Russia’s gateway to the European Union

Start of the Russian WTO membership strengthens Hamburg’s position as Russia’s major European trade partner

Russia’s gateway to the European Union

The start of Russia’s WTO membership on 22 August 2012 will give trade relations with Europe a significant boost. "The dismantling of trade barriers will strengthen Hamburg’s role as the leading hub of Russia’s trade with the European Union and the world", says Jutta Ludwig, CEO of HWF Hamburg Business Development Corporation. She continues: "Hamburg’s trade relations with Russia date back to the first days of the Hanseatic League and have been renewed ever since." Already, some 120 companies with Russian roots have chosen Hamburg for their expansion into the EU. By future simplifications of the commercial law, Hamburg’s position in Russian trade and as bridgehead of the Russian economy will be further strengthened. This evaluation is confirmed by Dr. Sergey P. Ganzha, Consul General of the Russian Federation: "With the Russian Federation joining the WTO, the good trade relations with Hamburg will be strengthened by establishing common international standards. The interest of Russian companies in Hamburg has been growing for a long time. This development will be furthered and positively stimulated by Russia’s WTO membership."

The Port of Hamburg is of particular importance to Russia. It is the central hub for Russia’s trade with the European Union. Claudia Roller, CEO of Hafen Hamburg Marketing e.V., explains: "With Russia joining the WTO in the middle of this year, trade barriers will gradually be further abolished. This also contributes to the benefit of the Port of Hamburg, as it is closely tied to the Russian market. For the port of the Elbe metropolis, Russia has become the second-most important trade partner in container traffic." Undeterred by the fluctuations in the global economy, the container handling increased by more than 35 per cent to 595.000 TEU in 2011.

But not only goods find their way to Hamburg. Also for Russian companies, Hamburg is an important location. Some 120 Russian companies have meanwhile settled in Hamburg, the majority with support of HWF. They are mainly active in logistics, shipping, and food trade. Currently, Hamburg also increasingly attracts IT and media companies, as the city has established itself as Germany’s games capital. The local infrastructure, for instance, convinced INTENIUM from Kaliningrad to open a branch in Hamburg. Today, INTENIUM is one of the most successful marketers of single- and multiplayer casual games in Europe. Employing a staff of 68 at its two locations Hamburg and Kaliningrad, the INTENIUM GmbH was awarded the Otto Wolff von Amerongen SME Award of the German-Russian Chamber of Commerce Abroad (AHK) in Moscow last November. Honoured as "Best Russian company in Germany", the prize acknowledges INTENIUM’s high level of innovation and the entrepreneurial spirit of the founder and managing director Konstantin Nikulin. Or take this example: Mail.Ru Games is a leading provider of online games. The company develops and sell premium client and browser-based games, played by million of people around the globe. The international business is managed by Mail.Ru’s Hamburg-based European headquarters. From Hamburg, products licensed or developed by Mail.Ru are sold within the EMEA-Region.

HWF Hamburg Business Development Corporation supports Russian companies when relocating to Hamburg and therefore operates liaison offices in Hamburg and Moscow with LUNO group as its partner. The representative offices of the Hamburg Chamber of Commerce in St. Petersburg and Kaliningrad are first points of contacts for all companies planning business activities in Hamburg. In St. Petersburg, the House of the German Economy is home to the representative offices of Hafen Hamburg Marketing, incorporating also the representative office of the Chancellery of the Free and Hanseatic City of Hamburg. A close relationship is maintained by the Hamburg Chamber of Commerce with the representation of the Hamburg Messe & Congress GmbH in St. Petersburg. In return, international Russian trade fairs such as “TransRussia” are used by Hamburg merchants for business contacts. Since 2006, the St. Petersburg Foreign Trade Office has been operating in Hamburg’s city centre, focusing on strengthening the economic and cultural ties between the two cities. The Eastern and Central Europe Association with headquarters in Hamburg provides contacts with small and medium-sized companies. In addition, the Baltic Sea Forum-Pro Baltica strongly promotes the economic cooperation of the Baltic region. According to data provided by the Hamburg Chamber of Commerce, some 800 Hamburg companies have partners in Russia.

Background: Russia’s WTO membership

In mid-June 2012, the Russian parliament approved the Russian Federation’s entry to the World Trade Organisation WTO. After the ratification of the protocol by President Putin, Russia will become a full member of the WTO on 22 August 2012. This clears the way for further reductions of trade barriers. The accession to memberships was preceded by an 18-year long marathon of negotiations. It is expected, however, that the full implementation may still take a couple of years. Already during the accession negotiations, several Russian laws have been adopted to WTO rules, Thus, no radical changes are expected, Russia’s obligations include, inter alia, the country’s reduction of import tariffs from an average ten per cent to 7.8 per cent. Quantitative import restrictions will be abolished. Export tariffs on 700 goods, including products of the fishing industry, the leather sector, nonferrous metals, and mineral fuels will be curtailed.

To understand the effects the reduction of trade barriers will create, take a look at China, Since China has joined the WTO in 2001, German foreign trade with the Middle Kingdom has almost quintupled and container traffic with China via the Port of Hamburg grown by four times.