Reconciling National Priorities in Eurasia

The formation of integration blocks in Eurasia is accelerating in spite of the protectionist pressures reverberating throughout the world economy. For the Eurasian Economic Union the source of inspiration is no longer only the EU model of economic integration but also increasingly the successful experience of regional blocks in East Asia such as ASEAN. There is also ample room for the Eurasian Economic Union to take on board the experience of East Asian economies in the sphere of industrial policy and the articulation of longer term development goals. East Asia’s integration patterns are also distinct from Western patterns in the degree of flexibility and greater leeway in pursuing bilateral trade agreements. 

In terms of industrial policy, one of the successful features of the Asian approach has been the use of conditionality with respect to the assistance extended to corporates from the state. The use of sunset clauses with respect to subsidies or conditions regarding the increase in the export share in foreign markets improved the alignment of incentives on the part of the corporates receiving state support. This approach which proved successful in countries such as South Korea stands in contrast to the experience of Latin American economies in the 1960s when activist industrial policies were not supported by a conditionality framework, rendering the policy effort largely unsuccessful. 

East Asia and ASEAN in particular also serve as an important model of a flexible pattern of economic integration among members in contrast to the more rigid and rules-based framework of the EU. For the Eurasian Economic Union the pattern of integration will likely involve a certain synthesis of the European and East Asian approaches to integration, whereby sufficient flexibility is to be reserved for member countries in harmonizing rules and practices in the sphere of customs and technical regulation. Another important angle in this flexibility is the ability of individual countries to conclude economic agreements with third parties – something that is exercised by ASEAN countries and that has been demonstrated in recent periods by EAEU members such as Armenia that signed the EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA). 

The formulation of long-term goals and the broadening of investment horizons has also been an important feature of East Asia’s development. One of the better known examples were the 5-year plans during the South Korean modernization effort. Among the regional integration blocks ASEAN provides an important reference point on the prevalence of long-term roadmaps, including with respect to developing connectivity among its members. More recent examples include the Digital ASEAN programme pursued in cooperation with the World Economic Forum (WEF) , which “aims to work on the issues that will underpin a regional digital economy in ASEAN so that the benefits of the Fourth Industrial Revolution can be fully unlocked and become a force for regional economic inclusion”.

An important part of the long-term planning in East Asia was the elaboration of a strategy of trade alliances for individual countries (Singapore and South Korea are cases in point) as well as regional integration blocks such as ASEAN. For the Eurasian Economic Union it will be important to formulate a comprehensive and a pro-active strategy of trade alliances – until recently it appears that the sequence of trade talks and agreements was to a significant degree a reaction to the interest expressed by EAEU’s counterparties. Even more importantly, the common strategy of trade alliances will need to be based on an ex-ante reconciliation of the respective strategies of EAEU members in contrast to ad hoc adjustments to the common stance during trade negotiations.

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