Preferential Trade Agreements of the Eurasian Economic Union: Economic Feasibility and Political Significance

Preferential Trade Agreements of the Eurasian Economic Union: Economic Feasibility and Political Significance

Maria Lagutina (Saint Petersburg State University, Russia)
Copyright: © 2020 |Pages: 27
DOI: 10.4018/978-1-5225-9566-3.ch002

Abstract

One of the trends in the development of modern trade relations is the increase in the number of concluded preferential trade agreements (PTA), which are considered to be a tool for reducing tariffs and, as a consequence, reducing the costs of entering the domestic market of the partner country. Although the Eurasian Economic Union (EAEU) has made only the first steps on the way towards its development. The EAEU has already managed to create a free trade zone with Vietnam, some agreements have been signed with Iran and China. Each of these agreements has its own specifics. The purpose of this chapter is to identify the economic feasibility and political significance of these preferential trade agreements for the countries of the EAEU and their external partners, as well as to determine the potential expansion of the network of preferential trade agreements of the EAEU.
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Background

The general dynamics of the EAEU foreign trade in recent years is positive: according to the Chairman of the EAEC Board T. Sargsyan, “the foreign trade turnover of the EAEU member-states with the third countries in 2017 amounted to $ 633.8 billion, or 124.4% compared to the level of 2016. At the same time, the volume of exports from the EEU to the third countries increased by 25.4% compared to 2016, amounting to $ 386.6 billion in 2017. The volume of imports to the EAEU from the third countries increased by 22.9% in 2017 compared to 2016, reaching $ 247.2 billion.” (Interview of the Chairman of the EAEC Board T. Sargsyan to The Economic Times, 2018). At this stage, the main trading partners of the EAEU are the EU and APEC countries. The main buyer of goods exported by the EAEU member-states is the European Union (53.9% of total exports), while import purchases come mostly from the APEC countries (43.7% of total imports of goods), with China occupying the first place. (Ob itogakh vneshney torgovli tovarami Evraziyskogo ekonomicheskogo soyuza, 2018). The presented figures show that the foreign trade policy of the EAEU has a multi-vector character at this stage.

The first experience of creating a free trade zone between the EAEU and Vietnam in 2015 is pretty positive. In addition, an Interim Agreement with Iran and an Agreement on cooperation between the EAEU and China were signed in 2018. About 50 countries from different regions expressed their desire to conclude trade agreements with the EAEU. However, if in some cases it is a question of signing a preferential trade agreement, in others, as, for example, in the case of China: “it is non-preferential, it is not an agreement on a free trade zone, that is, it does not concern the reduction of customs duties, but it is a trade and economic agreement that creates a legal framework for an alliance with China.” (Ministr torgovli EAES Verinika Nikishina, 2018). In this regard, it is important to understand the reasons for the choice of different forms of international cooperation of the EAEU with different groups of the third countries.

Key Terms in this Chapter

Free-Trade Area: Trade within the group is duty free but members set their own tariffs on imports from non-members (WTO’s definition).

Preferential Trade Agreements (PTA): A trading bloc that gives preferential access to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely.

Eurasian Economic Commission (EAEC): The permanent regulatory body of the Eurasian Economic Union (EAEU), which aimed to ensure the functioning and development of the EAEU, and developing proposals for the further development of integration.

World Trade Organization (WTO): The only global international organization dealing with the rules of trade between nations based on the WTO agreements; the goal is to help producers of goods and services, exporters, and importers conduct their business.

Greater Eurasian Partnership: The current Eurasian strategy of Russia, aimed at the formation of a complex, multi-level system of multilateral cooperation with the participation of the EAEU, ASEAN, APEC and SCO countries.

Eurasian Economic Union (EAEU): An international organization for regional economic integration that has international legal personality and is established by the Treaty on the Eurasian Economic Union.

Eurasian Development Bank (EDB): An international financial organization established to promote economic growth in its member states, extend trade and economic ties among them, and to support integration in Eurasia.

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