Caspian Energy Journal Caspian European Club
Wednesday, 06 June 2018 14:32

SGC will let supply Сaspian gas to the Сzech market Featured

SGC will let supply Сaspian gas to the Сzech market

Open and free trade is essential especially for export oriented countries


Caspian Energy (CE): Mr. Hüner, how do the today’s new rules of the world trade impact on the market of the EU and Czech Republic? Is protectionism beneficial for the world economy or taking it one step back?

Tomáš Hüner, Minister of Industry and Trade of the Czech Republic:  Today´s multilateral trading rules are embodied in the set of Agreements under the umbrella of the World Trade Organization. And it is necessary to preserve this system that governs the world trade for many decades. WTO is the cornerstone of this system, therefore we have to secure its functioning and avoid any attempts to undermine it.

Clearly defined rules and respect for them enable us to create trade relations with different partners based on mutual trust. This is crucial in current world that is interconnected in many aspects. Open and free trade is natural part of today´s reality and is essential especially for export oriented countries involved in global value chains like the Czech Republic and also for the EU as a whole.

It is unquestionable that free trade contributes to growth, competiveness and employment. We have to advocate these benefits now more than ever as we are witnessing unprecedented increase in protectionist tendencies around the world. It is logical to protect own interests, but this should be done in appropriate manner within existing trading rules.

Protectionism does not have any positive impacts from a longer perspective. On the contrary, it weakens economic growth and causes economic and social tensions. History knows the best, therefore we should learn from previous mistakes and try not to repeat them. 


Trade agency, offers a very wide range of trade and export promotion services today


CE: Czech companies and brands are broadly represented at the world markets. What has been the contribution of the Czech government into this achievement? Which preferences and incentives do you create for your companies?

Tomáš Hüner: Taking into account the fact that the fall of the communist regime has happened „just recently“ – in 1989, it is truly admirable what success the Czech companies have achieved. This has several major causes. First of all, we have always been a very industrialized country, and it still persists. Secondly, Czechs are native traders and are very creative and innovative. The Czech economy is very open too. An important role in our post‑revolutionary development has, of course, been played by Western European countries, whether from a foreign investment perspective or in the role of our mentors.

The key catalysts for private enterprise were, in particular, the start of a free business competition in the 1990s and, consequently, our accession to the European Union in 2004. The EU's internal market is a key foreign market today for Czech products and technologies.

If I were to talk about the tools we help Czech companies, it is mainly about competitive export financing and insurance. But it is a standard matter in Western Europe today.

Furthermore, the state, its central authorities, or the CzechTrade agency, offers a very wide range of trade and export promotion services today, which are highly popular amongst Czech companies and are being steadily used. It is mainly the Czech official participation in many dozens of foreign exhibitions and fairs annually, where we support especially innovative companies with high value added products. We also provide extensive informational, analytical and assistance services for our companies, as well as an export education system.

In general, as a government, we have a very open and regular talks with Czech businesses and their representations. We listen to their needs and in the same time we analyze European and global trends.

At the end of April, we were honored to host ETPO (European Trade Promotion Organizations) meetings in Prague, which we measure ourselves with and we are learning from too. So as you can see, trade promotion and export promotion are one of the main interests of Ministry of Industry and Trade as well as mine own as a government member.


CE: How is the 4th level industry developing in EU and Czech Republic?

Tomáš Hüner: The Initiative Průmysl/Industry 4.0 (the initiative is called "Průmysl 4.0" in Czech, literally translated into English as "Industry 4.0") was prepared by the Ministry of Industry and Trade in close cooperation with industry and academia and approved by the Government in August 2016.  The initiative involves different ministries according to relevant measures, business associations and trade unions, and academia. Industry 4.0 Initiative opened a broad discussion on its economic and societal consequences which led to establishing the Alliance Society 4.0 (approved by the Government in February 2017) and Industry 4.0 is taken into consideration by the Action Plan for Society 4.0 (approved by the Government in September 2017).

The goal of the Initiative Industry 4.0 is to show possible trends and outline measures that would not only boost the economy and industrial base in the Czech Republic, but also help prepare the entire company society to absorb this technological change.

