What is expected from a turn to the East
A free trade zone between EAEU and ASEAN countries is to be launched, with the first step already taken
The Eurasian Economic Union (EAEU) comprises five member states: Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan. Meanwhile, the Association of South-East Asian Nations (ASEAN) has ten members.
“Senior officials have already received instructions to organise this work as smoothly and quickly as possible, as is vital,” the Russian minister has emphasised. He also stresses that absence of customs barriers is relevant only for trade in goods, while issues relating to trade in services and investment need to be resolved at national level.
Experts support the idea of free trade zones, since these stimulate economic development for all members. Prof. Alexander Mikhailenko, of the Foreign Policies Chair at the Russian Presidential Academy of National Economy and Public Administration, notes that free trade zones eradicate customs barriers, allowing businesses to ‘compete on equal terms’. “Imagine a powerful Belarusian company. Prior to the agreement with Russia and Kazakhstan, it was working for 10 million people. After the agreement, it has access to 180 million. Not only trade opportunities expand but the enterprise itself; its infrastructure and capacity develop. It’s good for both the company and the national economy,” he notes.
The South-East Asian market is huge and growing, while a free trade zone with Asian countries is beneficial politically too, notes Prof. Mikhailenko. The West is known for having imposed sanctions, while the East has not. Importantly, trade should be mutually beneficial. It’s no simple task, as it’s likely that relatively cheap Asian goods will win out against domestic.
“The EAEU has a free trade agreement with Vietnam,” Prof. Mikhailenko tells us. “It deals with trade in commodities. Both Belarus and Russia would have lost out to Vietnam, due to its cheaper labour force. In view of this, additional agreements on major investment projects relating to hydrocarbon production and construction were signed, to recover a balance. Since the agreement with ASEAN is an agreement with ten countries and not just with Vietnam, it’s necessary to agree favourable terms, to avoid a ‘one-way street’.”
According to Alexey Ulyukaev, over the next two years, mutually beneficial details will be written into the agreement.
By Yevgeny Bogomazov