|“It is not true that we cannot influence anything in the European Union.”|
Ing. Vladimír Bärtl is a graduate geodesist and cartographer. In 1994 he co-founded the company HOUDEK s.r.o. focused on metrology and transfer of technologies. In 1999 he joined the state administration. He started at the Ministry of Foreign Affairs, and for four years he worked at the Czech Embassy in Ottawa. Then he was an adviser to the Vice Minister of Industry and Trade. He is a co-author of the project “The New System of State Commercial and Economic Services Abroad” and Export Strategy 2006-2010. After this he moved abroad again, this time to the Czech Embassy in Paris. During the successive French and Czech presidency in the EU, he co-organized the program “Czech and French Economic Year”. He was a team member for the localization of the Galileo Managing Center in Prague. Last year, he was named Vice Minister of Industry and Trade, and he manages the Section of the European Union and Foreign Trade.
Dear Mr. Vice Minister, what happens in the Section of the European Union and Foreign Trade?
“Originally, they were two separate sections that are now closely related, and if I simplify, there are several areas of agenda: the coordination of our relations with the
European Union, which falls within our authority; issues of the domestic market of the European Union; trade policy and membership in international organizations; preparations and realization of the export strategy of the Czech Republic; and generally the area of export promotion. This also includes the creation and realization of foreign economic policy of the Czech Republic, as well as the issues of European and international law, again falling within the authority of the Ministry. As you can see, the matters administrated by us extend beyond and connect to both the Union as well as the foreign trade agenda. That is the core of our section.”
So, everything is closely connected…
“Exactly. The creation of a common trade policy, which we are responsible for, is a big agenda which enables, for example, us to better prepare the export strategy of the Czech Republic in a smaller, national perspective.”
What are your main goals for 2015?
“It is a combination of two things – the Union, and international organizations connected to foreign trade. If you extrapolate, one priority is the creation of new jobs thanks to the growth of Czech businesses, and the fact that we are successful in mediating opportunities in foreign markets for them. The second priority is the growing reputation of the Czech Republic in the European Union, as well as among international organizations, and creating our international trade policy so that we can help internationalize our businesses.”
I would like to discuss the first priority. Are the best opportunities in the Arabian Peninsula and in China right now?
“Together with the Ministry of Foreign Affairs we try not to say in advance that a specific region is the priority for all sectors in general. On the contrary. We perceive the access to prospective markets individually. There are sectors for which China really is advantageous, but for others it is the region of Latin America, and yet for others it is sub-Saharan Africa. This is a diversion from the former perception of export orientation. A list was made of regions that were marked as priorities and in our interest. However, this may be confusing. Small and medium-sized enterprises, which would like to follow such advice, may find out that this kind of priority region for the Czech Republic is not necessarily the priority for them. Their goods may not be competitive there, or marketable…”
Does it mean that for almost any sector an advantageous region can be found?
“I cannot say that for every sector. For the sectors where we are strong, we have a comparative advantage and we see the potential. I would like to mention a tool which our colleagues at the Ministry of Foreign Affairs were primarily working with. It is called the map of sector opportunities. With this tool we enter data into the common trade policy which we are responsible for. The map will be repeatedly updated. It is using the information verified at our Embassies and in foreign CzechTrade offices to help Czech businesses with better orientation abroad. The idea is to bring them up to the a new level of trade. They do not have a list of the priority countries anymore, but they can have a look at where they may be heading with regard to their production or business programs. The result may show them a completely different region which has never been mentioned before. However, each region in which we can successfully realize projects in sectors that Czech companies excel at, is a priority region for us.”
Have you already received feedback from business circles regarding the new course of trade policy?
“We hold intensive dialogue with business representatives, and with the Confederation of Industry of the CR, the Czech Chamber of Commerce, the Association of Small and Medium-Sized Enterprises, trade unions, and others. None of the above mentioned institutions were intent on continuing with a purely regional approach. On the contrary, they support the sector approach. They appreciate and prefer having the resources of the state available to the businesses so that individual sectors can be directed to the regions where there is a chance for being successful. One great example of this is the very important united international network of foreign representative offices and foreign CzechTrade offices.”
How limited is the network of representative offices? The Czech Republic does not have its offices everywhere…
“That is correct. In the past, and due to the current political and economic situation, our representative offices were in fact being closed. Today, this policy is under re-evaluation. The Ministry of Foreign Affairs has visited many places which were recently closed down. We have also begun fresh communication efforts within the business sphere. This business sphere must be involved in the key and strategic decisions on the optimization of foreign offices. Economic diplomacy, and the promotion of our businesses abroad, is part of the key agenda of our Embassies.”
