On October 18th in St. Petersburg the heads of the CIS countries’ governments signed an agreement on the free trade zone, which has been developing for several years. A few days later the video link was organized in Moscow. Experts expressed their views on what this agreement means for the CIS countries, how it will work and prospects of deeper integration in the former Soviet space.
Sergey Glazyev, the executive secretary of the commission of Customs Union, the deputy general secretary of the EuroAsian Economic Community:
We were aimed at this event since 1992. After the Soviet Union dissolution agenda of our integration processes has included signing of a multi-sided agreement on free trade, which could replace the system of bilateral treaties on free trade, which were the platform for mutual trade during these 20 years. The agreement fixates the regime, which has been formed. We have no import taxes and quantity limits, except some withdrawals. We replace them for multi-sided system, which is more stable, more understandable and flexible.
There are some withdrawals taken from those bilateral treaties. They concern import of sugar, alcohol and cigarettes. In different countries withdrawals are different. All other goods will turnover within free trade. Export taxes will maintain. Each side will apply defense measures. It correlates with WTO norms, because we have standard regime of free trade.
I think later we will cancel remained limits and continue to hold off import taxes. It responds interests of our consumers. For example, sugar limits are sensible for each consumer. The alcohol market will work in free trade regime too, as alcohol producing enterprises of our countries have been working in territories of their neighbors for many years, and it’s not clear from whom we defense them.
Maybe in future we will cancel defense measures, but at the moment this norm exists. The point is not to lose potential of cooperation, including mutual trade, considering further changing of our trade regimes with third sides.
There are several threats. This agreement is important for the members of the Customs Union in the sphere of unification of trade regimes, which Russia, Belarus and Kazakhstan have with other CIS states. It is a necessary condition that all three states have unified trade regime. For them the treaty is not significant, as within the Customs Union we have no customs. However, the treaty is important for cooperation within the CIS.
The core of integration is the Customs Union. Soon two members of the EurAsEC, Kyrgyzstan and Tajikistan, should join the Customs Union. In the EurAsEC zone there are no any limits, common goods market is working, the zone of common trade of the CIS. Not all countries have signed it yet, for example, Azerbaijan, Turkmenistan and Uzbekistan. Through it we’ll fixate the free trade zone around the Customs Union.
Each country is independent in choosing third partners, with which it can agree on free trade zone. It is very important for Ukraine, as the biggest threat to this project is the agreement on trade free zone with the European Union. This agreement includes a special item, which says that is any of sides agrees with any third side (the EU is not a simple third side, it is one third of our import), consultations should be held, and if opening of our free trade zone through one of participants threatens interests of any other sides, as the result of consultations measures on defense of our common market can be taken.
We have established a very sensible system, all participants should take responsibility for its security. It seems that a free trade zone is not a big deal, but first document on this issue was signed in 1994 and hadn’t been realized. Our current agreement defeats that treaty. We should strengthen the regime of mutual trade and make it more open.
Pavel Nefidov, the general executive of the Financing Banking Council of the CIS
I am a representative of the financing banking council, in which major financing institutes of the CIS are involved. I would like to draw your attention to financing aspects of the agreement, first of all, to freedom of capital movement.
The agreement will influence positively financing markets, because financing markets usually follow real economy. High predictability of financing processes, including trade and investment processes, increases stability rate and attraction of cheap resources at all markets. I think the current infrastructure will go on development, maybe more rapidly even. In the 1990s we saw a typical situation: financing institutes of the CIS countries were like sunflowers, which look at the sun and don’t see each other. The sun was London, Frankfurt, New York and other world financing centers. Today we see interest of financing institutes to neighboring countries and growth of cooperation. That is why the idea of the international financing centre was born. I think that Moscow financing center can be successful only if it is a regional financing center, a center of the CIS countries.
Kazakhstan financial system is a serious platform for development of the project. Kazakhstan has financing center, where many issues, which we only discuss, have been implemented already. At the moment stable currencies – dollar and euro – are moving, and the effective mechanism of working with national currencies is ready.
We also have the Eurasian Bank of Development, which initially was a two-sided bank, but at the moment other countries of the EurAsEC are joining it. It can be a serious institute of investment development. We can see that financing structure is being formed according to international standards. This agreement corresponds to WTO norms. Financing infrastructure is developing within international norms, as well.
VK.
