organisation, is one of the oldest non-governmental organisations in Russia, having been established in 1932. All cities in Russia have a chamber of commerce, and they bring together 350 different unions and associations of entrepreneurs. 5,000 businesses are members of the Chamber. In St Petersburg alone, 250,000 economic operators are registered with the Chamber. Abroad, the Chamber has 16 representations in different countries.
69. The Chamber is involved in many different activities, ranging from the provision of legal advice to businesses, the certification of documents and papers, the translation and finalisation of documents under the rules of the WTO, to the organisation of arbitration. Arbitration is a new element in the work of the Chamber in Russia. The Chamber operates five arbitration courts; a sixth arbitration court is being planned, to deal with e-commerce issues. Attention is also being paid to the protection of intellectual property, which is an area that has received international attention. Mr Isakov noted that the Chamber has also set up a Committee to work on standardisation, and the Chamber has proposed that Russia set up similar inter-agency body to look at standardisation with the EU. If governmental and non-governmental bodies could be brought together to work on this issue, the process could be made more consistent.
70. Mr Peter Egardt, Deputy President of the Association of European Chambers of Commerce and Industry, briefly described the role and work of the Association, which represents the interests of some 16,000,000 companies all over Europe in the development of legislation and policy. Turning to Russia, he noted that in general the country is an attractive and growing market for foreign investors, since it has had high economic growth combined with, relatively speaking, low political risk. In addition, the economic legislation and policy of Russia is increasingly in line with other countries. Nonetheless, foreign companies continue to hesitate to make long-term investments in Russia. As of yet very few foreign companies are taking advantage of the skills and low labour costs in Russia. The export of manufactured good from Russia to the EU continues to be limited.
71. Mr Egardt then reviewed the results of a number of studies that had been carried out regarding perceptions in the business community of doing business in Russia. He emphasised that these studies dealt only with perceptions and not with reality; nonetheless, since perceptions drive decisions on investment, they should be taken into consideration. The studies suggest a number of perceived practical barriers to trade and investment to Russia, in particular the amount of bureaucracy involved in company registration and visas, complex customs procedures, difficult technical standards, and ineffective protection of property rights. Mr Egardt noted the need to lessen barriers, make procedures more effective and foreseeable, and simplify border crossings. More attention should be paid to institutional legal conditions and property rights, taxes and levies, bureaucracy and administrative competence. More information should be provided to potential investors on for example market conditions as well as production and market costs.
72. In the legal field, Mr Egardt referred for example to the need to continue to modernise laws, reduce regulation and simplify bureaucratic procedures, further improve the training of judges and the effectiveness of enforcement of court judgments. More generally, the business community and government should strengthen their dialogue. There is a need for those in government to understand the world of business, just as there is a need for those in business to understand the world of government.
73. Mr Igor Yurgens, Vice President of Russian Union of Industrialists and Entrepreneurs (Employers), noted that his business organisation is the oldest in Russia. Before the Revolution, it had been called the Organisation of Merchants and Industrialists. He commented that the question in establishing the Common European Economic Space is not one of the integration of Russia into a European system, with adoption in Russia of EU standards, but of true co-operation between Russia and the EU in economic integration.
74. Mr Yurgens argued that EU - Russian legal and economic integration involved several challenges. The first challenge is related not just to regulation and legal issues, but to the underlying way of thinking on both sides. The present process of introducing order in Russia, based as it is on a system with a strong central power and on the subordination of various Russian entities, is often viewed in the EU as infringing on human rights, freedom and democracy. Although it is true that some problems arise, including a problem with the mass media, it should be recalled that the strengthening of power in Russia is a strengthening of the State. Another example of different perceptions is that gas, oil and energy in general are viewed as a strategic instrument by the Russian leaders. Europe wants something different: the EU wants to diversify and reduce the price of energy.
75. Another challenge was posed by the relationship between EU's newest Member States as of 1 May 2004, and the Russian Federation. Yet another challenge flows from the links among four CIS states on one hand (Belarus, Kazakhstan, Russia and Ukraine) and their relationship with the EU on the other. The challenge will become even greater if, in time, for example Ukraine or Georgia apply for membership in the EU. Mr Yurgens closed by noting that if, in the long term, countries such as Bulgaria, Romania and Turkey become Member States of the EU, there was no reason why Russia could not join. There are more things in common among Russia and the EU countries than that divide them.
