On the initiative of the Moscow Chamber of Commerce and Industry, an online conference on the current topic of "COVID-2019 and the protection of the interests of Russian exporters to the EU" was held.
The event was attended by representatives of the Ministry of Industry and Trade, the Trade Mission of the Russian Federation in Germany, Russian and German businesses.
Mr. Suren Vardanyan, the MCCI’s Vice-President, who moderated the conference, noted that during this event, the MCCI opens a series of meetings, devoted to the development of exporting activities under adverse epidemiological and quarantine conditions.
During these events, the plan is to inform entrepreneurs, engaged in foreign economic activity, about supporting measures that the Government is developing and implementing for business, as well as describing the current situation regarding export and import operations between different countries. The first meeting was focused on cooperation with Germany and the sphere of logistics.
According to Mr. Andrey Sobolev, the Trade Representative of the Russian Federation in Germany, the German economy is seriously affected by the pandemic. Since March 19, all industrial enterprises, including automobile production, have been closed. Sales of cars are predicted to decline by 70 percent. And one job in the automotive industry provides up to 10 additional jobs in related industries.
In Germany so far, the chemical and food industries have suffered the least. Experts predict that about 2 million people will lose their jobs and about 6 million more will resort to part-time work. According to analysts, the peak of the crisis should come in May and the overall decline will last at least three months. Meanwhile, German entrepreneurs are showing interest in doing business with Russia.
The Ministry of Economic Development and Trade, together with the Russian Export Centre (REC), have created an electronic platform whose main task is to respond to exporters' requests. In addition, the REC and the German Trade Representative Office compiled a register of companies operating in the FMCG (fast moving consumer goods) sector.
"The German market is estimated at €100 billion, of which more than 40% are consumer goods," said Mr. Sobolev.
The Director of the Department of Foreign Trade Regulation and Export Support of the Ministry of Industry and Trade, Mr. Andrei Tsemakhovich, noted that despite all the restrictions, the EU is Russia's main export partner: up to 42% of Russia's trade turnover is involved with the EU. Now, the main activity of the Government is aimed at the mitigation of coronavirus.
At the same time, business support measures are being introduced. In the near future, a new document on support for transportation services and logistics is expected to be issued. Last year, the Corporate Competitiveness Improvement Programme was adopted, with the participation of companies that undertook to increase their export volumes and receive state support.
Now changes are being made, which allow exporters to make changes to their corporate programs, thus avoiding penalties," said the official. The changes should also affect the provision of logistics’ subsidies (conditions of entry into the program, as well as the amount of support).
According to Mr. Aaron Roeschke of the Düsseldorf Chamber of Commerce and Industry, the pandemic crisis should lead to a diversification of trade chains and localization of business. The situation, when the majority of European companies had partners from China, America, and now have to urgently change partners, according to the speaker, may force Europeans to revise their business strategies and, perhaps, pay attention to goods produced within the European Union, even at higher prices.
Mr. Alexander Kravtsov, the Director General of Sovtransavto Deutschland GmbH, shared his experience in organizing transportation during the pandemic. He noted that now the situation with transportation of goods from Italy, Belgium, Austria, Slovenia and some other countries is being normalized.
Enterprises are starting to work, but they are understaffed. The German state takes measures to support its employees. Enterprises with up to 9 employees can receive a lump sum payment of 9 thousand euros, up to 10 employees - 15 thousand euros. In addition, for staff switched to the Kurzarbeit regime (shortened working hours) the state compensates between 60 and 67 percent of their earnings for hours they do not work.
At the same time, pensions, medical and social insurance are preserved - all this is also taken over by the state. "This measure is in demand. More than 500 thousand legal entities, including IE, have already applied for it," said the expert.
Mr. Alexei Kostin, the Head of the Project Transportation Department at the Union Logistics Group, outlined the main trends in the transportation market. He specifically highlighted the problems of the sea, road and air transportation. In particular, he noted the problem of lack of containers for transportation, which are “stuck" somewhere due to the situation with border closures. Due to different requirements in various European countries, carriers face many difficulties.
When crossing the Italian border, drivers are immediately quarantined for two weeks, so additional personnel are required. There are several cases where drivers are not allowed in the warehouse and cannot control the loading of goods. This is in violation of the law, but justified by quarantine requirements. According to the speaker, there is a "collapse of air cargo" in air traffic.
There are only a few large hauliers working. Now there are transport companies ready to carry out transportation at severely lowered prices. However, in this case there is a security threat to the cargo.
Mr. Aleksandr Bezborodov, a lawyer, partner of the international law firm Beiten Burkhardt, noted that a decision of the Plenum of the Supreme Court regarding the recognition of force majeure circumstances for contracts is being prepared. According to him, for the time being, the court is inclined to formulate a decision, according to which it will be necessary to prove that the emergence of inability to perform a contract is due to the pandemic.
And, according to the expert, it is very difficult to prove it in court. In this case, the lawyer advised all entrepreneurs, who are not able to fulfill all the provisions of contracts, to be sure to notify their counterparties in writing on changes in circumstances and conditions of supply, etc.
As Mr. Vardanyan noted, the Russian Chamber of Commerce and Industry issues a force majeure certificate for export transactions. And the Moscow Chamber of Commerce and Industry provides the conclusion on intra-Russian transactions. "We are constantly explaining the terms of issuing this certificate", - said a representative of the management of the Chamber of Commerce and Industry. At the same time, the business community is waiting for a system solution for force majeure to be developed at the government level.
In general, experts agreed that the current pandemic will have the strongest impact on the global economy as a whole - this situation has not happened in history. Something similar happened in 2014, but only on the territory of only three African countries, so the scale of the damage and associated changes in the economic situation is still difficult to imagine.