The initiative provides an integrated framework dealing with Innovation capacity (Digital Innovation Hubs, Competence Centers, Industrial Platforms, Pilot projects, Test beds). Actions to promote digital skills include education, vocational training, company involvement, research programmes and academia. It considers the impacts on labour market, skills and social impacts, as well as impacts on the education system. Complementary measures (e.g. tax incentives, development loans) deals with cyber security and relevant legislation, application of innovative technologies in energy, transport and Smart Cities, Smart devices & technology innovation.

The Industry 4.0 Initiative envisions some technological preconditions and visions, where particular technologies will play a critical role in the vertical, horizontal and all engineering phase integration promoted by Industry 4.0. The technologies addressed by the Industry 4.0 Initiative include big data, communication infrastructure, cloud computing, additive manufacturing etc. The initiative will be followed up on an ongoing basis within the Action Plan for Society 4.0 which will be continuously updated.

The EU´s approach towards digital transformation of industry is based on complementarity with activities of Member States and regions meaning that a common action is reserved to those cases where there exists a European value added. This idea is in fact enshrined in the European Commission communication Digitising European Industry – Reaping the full benefits of a Digital Single Market of April 2016. The purpose of the Communication is to reinforce the EU's competitiveness in digital technologies and to ensure that every industry in Europe, in whichever sector, wherever situated, and no matter of what size can fully benefit from digital innovations. Currently there are 15 national initiatives in EU Member States, 5 more are in the pipeline; the target is to have them in each Member State.


CE: Which prospects open within the framework of the recently signed memorandum about industrial policy between the Vyborg 4 countries? What does this memorandum imply?

Tomáš Hüner: Joint Declaration on the future of Economic cooperation among Visegrád countries (V4) was signed on April 19, 2018 in Budapest (abbr. Budapest Declartion) where the meeting of Minister of National Economy of Hungary with State Secretaries of V4 countries was held. Budapest Declaration expresses the wish to boost competitiveness, innovativeness and digital transformation of V4 countries. It should be encouraged for instance by means of sharing best practises, by exchanging information and positions, by promotion of mutual learning, sharing information on successful innovative projects and methods in order to foster innovation, emphasizing knowledge-based activities of countries´ industrial ecosystem, including universities and connected start-ups; by cooperation among existing national Industry 4.0 Platforms including digital technologies, digitisation of education systems; and regular meetings in order to advance progress and to promote further cooperation.


CE: The Czech Republic has been traditionally dependent on gas import. How are the European Commission’s rules on diversification of supply observed?

Tomáš Hüner: The Czech Republic is practically fully dependent on the import of natural gas. The security and reliability of natural gas supply is therefore a very important requirement of the State Energy Conception of our state, which is fulfilled in the following forms:

● Diversified sources of natural gas (Russian Federation, Norway, the European Union)
● Diversified transmission  routes of natural gas (the route through Ukraine, Nord Stream, the European transmission networks)
● Underground gas storages in the Czech Republic (total capacity UGS is about 40% of total annual gas consumption of the Czech Republic)
● Reverse flows of  natural gas in the  Czech transmission  networks (since the crisis in 2009 all outgoing points in the Czech transmission  networks  are able to operate in reverse direction)

At the same time, it is of course necessary to consequently comply with the standards of infrastructure (n-1) and security standards of supplies according to Regulation concerning measures to safeguard the EU´s security of natural gas supply.

Because natural gas supplies have not been reduced to end customers in the Czech Republic for more than 30 years, this conception is successful.


Azerbaijan represents the most important business and strategic partner of the Czech Republic in the South Caucasus region

CE:  Do you plan deliveries of other alternative suppliers – Azerbaijani, Kazakhstan, Israeli, Egyptian and African gas? 

Tomáš Hüner: First of all, I must emphasize that natural gas market in the Czech Republic is fully liberalized and privatized. There are more than seventy gas traders, who use natural gas mainly from the Russian Federation or natural gas from spot markets in the European Union. However, there are no legislative barriers to natural gas supplies on other sources, including natural gas supplies from the Caspian region. Currently this is possible only on the basis of swap transactions. I believe that after completion of the South Gas Corridor as well as the North-South Gas Interconnections in Central-Eastern Europe this natural gas supplies from the Caspian region to the Czech market will be physically possible as well.


