Barrier free medium to yield benefits to all parties

Commonwealth signs free trade zone agreement

By Irina Yeliseeva

The document has endured a long and complicated journey: a whole decade of debate by CIS member states. Agreeing the details has been a challenge, so its recent signing in St. Petersburg is a true surprise to many.

Back in 1994, when all our post-Soviet states were badly in need of a free trade agreement, one was signed. However, it never worked efficiently, as many failed to ratify it. A new draft remained idle until 2009 but, in 2010, the process of its co-ordination began to move quickly. The crisis inspired integration talks and, this March, a free trade zone agreement was studied by our prime ministers at a Minsk summit. It was perhaps the largest and most acute discussion, with each country keen to protect its own interests. Some positions were utterly contradictory and consensus seemed impossible; accordingly, when the signing of an agreement was announced in September, few believed the news.

Some details are yet to be ironed out of course. Azerbaijan, Uzbekistan and Turkmenistan are still to sign the document, deciding to postpone until late 2011. Meanwhile, those who have signed need to lift all barriers and restrictions to trade as soon as possible (abolishing  a range of import and export duties). Some products are not yet covered by the agreement, so these exemptions will be the subject of future talks.

Many wonder how the CIS free trade zone will function, since the Customs Union operates within it. The Customs Union Commission Executive Secretary, Sergey Glaziev, explains, “We’ve shifted from one-sided agreements, which were burdened with numerous exemptions and which have failed to create common framework conditions for free trade. Rather, we seek a fully-fledged multi-sided agreement. We have absolutely no obstacles to its realisation within the Customs Union. As regards our partners outside the Customs Union, we share a customs border with them; accordingly, barriers remain.”

Irina Tochitskaya, a candidate of economic sciences at the Institute of Privatisation and Management, also believes that the CIS free trade zone and the Customs Union have no contradictions. She tells us, “The Customs Union is a higher form of integration. Agreements achieved within it are unchanged. As regards the CIS agreement, firstly, it’s important that Russia has signed it. Its earlier signing was postponed as Russia did not wish to launch free trade without exemptions. Secondly, it’s important for Belarus that the whole CIS market opens up, as the country exports its industrial manufactures to these states. The Ukrainian market is of major importance, being our second trading partner after Russia.”

In the first half of 2011, CIS turnover rose by 48 percent. Conceptually, the new agreement forms the basis of mutual trade growth. Time will tell.

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