Do the EAEU Countries Need a Common Trade Policy?

21.12.2016

Talks on a trade and cooperation agreement were launched between the Eurasian Economic Union (EAEU) and China in 2016 amid a growing awareness of the need to strengthen Eurasian integration, coordination among its members, and contact between the member state governments and the Eurasian Economic Commission, the executive agency of the EAEU. It was also clear that the EAEU needs to improve the mechanisms of interaction with the other large regional partnerships, primarily the Regional Comprehensive Economic Partnership (RCEP) and, possibly, a revised Trans-Pacific Partnership (TPP). Until recently, the RCEP and the TPP were seen as the rival projects of China and the United States. Then the upcoming US administration said it would abandon the TPP. But the proposed partnership’s standards and the demand for it among a considerable part of the business community are so high that the TPP or something like it will eventually be created.

That these projects are led by the United States and China is an important but not overriding factor of the planned TPP and the quite real RCEP. The strategic difference between these projects is not the country that leads them, but their philosophy of regulating international trade and investment. The TPP philosophy is focused on the leading role of corporations, the largest possible market liberalization, and the creation of a uniform institutional environment. The RCEP aims to liberalize the markets yet preserve the member states’ ability to directly interfere in market processes. The EAEU and other regional partnerships will have to choose between two development paths, one represented by the so far failing TPP and the other by the RCEP’s promise of success.

The absence of a common trade policy for the EAEU member states could become a problem in this situation. It is true that the Eurasian Economic Commission has the authority to conduct foreign trade talks on behalf of the member states, but this is not enough. The EAEU countries should use foreign trade talks to enhance the competitiveness of their economies and to strengthen their sovereignty to achieve national development goals. This calls for revising the essence of the EAEU trade policy. Astana, Bishkek, Yerevan, Minsk and Moscow must decide whether they will respond to external and internal challenges together or separately.

International practice offers a possible solution: a more flexible and systemic use of preferential trade agreements, which can be done if the EAEU states view the efforts to achieve domestic development goals, increase the EAEU niche in foreign markets and pursue a more active trade policy as an integral system of measures. In this sense, the EAEU lags behind the leading economic associations so far, including the EU, and large national economies, such as the US, China and Japan. The consolidation of efforts increases the individual capacity of each country involved in a common trade policy.

The EAEU countries must above all choose a strategy and mechanisms for a proactive and common trade policy. They must have a clear understanding of common goals and common methods of achieving them that can consolidate the work of the negotiators from the EAEU member states and the Eurasian Economic Commission. Under this strategy, interaction with regional mega-partnerships and associations would bolster internal development and modernization and strengthen the export capacity of the EAEU economies.

A common trade policy is an important tool that can also be very effective, as the European experience has shown. But to become effective it needs to move beyond mere foreign trade negotiations and towards agreements that will coordinate mutual investment, technical regulation and technological cooperation. A modern approach to foreign trade agreements is unthinkable without a fundamentally new understanding of their essence and practical opportunities. Foreign trade agreements are changing from a simple means of trade liberalization into a major factor of economic development and an indicator of the countries’ and interstate associations’ place on the global economic stage. With a common trade policy, Russia and its EAEU partners will be able to uphold their negotiating positions with large and consolidated partners more effectively. They only need to make full use of available opportunities at the national level and within the EAEU.

Timofei Bordachev is Programme Director of the Valdai Discussion Club.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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