Both our countries place great emphasis on the development of the industry and the real sector in general


CE:  How would you assess trade indicators between Czech Republic and Azerbaijan? What is required to intensify trade turnover?

Tomáš Hüner: Azerbaijan represents the most important business and strategic partner of the Czech Republic in the South Caucasus region (in 2017 Azerbaijan constituted 88% of the total turnover of this region). Trade and economic relations between our countries have a long-standing tradition. Moreover, both our countries place great emphasis on the development of the industry and the real sector in general. Therefore I am convinced that fostering our economic ties is of our mutual interest. The Azerbaijani market is very perspective for the Czech Republic, especially with regard to exports of Azerbaijani oil. In recent years we can observe growing interest of Czech business in Azerbaijan.

The commodity structure of mutual trade has been stable over a long period. While the biggest share on the Azerbaijani imports into the Czech Republic have mineral fuels as oil (over 90 %), the Czech Republic exports to Azerbaijan mainly market products from metal, wood and paper; machinery and transport equipment and to a lesser extent chemicals.

I´m glad to observe that after the decline of the mutual trade in 2015 and 2016, in 2017 there has been a significant recovery of the bilateral economic relations and the overall turnover has climbed to 25,8 billion CZK, which is almost twice higher than in 2016. This is mainly due to the more than 100 % increase of imports from Azerbaijan compared to the same period of the year 2016 (caused by the restoration of crude oil supplies to the Kralupy nad Vltavou refinery). In terms of turnover Azerbaijan represents the 33rd most important business partner of the Czech Republic. And the most recent indicators from the first two months of 2018 show ongoing increase in the turnover by 3,6 % compared to the same period in the 2017.

However, in 2017 Czech exports has declined by 22,4 % to 2,05 billion CZK. The highly passive balance of the Czech Republic increased to a ratio of 9 % to 91 %. It is thus our big challenge for the coming years to diversify our trade exchange, which brings great opportunities for both Czech and Azerbaijani companies.

In order to intensify our mutual trade turnover we should not only diversify the trade exchange but also continue in deepening dialogue between our countries on issues related to mutual economic cooperation. An excellent platform to define new opportunities for further development of our relations is Czech-Azerbaijan Joint Commission on Economic, Scientific-Technical and Cultural Cooperation (hereafter, Joint Commission). Last session took place in Baku in January 2017. Fifth meeting is planned in the second half of this year. The Czech Republic will continue to intensify its economic relations with Azerbaijan within the framework of the mentioned Joint Commission, as well as business missions and meetings of representatives of the state and corporate sectors.


The current state of the Czech-Azerbaijani economic cooperation is based primarily on trade with oil


CE: Which areas of the non-oil sector of the Azerbaijani economy are the most promising for the Czech investors? Which new technologies can Czechia offer in the agricultural sector?

Tomáš Hüner: The current state of the Czech-Azerbaijani economic cooperation is based primarily on trade with oil. However, there are broad possibilities of developing economic relations in other fields with still unfulfilled potential. Especially industry branches which are activated by the Azerbaijani government in an effort to diversify the economy and to support the development of the non-oil sector, represent the biggest opportunities for the Czech companies. These are mainly agriculture, chemical and manufacturing industry, engineering, services (especially transport, logistics, tourism) and IT.

Czech companies can also succeed as suppliers in the field of pharmaceutical industry, electrical engineering, luxury consumer industry and environmental technologies. There is a great potential for future cooperation in the field of renewable energy sources. Technology of Czech companies can find eligible application in the field of wind and water power engineering, improving the efficiency of the energy industry, construction of sewage treatment plants, water treatment plants and cleaning of contaminated soil.

In the Czech Republic we also develop innovative and affordable technologies which are crucial for the sector of food processing and agriculture. Among agricultural machinery and technologies I can name for example famous Czech tractors, machinery for soil preparation and tillage and technologies for animal housing, aquaculture and forest cable logging systems.

Another important area for cooperation in the agricultural field is the mutual exchange of experience in the field of livestock farming and increasing the volumes of exported agricultural products. There is also potential for establishing of joint enterprises for sorting, preserving and labeling of agricultural products.

Thank you for the interview.



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