Policy Memo: Swiss-Russian import of medical products policy
The Russian-Swiss Joint Intergovernmental Commission on Trade and Economic Cooperation was established in January 1994. In July 2009, with the support of the Russian Chamber of Commerce and Industry, a business council on cooperation with Switzerland was established.[3]
Nowadays, the state of Russian-Swiss relations is characterized by positive dynamics, having continuous support from political dialogue at the highest levels.[3]
Russia is a priority country of Swiss foreign policy. The two countries share many interests. As a member of the UN Security Council and the G-20, Russia is a major international player. Since the signing of a memorandum of understanding (MoU) in 2007, bilateral relations have developed significantly. The MoU defines the framework for systematic and closer cooperation in the areas of:
- Foreign policy and security;
- Justice, police and migration;
- Economics and science;
- Education and cultural affairs.
Representatives of both foreign ministries meet regularly for consultations. There are close contacts at the parliamentary level too, with active parliamentary friendships groups in both countries. Since 2009, Switzerland has represented Russia's interests in Georgia and Georgia's interests in Russia, after the two countries broke off diplomatic relations.[2]
At the same time, the ties linking the business communities of both states are expanding and strengthening. It is quite evident from a large number of bilateral events such as meetings, forums, and conferences held at the trade mission level. Such events have already become traditional and are usually held in an atmosphere of mutual respect and desire to expand the frontiers of bilateral partnership.[3]
Russia's exports to Switzerland primarily consist of minerals (50.5 percent), gem stones and precious metals (38.7 percent), chemical products (6.3 percent) and metals and metal products (2.5 percent). Imports from Switzerland include cars, equipment and vehicles (42.1 percent), chemicals (33.0 percent), food and agricultural raw materials (9.6 percent) and other products, mainly watches (9.0 percent), metals and metal goods (3.7 percent).[1]
Major Swiss investors in Russia include Nestlé (food industry), Asea Brown Boveri (high-voltage and low-voltage equipment for industrial production, construction, housing, and utilities) and Schindler (elevators and escalators). Over 600 companies with Swiss capital are registered in Russia. Some major Russian investors in Switzerland include the Renova Group, Rusal, and the SUAL Group.[1]
Currently, more than 600 companies with Swiss capital are operating in Russia, on the other hand, many Russian companies are working on the Swiss market. However, the volume of bilateral trade has been constantly growing, and this suggests that the potential for bilateral cooperation is far from exhausted. Russia and Switzerland are also brought together by a number of major investment projects, designed to be implemented in the years to come.[3]
First of all, we are talking about projects in such important spheres as science-intensive high-tech industries including energy, space, medicine, nuclear and IT-technology. In particular, the most well-known and highly advocated bilateral projects deal with innovation and nanotechnology issues.[3]
In the last several years experts observe increased imports to Russia of Swiss machinery and equipment, electronic goods, which is encouraged by the economic growth and stable demand on the Russian market.[3]
In 2014, relations between Russia and the West deteriorated due to the crisis in Ukraine. In late July, the EU and the US moved from targeted sanctions against specific individuals and companies toward measures against whole sectors of the Russian economy. Switzerland did not join the EU sanctions.[1]
Russian's Ban on Medical Imports
Medvedev told Russian journalists a suggested bill to restrict imported medical devices and supplies would not be supported by his government unless treatment quality for patients could be maintained.[4]
The list of items suggested for the ban included everything from X-ray machines, defibrillators, incubators for newborns and prosthetic devices to crutches, bandages, and condoms.[4]
Russia's medical community criticized the proposal for failing to first consult doctors and medical experts as Russian producers can not make the same quality of products or do not make them at all.[4]
Russia's "import substitution" policy aims to encourage Russia's domestic producers to develop supplies for markets now dependent on foreign imports. It was accelerated after western sanctions were put in place following Russia's annexation of Crimea in neighboring Ukraine in 2014.[4]
Although the Ban on Medical Imports is not accepted yet, there is a positive dynamics in this direction, which indicates that it can happen in the nearest future. Before it happens, Russia has to be prepared for such a drastic change.
Proposal
Russia is a large market with great potential for Swiss companies. Switzerland is committed to creating optimal conditions for Swiss businesses and has an action plan on developing economic relations to achieve this. A bilateral mixed economic commission meets on an annual basis. The Swiss Business Hub, which is integrated within the Swiss embassy, advises Swiss companies intending to enter the Russian market and promotes Switzerland as a business location.[2]
According to Russian laws "Goods are considered to be of Russian origin, if they are made or have been sufficiently processed in the country according to customs regulations that are applicable in Russia. A supplier is considered Russian if it is a legal entity registered in Russia (which can be fully foreign-owned, except in cases of specifically regulated sectors, such as media) or a Russian citizen."[5]
Taking into consideration these two facts and the necessity of developing the Russian sector of medicine, I propose such Swiss companies like Novartis (Sandoz), Hoffmann-La Roche, Basilea Pharmaceutica, Actelion and Straumann to create assembly factories on the territory of Russia and, therefore, to gain a foothold in the Russian market.
Both Switzerland and Russia will benefit from it, which means that it is a win-win proposal:
- Switzerland: Swiss pharmaceutical industry will be expanded to Russian territory and, therefore, bring more profit and improve international relations between countries;
- Russia: not mentioning the increase in the number of workplaces, Russia will improve the quality of the medical product which will allow Russia to finally accept the Ban on Medical Imports and not to depend on other countries in the field of medicine. Moreover, the Russian government will increase its budget with the taxes from new pharmaceutical companies.
REFERENCES
[1] Sputnik, “Russian-Swiss Relations: Facts and Details”, 8 Dec 2014,
http://sptnkne.ws/dVkD.
[2] FDFA,“BilateralrelationsSwitzerland–Russia”, 8 Apr 2016,
https://www.eda.admin.ch/eda/en/home/representations-and-travel-advice/russia/ switzerland-russia.html.
[3] MiroshnichenkoV., “Russian-Swisstraderelations”, Business Mir #22, Aug 2012,
http://www.businessmir.ch/?p=159596&language=en.
[4] VoaNews, “Russia’s PM Halts Ban on Medical Imports”, 3 Sep 2015,
http://www.voanews.com/a/ russia-pm-halts-ban-on-medical-imports/2944103.html.
[5] GoncharoffP., “AsTrumpPushes’MadeinUSA’, PutinPromotes Products ’Made
in Russia’”, 16 Jan 2017, http://russia-insider.com/en/business/ri18556.
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