76. Mr Yanis Urbanovich, President of 00 Baltiysky Forum, observed that the place, time and format of the Conference gave reason for optimism: the white nights of St Petersburg show the way to a bright future. The Baltic Forum has been active for over six years, bringing together EU and Russian experts. Mr Urbanovich emphasised that one issue in particular remains a problem, the gap in the complexity of relationships between the political elites and the rest of society, as shown by the recent outcome of the European Parliamentary elections. It appears that the European institutions are just formal institutions. In Mr Urbanovich's view this is leading to a crisis that is spreading to other areas of society. He took the example of the specific Latvian problem, which was related to the extremely difficult relationship with Russia, the poor economic situation and the difficulties in ethnic relationships. Special attention should be given to the underlying reasons for the problem. It is not essentially one of an inability to find a Latvian-Russian solution, but of the very slow process of adoption of EU and human rights values. The bilateral problems could perhaps be overcome by outside assistance.
77. Mr Urbanovich expressed his appreciation for the Conference, and hoped that a bridge could be built between this Conference and future conferences, in order to improve legal and economic integration. This is becoming important because it appears that development is beginning to proceed at different speeds in different countries, especially in the adoption of legal standards. He expressed concern that Latvia and certain other EU Member States were on a slower track of development, and could thus be turning into a European fringe area.
Trade and investment in the Common European Economic Space
Chairman: Minister of Justice of Finland Johannes Koskinen
78. Mr Matti Vuoria, Chairman of the EU-Russia Round Table of Industrialists and CEO, President of Varma Mutual Pension Insurance Company, stressed that Russia's membership in the World Trade Organization is of particular importance for the international community. It provides certainty for investors and at the same time Russia has made a commitment to follow common rules and structures. As a consequence of EU enlargement on 1 May 2004, the Russian industry has clearly become a European concern. The links with Russia and the ten new Member States in industry are strong, due to the existing economic co-operation. For this reason, there is a need to integrate Russian industrial interests into wider European industrial interests. Since this integration takes place on the industrial level and not just on the political level, the industrial sector should be involved in the process so that they can express their views and concerns.
79. Mr Vuoria noted that the Round Table has identified three processes. A process of regulatory convergence is underway, aiming at harmonisation of Russia's legal and economic corporate, technical and financial standards with wider European and international standards. A second process is the liberalisation of trade and investment, which under WTO rules is based on the reciprocal opening up of the market and elimination of trade barriers. A third process is the establishment of a free trade area, leading to integration of the EU and Russia infrastructure in such areas as energy, telecommunications, information technology and transport. The processes are strengthening industrial and scientific co-operation and are promoting investment. Mr Vuoria paid tribute to the very positive contribution of Russian industrialists to the Russian market. It is they who have created the pressure for the improvement of the market and who have made proposals for reform. Since businesses do not operate in isolation, this has strengthened the process towards a civil society.
80. Mr Vuoria closed by noting that the over-all favourable economic development in Russia provides a favourable environment for business and investment. However, so far there has been only modest development in the financial and banking sector. In order to improve the conditions for investment, there is a need to decrease the systemic risks, which have remained high. Furthermore, some major structural legal and institutional reforms still need to be finalised. In particular, the excessive tendency towards government regulation (a tendency that exists in the EU as well) should be curbed, in particular as this regulation is coupled with low government efficiency and predictability. Excessive regulation imposes administrative burdens and increases transaction costs, which is a particular difficulty for small businesses.
81. Mr Dmitry Tarasov, First Vice President of OAO LUKOIL, presented the activities of Lukoil in several of the new EU Member States and candidate countries. Lukoil has some 350 petrol stations in the EU, and some 500 in the EU candidate states of Romania and Bulgaria. With the enlargement of the EU, the proportion of oil and natural gas provided by Russia to the European Union has increased considerably. Russian energy is thus an important guarantor of the security of EU's energy policy. Further expansion of Russia's capacity to provide energy to the EU are envisaged, although some limitations exist. For example the Vystosk terminal on the Bay of Finland is being expanded, and also other terminals used by Lukoil are being enhanced. In South-East Europe, the potential of the Black Sea straits is being examined, as are options to the straits, such as land-based pipes through Turkish territory. Russia has increased competition in the Caspian region from Kazakh oil.
