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Tuesday, July 23, 2024

Eurasian Economic Union Free Trade Agreement: Latest Developments


Discussions and negotiations are underway on free trade agreements between the Eurasian Economic Union and Egypt, Iran, the United Arab Emirates, Indonesia and China

this Russian Union of Industrialists and Entrepreneurs (RSPP) hosts an integration forum this week titled “Pushing the horizon: Eurasian economic integration strategy and the role of business in new conditions” and learn about the Eurasian Economic Union (EAEU) drive for internationalization and the opening of new markets . The Eurasian Economic Union is a free trade bloc that includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, covering northern Eurasia from the borders of Eastern Europe to western China.

The Eurasian Economic Union has additional significance for Russia as its foreign trade is increasingly restricted by sanctions from developed Western countries. However, this was partially offset by trade in the Eurasian Economic Union. Exports of Armenia, Belarus, Kazakhstan and Kyrgyzstan to other Eurasian Economic Union members increased by $9.8 billion in 2022, a 40% year-on-year increase, with Russia importing the vast majority, worth $9.5 billion, to smaller countries The good news is that exports from the countries of the Eurasian Economic Union have increased significantly.

Critics have argued that this partly has to do with parallel imports of Western products into Russia and does not fully represent actual trade growth—the Eurasian Economic Union member states simply play the role of buying goods from Western countries and reselling them to Russia at a small price. Role. mark. RSPP chairman Alexander Shokhin said this had not gone unnoticed in the US and EU, adding: “We believe that it is one thing to control dual-use products for secondary sanctions, but another to produce and invest in the domestic EAEU manufacturing,” he said, adding that EAEU companies must start producing alternative products to fill the vacant market left by Western companies leaving Russia.

The strengthening of sanctions against Russia and its enforcement control has made the Eurasian Economic Union a supranational union of countries, in which Russia plays a key role, and has now become one of the most important tools to protect Russia’s foreign trade.The trade volume between Russia and the member states of the Eurasian Economic Union is constantly growing, while Eurasian Economic Commission (EEC, the governing body of the EAEU) is preparing new Free Trade Agreements (FTAs) with countries that can sign these agreements.

Upcoming is the finalization of the Eurasian Economic Union Free Trade Agreement with Iran, which is in place and active but requires some additional work, and the Free Trade Agreement with Egypt. Negotiations with Indonesia and the United Arab Emirates are also well under way.

EEC Trade Minister Andrei Slepnev said, “The prospect of increased secondary sanctions by the West against companies that cooperate with Russia also strengthens tensions between the Eurasian Economic Union and third countries on the creation of new free trade areas.” Negotiations. The number of applicants has increased over the past year.”

Eurasian Economic Union-Egypt Free Trade Agreement

The European Economic Community is waiting for the completion of negotiations on a free trade agreement with Egypt.According to negotiators on both sides, the deal should be a gateway to Africa: Goods produced by African residents Port Said Industrial Zone, Russiawith a localization rate of 30%, will be labeled “Made in Egypt”, which will also make it possible to export to these countries that have trade agreements with Egypt.

Egypt is a signatory to several multilateral trade agreements, including African Continental Free Trade Area (African Free Trade Area), Greater Arab Free Trade Area turks and south americans Mercosur group.
Egypt also has a trade agreement with China, while Egypt has an economic treaty with Russia. In June 2001, Egypt signed an Association Agreement with the European Union (EU), which entered into force on 1 June 2004. The agreement provides for immediate duty-free access to the EU market for Egyptian products.

Eurasian Economic Union-Iran Free Trade Agreement

EAEU has reached a provisional trade agreement with Iran, stipulating to reduce tariffs on 360 commodities, with a trade volume of about US$5 billion, while implementing zero-tax rates for more than 90% of the product range. Negotiations to finalize a permanent free trade agreement with Iran are almost complete, Slepnev said. “We concluded formal, meaningful negotiations with the Iranian side a month ago, and now we are refining the agreements we have with governments,” he explained.

EAEU-UAE Free Trade Agreement

RPSS also announced the start of the first round of free trade agreement negotiations with the UAE. The EEC negotiating team will strive to complete preparations and reach an agreement within the next 12 months.

Trade between the Eurasian Economic Union and the UAE will soar 60.9% to $6.3 billion in 2022, with imports falling 6.8% to about $418 million and exports surging 69.4% to $5.9 billion.

The UAE is a party to a number of multilateral and bilateral trade agreements, including agreements with partner countries in the Gulf Cooperation Council. As part of the Gulf Cooperation Council, the UAE has close economic ties with Saudi Arabia, Kuwait, Bahrain and Oman, meaning the UAE shares a common market and customs union with these countries. According to the Greater Arab Free Trade Area Agreement (GAFTA), the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Iraq, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya and Yemen.

The Eurasian Economic Union and the UAE plan to sign two new agreements on trade, services and investment as part of bilateral talks, the Russian Economy Ministry said. The Ministry expects that this will not only reduce tariffs, but also simplify the issuance of licenses, guarantee business access to the UAE market for service industries, including Russian transport and financial companies, provide guarantees for transfers of funds, and ensure the protection of Russian investors. The Russian-UAE business community wants to improve payment for related services, invoicing, certification, and access to third-country markets with which the UAE has agreements.

Eurasian Economic Union-Indonesia Free Trade Agreement

Negotiations between the EEC and Indonesia are also scheduled for the end of this month (March 2023). Slepnev said Indonesia was very interested in the track of negotiations with the Eurasian Economic Union. Indonesia is a market of 274 million people with a GDP of over US$1 trillion. It is a member of the ASEAN Free Trade Group, which also includes Bahrain, Cambodia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The Eurasian Economic Union already has a free trade agreement with Vietnam.ASEAN also has partnerships with China, India and Regional Economic Partnership Agreement country group.

Eurasian Economic Union-China Free Trade Agreement

The EEC is also preparing to amend its existing agreement with China. By 2022, the share of these countries in the total trade of the Eurasian Economic Union has increased by 23%. The current non-preferential agreement came into force in October 2019 and does not provide any tariff relief. Both the ECC and China plan to discuss the depth, ambition and industrial direction of expanding China’s cooperation with the Eurasian Economic Union. So far, the road map of the Eurasian Economic Union and China has been divided into three parts: digitization of transport corridors, dialogue on foreign trade policy issues, and joint scientific research on various scenarios of deepening cooperation, including trade liberalization.

If these agreements come to fruition, they will further link the Eurasian Economic Union with Asia and greatly expand the volume of trade in goods between the Middle East and North Africa, ASEAN and China. It should be noted that other interested parties, including India, are also negotiating an Eurasian Economic Union free trade agreement, although this may take time to materialize. However, the moves do underscore that Russian trade and investment is moving away from the EU, and that a new Russia – one with a clear new focus on Africa and the East – is rapidly emerging.

Source: Tatiana Edovina and Diana Galieva for Kommersant and additional trade data provided by Chris Devonshire-Ellis

Dezan Shira & Associates Assisting foreign investors, including Russian companies throughout Asia, has been done for more than 30 years.The company is in United Arab Emirates, Indonesia, Vietnam and China and partner companies in Egypt and Iran. For assistance with market and business intelligence, company formation, tax advice and overall trade compliance, please contact Maria Kotova at asia@dezshira.com

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about Us

In these uncertain times and with sanctions in place, our company helps Russian companies relocate to Asia. We also provide financial and sanctions compliance services to foreign companies operating in Russia. In addition, we provide market research and consulting services to foreign exporters interested in doing business in Russia, as the economy seeks to replace Western-sourced products.For assistance please email russia@dezshira.com or visit www.dezshira.com


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