Russia is Asia-Centric in Development of Free Trade Areas

13 november 2015

The Analytical Center in cooperation with the Eurasian Business Council held a Round Table on ‘Challenges for Global Trade: Free Trade Areas - Impact on Russia and Eurasian Economic Union’, during which experts discussed global trends, perspectives and challenges of participation in free trade agreements.

Experts recalled that on 5th October, 2015 a trade agreement among twelve Pacific Rim countries (the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru ) - the Trans-Pacific Partnership (TPP) - was reached in the United States. The roundtable participants discussed the impact of the agreement on Russia and the Eurasian Economic Union (EEU) in terms of development of world trade and participation in economic integration with Asia-Pacific countries.

‘Now there is a tendency of creation of regional economic blocs, such as the Trans-Pacific Partnership, agreement under debate on the trade and investment partnership between the US and the EU and others,’ said Denis Yershov, the Head of Department for International Cooperation of the Analytical Center. According to him, now there is a clear trend that differs from the system in which agreements were concluded between two countries or between developed and emerging economies. ‘At the moment we see that the situation changes and agreements are already concluded between several leaders of world trade. New rules for global trade are being developed, so we need to be clear about consequences of this process for Russia,’ said Mr Yershov

The Chairman of the Committee for International Cooperation and Integration of the Eurasian Business Council Anton Akimov talked about free trade areas, which are defined as agreements between two countries on the removal of duties and restrictive trade measures. Today it is the most popular type of a regional agreement, the expert said. ‘The WTO does not prevent the formation of a free trade area provided that there is no discriminatory mode regarding the third country between the countries entering into an agreement,’ Mr Akimov emphasized.

Nikolay Mizulin, the Senior Partner of the international law firm Mayer Brown, believes that the Trans-Pacific Agreement is the agreement of the new generation, which includes such aspects as the digital economy, the system of dispute resolution, state-owned enterprises and government procurement. ‘In terms of tariff heading this agreement did not bring anything substantial for the business. The Japanese industry does not create something new for the export. But this agreement creates economic security, and it is the subject of negotiations with China, so to say the insurance of risks that could arise if you stay face to face with it,’ said the expert. Mr Mizulin also noted that negotiations on the Trans-Atlantic Trade and Investment Partnership between the US and the EU have been carrying out since 2013. In this regard expert considers that Russia should determine its position as quickly as possible and move more actively towards the creation of the free trade area with Asian countries. ‘We need to optimize the process, and we will likely have to join China,’ the expert suggested.

During the discussion, experts noted that Russia has enough opportunities of the trade liberalization in different directions but there is no specific request from the business. To create such agreements the active position of the business is needed in order to understand how to build negotiations but the Russian business is still not oriented on it, experts assert.