MONTREAL - The heads of government of the participating states of the (CIS)
concluded a free-trade zone (FTZ) agreement last week, meeting in St
Petersburg. The heads of state of Armenia, Belarus, Kazakhstan, Kyrgyzstan,
Moldova, Russia, Tajikistan and Ukraine signed the document.
Armenia, Kyrgyzstan, Moldova and Ukraine are already members of the World Trade
Organization (WTO), and the WTO's rules do not prohibit FTZs. Russia has been
seeking WTO membership for 18 years. Accession talks are stalled by Moscow's
insistence on support for agriculture and automobile production. Russia's
President Dmitry Medvedev stated on the day after the signing
ceremony that Russia "can live without" WTO membership "if we are told that we
are not fit for it for some reason".
The first FTZ protocol among CIS leaders was signed in 1994, and the prospect
of a final agreement has perennially been headlined at CIS summits over the
last decade. Azerbaijan and Uzbekistan are also CIS members but did not attend
the meeting; neither did Turkmenistan, which has observer status.
In an article published by Izvestiia two weeks earlier, on October 4, Russian
Prime Minister Vladimir Putin separately announced the creation of a "Eurasian
Union" as a goal of Russian foreign policy during his soon-to-be presidency.
The Eurasian Union is supposed to be a political superstructure sitting on top
of the already existing "CIS Customs Union", qualitatively differentiated from
it by the existence of supranational institutions.
However, in his October 4 article, Putin incongruously attributed to the
Eurasian Union (which has only Belarus, Kazakhstan and Russia as members) the
"practical agenda" of implementing the CIS-wide FTZ treaty that Russia had
proposed in 2010. It was left unexplained how the Eurasian Union's yet-to-be
institutionalized bureaucratic apparatus will administer the FTZ for the whole
CIS, including Customs Union non-members.
Moreover, he wrote those words knowing that the St Petersburg summit of the CIS
would approve the new FTZ treaty. For although he pretended there that the
success of the FTZ agreement was a surprise, Moldova's deputy economy minister,
Octavia Calmac, told the RFE/RL news service that the agreement was ready in
May.
It was not signed then, she explained, because Azerbaijan, Turkmenistan, and
Uzbekistan (which did not attend the St Petersburg summit and so have not yet
signed it) had some misgivings. They were given six months to reach
accommodations; six months later, in October, it was signed without them. Each
has now said pro forma that it will consider acceding to the agreement.
The agreement has still to be ratified by the signatories' national
legislatures where their constitutions requires this. Ukraine is one of these
places. It is potentially one of those hinges of history, that Ukrainian
President Viktor Yanukovych signed the FTZ in St Petersburg on the day after
the European Union disinvited him from a planned visit to Brussels, following
the jailing of former prime minister Yuliya Tymoshenko.
Meetings had been planned to put finishing touches on an association agreement
(AA) between the two parties, which includes provisions for a "deep and
comprehensive" free-trade area (DCFTA).
The European parliament will have to approve the DCFTA and the AA. There, four
parliamentary party groups have already offered an agenda point to link
approval with "the state of democratic values" in Ukraine. A spokeswoman for
the European Commission separately expressed the same point slightly more
diplomatically.
The commission, she said, "would like to see progress [in Ukraine] on subjects
such as law, the application of law, the independence of the judiciary, which
are at the heart of our eastern partnership". She said the meeting had not been
cancelled but only postponed, although it has not yet been rescheduled for a
definite date. Neither has the December signing summit for the AA been
cancelled.
The scheduled October meetings in Brussels nevertheless took place in
Yanukovych's absence. Marketwatch reported that on October 20 the two sides
agreed on all key trade aspects of the association agreement, including a "deep
and comprehensive free-trade zone" between the EU and Ukraine.
Ukraine insists that the document include language specifically referring to
the possibility that Ukraine becomes an EU member in the less distant future,
whereas the EU had preferred language about a "long-term perspective", which
they have apparently abandoned.
Long-time Moscow-based observer Isabel Gorst, writing in a Financial Times
blog, noted that the FTZ may open a window for resolving the current
Russia-Ukraine gas pricing dispute. She states that Ukraine has been seeking to
import gas from Turkmenistan undercutting the price for which Russia sells its
own gas to Ukraine, but that Russia has denied Ukraine access to its own
pipeline system for transit.
Ukraine's Prime Minister Mykola Azarov explained that his country "cannot
receive cheap gas from Turkmenistan" because it does not have access to
pipelines on Russian territory. Ukrainian participation in the FTZ may set the
stage for a compromise with Russia even if Moscow refuses to adjust the
contractual delivery price. (See
Ukraine moves to trim gas lines, Asia Times Online, September 8, 2011.)
Gorst reports that Azarov said on Ukrainian television that Russia will allow
Ukraine such access once the CIS FTZ has been operating for six months.
Dr Robert M Cutler (http://www.robertcutler.org),
educated at the Massachusetts Institute of Technology and The University of
Michigan, has researched and taught at universities in the United States,
Canada, France, Switzerland, and Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian Studies, Carleton University,
Canada, he also consults privately in a variety of fields.
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