So, medium-sized businesses are welcome at the Ministry as well?
“Of course they are. The CzechTrade agency is clearly oriented toward the promotion of small and medium-sized businesses. Since last year, when the Framework Agreement between the Ministry of Foreign Affairs and the Ministry of Industry and Trade was signed, the approach of our representatives abroad towards businesses has started to unite. The natural relationships that CzechTrade is promoting is business to business (B2B). Here, the requirements of small and medium-sized businesses are heard. When it is necessary to open doors, to cultivate business to government (B2G) relationships, this is a task for our economic diplomats, here at headquarters or at our representative offices. Until very recently, it was confusing that some services provided by the CzechTrade agency were paid for, while similar services could be mediated for free by our economic diplomats at the Embassies. Therefore, we created a single catalogue of services. It includes the services that are free all over the network, whether provided by a diplomat or a CzechTrade employee. Then, there is a superstructure of further services provided by CzechTrade. Another pillar of the agreement between the two resorts was a single input point for the whole system. This so-called Clients´ Center physically resides at the CzechTrade agency in Prague, and on days which are specified in advance, the businesses are assisted by both the representatives of CzechTrade as well as economic diplomats from the Ministry of Foreign Affairs. For businesses this makes things more comfortable. They don´t have to think about where to go or if their requirements belong to B2B or B2G. They have one single place where the employees will sort their requirements out.”
The second topic that you mentioned was the reputation of the Czech Republic within the European Union. How are we doing at the moment?
“We are part of the so-called group of like-minded states. These are Scandinavians, Germans, the Baltics… As far as the approach towards our domestic market is concerned, we are perceived as hardcore, and with regards to free trade we belong among the most liberally minded states. Last year, we successfully formulated the common priorities of 13 member states in the domestic market of the EU, and these priorities could be partly reflected in the working program of the new European Commission. Regarding this, I want to demonstrate that it is not true that we cannot influence anything in the European Union. On the contrary, if we have enough discussions, and enough feedback from businesses, we are able to formulate our requests, negotiate them, and much more effectively promote them among the whole twenty-eight nation bloc. For example, in the committee for trade policy, where I take part, we can influence a row of allied member states and enforce our opinion at the Commission. At the same time, it enables us to observe and evaluate the development in the EU and its impacts on the CR.”
Well, how was it then with the sanctions between the European Union and Russia? Was our negotiating position strong there as well?
“There were three waves. The first two were connected to individual persons and businesses that have taken part in destabilizing Ukraine and the annexation of Crimea. The next wave involved the corresponding sectors. Before the general agreement within the European Union was reached, discussions were going on. We were aware of the sanctions and we were able to consult with businesses in the sectors which were concerned. Based on the data from businesses, we managed to successfully argue in Brussels the fact that some of the considered measures may take aim more at the civil sector than the military or related goods. We were able to successfully argue and change the final version of the sanctions so that the economic impact would not be more serious for our civil sector than for the Russian side…”
Can you be more specific?
“The third wave of sanctions was planned to affect not only large areas of engineering but also petrochemistry, specifically technologies of hydrocracks and desulphurization. It turned out that our companies had a whole lot of civil projects under preparation in the Russian Federation. If they had left them, it would have meant a loss of around five billion crowns.”
What is the latest information regarding the sanctions?
“The results of the previous eleven months of 2014 show quite a big decrease in mutual trade. This is due to the overall worsened situation of the Russian economy, as well as uncertainty caused by the current political situation, and also restrictive measures due to the events in Ukraine. The volume of mutual trade in Czech crowns has decreased compared to the same period of the previous year, by 7.5%, if we use EUR; however it is over 13% due to the exchange difference. Our export in Czech crowns went down by 2.5%, in EUR by more than 8%. At this moment, devaluation of the Russian ruble is more essential for us. Since the beginning of 2014 it has lost almost 50% of its value. On the Russian side, this increases the cost of import of all items, no matter if they are affected by the sanctions or not. We are entering a brand new level of problems. If the situation is not solved in several months, the impact on Czech export will be more evident.”
Will that affect all sectors?
“Generally, Russian partners have problems creating sufficient ruble cash flow to meet their obligations in foreign currencies. So it is a general problem. Of course, this may affect Czech sectors such as engineering and automotive.”
So, further development will be decided by the strength of the Russian currency rather than by the sanctions...
“Speaking of the sanctions and counter-sanctions, it is still about the relationship between the European Union and Russian Federation. The devaluation of the Russian ruble may cause a domino effect on the whole region, on all countries that are geographically, through customs and trade, connected to the Russian Federation. There you can expect they will be influenced by the economic recession caused by the fall of the ruble.”
