Statement: 25 Years of Eurasian Integration: from Idea to Implementation
Excellency, Ms. Tatiana Valovaya, Minister and Member of the Board on the Main Areas of Integration and Macroeconomics of the Eurasian Economic Community,
Excellency, Mr. Alikhan Smailov, First Deputy Prime Minister of the Republic of Kazakhstan and Minister of Finance of the Republic of Kazakhstan,
Mr. Victor Khristenko, President of the Business Council of the Eurasian Economic Union,
Mr. Robet Urazov, Director General of the Union ‘Young professionals ,World Skills Russia’,
Mr. Frank Schauff, Chief Executive Officer, Association of European Business,
Mr. Christian Karl Harten, Executive Director of the German-Russian Foreign Trade Chamber
Very distinguished participants,
It is a pleasure to be with you to celebrate the 25th Anniversary of the idea of Eurasian integration and the 5th Anniversary of the Eurasian Economic Union Treaty. I am pleased do so in Kazakhstan, as this project owes much to the initiative of First President of the Republic, Nursultan Nazarbayev.
Today, as we work to implement the United Nations 2030 Agenda for Sustainable Development, deeper regional economic cooperation and integration is ever more important. It is a necessity if we are to overcome the many challenges which transcend boarders and support sustainable economic and social development. Eurasian integration is directly relevant to the broader Asia-Pacific.
Among the sub regional organisations and integration initiatives in Asia and the Pacific - the EAEU is among those with a high level of ambition.
It has had many successes. Allowing for the free movement of goods, services, capital and labour in the union is a ground-breaking achievement. The reduction in intra-EAEU tariffs over the past 25 years from twelve percent to zero is another. It has supported international agreements within the Union and taken a common approach to certain economic sectors.
The high level of ambition remains. Trade agreements have been signed with China, Viet Nam and Iran and memorandums of understanding have been signed with governments over twenty countries around the world. Infrastructure connectivity initiatives are underway to underpin this integration effort.
Yet for all these successes, there is scope for economic integration to be deepened further within the EAEU and in North and Central Asia. Overall, North and Central Asia is among the least integrated subregions in Asia and the Pacific. Our latest analysis shows intra-subregional trade accounted for only 8% of North and Central Asia total exports, compared to 24% for South-East Asia.
Despite the removal of intra-EAEU tariffs, trade within the union still remains smaller than with external partners. It represented about 14% of total trade in 2017, significantly lower than that of ASEAN (25%). It is dominated by commercial exchanges between Belarus and the Russian Federation, and to a lesser extent between the Russian Federation and Kazakhstan.
There is also scope to increase EAEU integration with the rest of the Asia-Pacific region and some of the world’s most dynamic markets. Trade of EAEU members with the rest of the Asia-Pacific represented less than 40% of their total trade in 2017. Exports are concentrated in low value-added commodities, and FDI in the natural resources sector. These are dominated by oil and gas exports. There has been little change in this situation over the past two decades.
Non-tariff trade costs, including additional logistics costs associated with many of the Central Asian countries being landlocked, continue to weigh on competitiveness. The North and Central Asia Subregion has the highest non-tariff trade costs of Asia-Pacific.
Considering these challenges, allow me to suggest three priorities to support economic integration within North and Central Asia, and with the rest of Asia and the Pacific.
First, lowering cross-border trade and transportation costs requires the completion of transport, energy and information and communication technology linkages. Many strategic transport infrastructure projects are underway and some with the support of the United Nations Economic and Social Commission for Asia and the Pacific. We are keen to help ensure social and environmental sustainability remain central to their development. Now is the time for North and Central Asia to consolidate its position as an alternative transit route for goods moving between East Asia and the European Union.
Second, we must move integration beyond preferential tariffs, and eliminate non-tariff barriers, restrictive rules of origin and barriers to foreign direct investment. At ESCAP, we are working with partners to examine the impact of non-tariff measures on intraregional trade and build capacity to reduce their adverse impacts within the North and Central Asia subregion. Thank you for your cooperation in this area.
Third, there is scope to reduce trade costs by simplifying and automating trade, transit and investment procedures. Enabling the electronic exchange of trade information between North and Central Asia and trading partners could reduce trade costs by 25%. A United Nations treaty to facilitate cross border paperless trade in Asia and the Pacific has recently been agreed for this purpose. Armenia and Azerbaijan are among the countries which have signed and acceded. I hope more countries from central Asia will follow and maximize the treaty’s benefits.
Ladies and gentlemen,
I believe we have an opportunity to build on the Eurasian Economic Union’s successes to strengthen economic integration between North and Central Asia and the rest of Asia and the Pacific. Our success depends in part on a sustainable approach to transport and trade facilitation. More hard infrastructure projects, consistent norms and standards, and harmonised legislative frameworks are needed. Strengthened cooperation to ensure we have the means to finance and strategically target our investments will also be important.
At ESCAP, we are committed to supporting the intergovernmental work needed for this to happen working closely with all relevant sub-regional originations.
Thank you for your attention. I am looking forward to joining forces with all of you to lay the foundations for deeper economic integration in Asia and the Pacific.