82. Mr Benno Goldberg, Vice President International Operations C.I.S, Siemens AG, recalled the long presence of Siemens in the Russian market. For example, the 9,000 km of telegraph lines between Moscow and Sevastopol were laid by Siemens. Siemens' decision to enter into the Russian market was undoubtedly the proper one; at the same time, this was the first milestone in the globalisation of the company. Mr Goldberg noted that Russia has much to offer to international co-operation and investment. Among the critical success factors for stable competition are political stability and transparency, a trustworthy and reliable legal framework, a good banking environment, proper corporate governance and education. According to Mr Goldberg, Russia has shown progress in all respects, and the overall quality of life has improved.
Building Europe on the rule of law
83. Mr Guy De Vel, Director General of Legal Affairs of the Council of Europe began by recalling Dostoevsky's words that "the destiny of the Russian is undoubtedly pan-European" and adding that this destiny is consequently one of democracy, rule of law and human rights, which are our common European values. He noted that while the EU has enlarged, also the Council of Europe has expanded, and by next year, with the inclusion of Monaco, will include among its members all European states, with the exception of Belarus. The Council of Europe thus continues to be the only truly European organisation in which all European states co-operate on an equal footing. Mr De Vel described the work of the Council of Europe in developing international instruments and recommendations as well as mechanisms for monitoring and mutual evaluation, and providing assistance and co-operation activities to strengthen the rule of law. Many treaties concluded within the Council of Europe have contributed to the creation of an area of freedom, security and justice, which is a common goal of the Council of Europe and the European Union. Co-operation within the Council of Europe allows a common approach to crime and judicial co-operation on a pan-European level.
84. The principal criteria for action on a pan-European level could be, for example, the pan-European dimension of a crime or its consequences, the effects of existing disparities in national laws on transnational or organised crime, or the need to establish common definitions of certain types of crime on pan-European level. Solutions reached within the Council of Europe do not prevent the European Union from establishing closer co-operation among its Member States. Both institutions should ensure better co-ordination and consistency in the drafting of new instruments, using wherever possible harmonised language. Of particular importance are mechanisms of mutual evaluation and peer pressure that have been successfully established within the Council of Europe.
85. Mr De Vel also noted Council of Europe activities involving Russia, several more recent ones of which have been joint programmes with the European Union aiming at the promotion of human rights, legal and institutional reforms and reform of the judiciary. Russia has already ratified 46 treaties of the Council of Europe. The programmes have been carried out primarily in the fields of reform of the judicial system and training of legal professions, access to law, reform of the prison system, reform of the criminal law, and reform of the distribution of competence between the Federation and its subjects. Mr De Vel referred to the initiative of Minister Chaika regarding the setting up of a European Register of normative acts of the Council of Europe Member States in order to facilitate electronic access by European citizens and administrations to the laws of all the Council of Europe Member States.
Organised crime - a threat to integration
86. Mr Aleksandr Zvyagincev, Assistant Prosecutor General of the Russian Federation, noted the extensive amount of organised crime, including not only drug trafficking, trafficking in persons and money laundering, but also for example trafficking in cultural heritage. No country can respond to the challenge alone; co-operation is needed in order to deal with transnational crime. There is also the need to involve different institutions of civil society and the mass media in the prevention of corruption and organised crime. The proceeds of money laundering should be repatriated to the country of origin. International multi-disciplinary groups of experts should be set up to help investigative bodies. In respect of drug trafficking, the flow of drugs from Afghanistan is a particular problem. Joint action is needed, especially with hard drugs such as heroin. As for trafficking in humans, some 2,000,000 people are involved annually. Although a strong legal framework is being developed in order to counter such trafficking in humans, huge gaps remain.
