Faced with a rising tide of imports, the Moscow city government has designated a "free-trade zone" on 165 hectares of land adjacent to the Sheremetyevo airport as a way of expediting the flow of goods into Russia.


Once cargo handling facilities have been built, foreign companies will be able to sell their products immediately upon arrival in Moscow, free of most trade tariffs, value-added taxes and customs fees.


The project, a three-way joint venture between the Moscow government and the Irish companies Ayer Rianta International and Walsh Western, will be wholly owned by the city, and administered by Sheremetyevo II.


Airport officials would not say when they expect the project to be completed.


Hong Kong and China have both used free trade zones successfully to bolster trade and attract business development.


But while participating foreign export firms will be able to lease space and sell their products unburdened by high tariffs, the right to purchase will be limited to wholesalers and businesses. The general public will be excluded. Anatoly Pirchenkov, deputy chief of the airport's cargo unit, said that the need for such a zone became clear when goods began piling up at the airport because the old Russian import codes dictated a lengthy clearance process.


"Unfortunately, the legislation of the Russian Federation is too old", he said. "We cannot use our old administrative codes when working in international zones".


He said that with the new free-trade area, Sheremetyevo would be able to expedite foreign cargos through customs more efficiently, rather than relying, as now, on cargo handling provided by individual airlines and operated in collaboration with Russian cargo firms.


Under the new arrangement, arriving Western goods can be sold off immediately at the airport, a move expected to increase the flow of imports. The free-trade zone's management will provide Western companies with land, office space, storage facilities and logistical support.


"Right now, Western airlines like British Airways, Lufthansa and Finn Air are operating their own cargo services, because the administration of the airport is outdated", Pirchenkov said. "With the free-trade zone, Sheremetyevo will be able to handle incoming international trade more efficiently".


He said that the Moscow city government's decision was prompted by an appeal from Sheremetyevo's administration, which wants to modernize and streamline its cargo processing.


"Sheremetyevo petitioned the government because it wants to be exclusively in charge of loading and unloading the airplanes using the airport", he said.