What can the Czech Ministry of Industry and Trade do to reduce the impacts on the Czech Republic?
“For us, it is important to understand the timeline. This problem has its genesis and it is not the reason to leave the Russian market completely. There are many sectors which are not affected by the sanctions and counter-sanctions. The crisis situation may be perceived as a chance to search for new opportunities, and interesting prospective areas, no matter if it means business with sectors that were not essential until now. We try to maintain dialogue and perceive that the return to a deserted Russian market is more costly than continuing to work in some kind of a crisis mode. You may presume that after the situation is stabilized, those who deserted the market completely will have problems returning. It is better to try using personnel capacity as much as possible in the meantime.”
Does that mean you will not leave the Russian market?
“No, we are even considering a certain measure, which we are working on with the Ministry of Foreign Affairs, and which resulted from the implementation plan of the government from the middle of October last year. It regards the strengthening of economic diplomacy. Together with the Ministry of Foreign Affairs we have been able to increase our foreign network by ten positions of economic diplomats in various countries where we can see untapped potential. Now, we are discussing whether it may be useful to enhance the economic department at our Moscow Embassy as well, to be able to compensate for difficult conditions, focus on the regions and so on. We are discussing our views with the Ministry of Foreign Affairs right now.”
Last question about Russia: What is the Ministry currently participating in?
“The situation which has developed, i.e. the reaction of the European Union and the counter-reaction of Russia, was discussed at a working group by the Office of the Government. Many agencies were taking part. We were trying to find solutions that would help the businesses avoid serious harm. Among them, for example, was the strengthening of economic diplomacy, and measures to support the restoration of Ukraine, and so on. Regarding the situation with the ruble at the end of the year, we reacted at the Ministry of Industry and Trade. On the 22nd of December, the government acknowledged the establishment of the Interdepartmental Working Commission on the economic and trade dimension of the Russia-Ukraine crisis. Thus we are building a platform for the meetings of the organizations of the state administration, representatives of business, and especially exporters who are affected by recent economic impacts. One such impact, the devaluation of the ruble, was already mentioned. This commission therefore is the second tool we are using, besides the working group by the Office of the Government. The commission has a wider dimension within the whole region. We organize seminars for business representatives, for example on the impact of ruble devaluation.”
Another important area of development is our relationship with China. What can we expect in the new year?
“First, in April there will be an official trip of the government delegation to the People´s Republic of China, led by Jan Hamáček, Chairman of the Parliament. This will coincide with our official participation in the Chinese International Technology Fair. Then we are expecting the visit of the Vice Prime Minister of China for Health, Science and Technologies during the meeting of the ministers of health within 16+1, which means the cooperation of the People´s Republic of China with the countries of Central and Eastern Europe. The important event for us will be the visit of the Vice Administrator of the Civil Aviation Authority of the People´s Republic of China. This is the institution with which we try to exert strong lobbying to facilitate the certification of Czech airplanes for the Chinese market. We have problems with that, and trade barriers are occurring, specifically a non-tariff barrier. In this respect, we will also take steps in Brussels so that the discriminating approach towards European products is tempered. This administrator´s visit is crucial to the progress of negotiations. The Czech Republic will also be visited by the Minister of Industry and Information Technologies, and on the other hand our Prime Minister Sobotka is planning his trip to China. There is a high probability that we are going to organize an Economic Joint Committee, and the China Invest Forum will be realized and so on…”
Where besides aviation might we meet these barriers?
“Common aviation is the key area. Some administration workers can be creative in finding ways to avoid making it easy for foreign products to enter. Of course, there are more issues. We have to guard the intellectual property connected to our licenses, and similar things. Our Representative Office in Beijing is helpful with that.”
You have already visited China. What do you consider to be the main aspects of cooperation with Chinese investors?
“In cooperation with the Association of the Aerospace Manufacturers, Light Aircraft Association, and CzechTrade we undertook a week-long negotiation focused on promoting the aviation industry, including the already mentioned certifications. It was my first working experience with China, and I may say that due to the character of the Chinese administration, opening the doors for businesses is extremely important. The fact that the representative of the Czech Ministry supports Czech associations, businesses and producers, is an important signal that increases the credibility for Chinese partners. This too was the reason that we agreed with the mentioned associations, and that we consider this way of targeted activities of economic missions useful. We will also try to apply it in other areas besides China.”
Thank you very much.
Author: Jaroslav Kramer
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Source: Prague Leaders Magazine