87. The importance of combating terrorism should be stressed. Terrorism has become a major commercial enterprise that generates billions of dollars in illegal profits and much power to those who engage in it. Accordingly, there is a need to monitor financial flows and to strengthen co-operation. Regrettably, some EU countries have granted refugee status to persons who have organised and engaged in terrorism, and have refused extradition to Russia. The Russian side is in favour of implementation of decisions related to the space of freedom, security and justice but the Russian Federation would like to be involved on an even footing. The EU-Russian action plan should be carried forward, enhancing trust, and extradition treaties should be strengthened in order to contribute to stronger freedom, security and justice.
Good governance and administrative procedures
88. The first European Ombudsman (1995-2003) Mr Jacob Söderman began by recalling Gogol's novel, "The Inspector," which was premised on the popular view of the time that government officials were to be feared. Today, people expect that the public sector should serve the citizens and the economic sector, and not vice versa. Mr Söderman then presented six theses regarding good governance and administrative procedures. First, since the citizens of Europe expect public administration to be open, accountable, service minded and based on sound financial management, the most appropriate structure or organisation should be used for each activity, subject to public guidance and supervision. Second, successful public administration needs a competent and motivated staff that is well managed and advised. Third, the staff of public administration should have the right to take part in projects to reform the administration. They should also have the right to take initiatives to promote better performance in the administration, and should in principle have the right to exercise the freedom of expression to promote public debate of their work and working conditions when necessary. Whistle-blowers, in other words staff members who report cases of fraud and irregularities, should be protected against negative consequences from the management.
89. The fourth thesis is that public administration should have a well planned information policy, including the use of modern technological methods such as the internet. The citizens should have the right of access to documents and information held by the administration, subject to justified exceptions precisely stated in a law. Fifth, laws or codes should be enacted in order to establish the citizen's rights and obligations in relation to the public administration. These laws or codes should promote fair, swift and consistent decision-making within the limits of the law. Such laws or codes should also clarify what kind of service the administration should be obliged to deliver to the citizens. Sixth, citizens should have access to an easy and cost-free remedy in case of conflict with the public administration. The administration or body should therefore establish internal complaint procedures through which disputes could be solved promptly.
90. Mr Söderman further noted the need for extra judicial control by an ombudsman or a similar body with a remit to solve disputes and take initiatives in order to promote better administrative procedures and practices. Good independent auditing activities should exist. He closed by underlining that an open, fair and expedient public administration can greatly support economic progress and social well-being in society.
Conclusion of the Conference
Chairman: Minister of Justice of Finland Johannes Koskinen
91. Johannes Koskinen, Minister of Justice of Finland, noted that the intention in planning the Conference on Russia and EU - Perspectives in Economic and Legal Integration had been to take stock of the processes that have contributed to the rapid expansion of co-operation in Europe, identify the challenges to come, and discuss what steps still need to be taken. He recalled that in her message to our Conference, President Halonen observed that in the rapidly developing world, there is a need for a basis of rule of law, good governance and mutual confidence, a basis that assures predictability and certainty. President Putin, in his message, referred to the new opportunities that are being opened up in Russia and Europe, thus contributing to security on our continent. Both Presidents noted that they were looking forward to smooth dialogue that will show the way forward.
92. Minister Koskinen noted that, on the basis of the discussions, the organizing committee has prepared a set of Chairmen's conclusions, which he read out to the Conference. (The Chairmen's conclusions are provided in annex II.) Minister Koskinen invited the Conference participants to submit to the organizers any comments regarding the conclusions. He further noted that the organisers of the Conference shall inform the relevant authorities of the European Union and the Russian Federation of the conclusions of the Conference, so that the necessary follow-up action can be taken.
93. Minister Koskinen expressed his warm appreciation and that of Minister Yury Chaika and Minister Michael McDowell to those who had contributed to the success of the Conference, including in particular the many speakers. Through the discussion both in the meeting room and in the informal settings, all of the participants had made their own contribution. Minister Koskinen further expressed appreciation for the work of the high-level working group that organised this Conference, the Ministry of Foreign Affairs and the Ministry of Economic Development and Trade of the Russian Federation, as well as the Supreme Court of Arbitration, and further to the European Commission and to the Ministry of Foreign Affairs of Finland for their generous financial contribution to the success of the Conference.
94. Minister Koskinen declared the Conference on Russia and EU - Perspectives in Economic and Legal Integration closed.
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