Eurasian integration: from revival of the Silk way to Big Eurasia

Eurasian integration: from revival of the Silk way to Big Eurasia

10 December, 23:41 404
Eurasian integration: from revival of the Silk way to Big Eurasia

Global changes in architecture of world economy attract the growing interest of the countries of Eurasia in revival of the Silk way at modern technological level.

It is expected that the new transit corridor will bring considerable economic benefits as seriously reduces time of transit transportations of goods for the markets. And time for business, as we know, is real money.

The created general transport infrastructure - thanks to a construction of the international long, automobile and pipeline distance railways - will connect the Pacific region to Europe and the Middle East, will open new opportunities for trade and economic and investment relations between the countries, in particular with Russia, India, China, the CIS countries, Asia, the EU and even the USA within strategic partnership.

In this context the idea of Big Eurasia presented by the Head of Kazakhstan at an anniversary 70th session of the United Nations General Assembly became timely. It will allow to unite the Eurasian Economic Union, the Economic belt of the Silk way and the European Union in the single integration project of the 21st century. The idea of Big Eurasia found the reflection and in respect of the Nation – 100 specific steps to development of five institutional reforms.

Experience of integration

From three called components of Big Eurasia the most mature and advanced experience of regional integration is the European Union, in six decades it went through the European Coal and Steel Community to political and economic union with own currency. This way wasn't easy and cloudless. Even today the EU is faced by serious challenges and problems. So, the former French Prime Minister Manuel Valls, speaking at the World Economic Forum in Davos, designated three main problems capable to lead the EU to split.

The first threat is the international terrorism. The second is caused by a flow of refugees from the Middle East and North Africa. According to Valls this flow is extremely difficult integrated into cultural and economic spheres of Europe life. The line item of Great Britain on an exit from the EU became a serious problem also. Nevertheless, the hope that the EU will find compromise means to cope with these problems remains.

The idea of creation of the Eurasian union offered by the President of Kazakhstan in March, 1994 found the embodiment in the Agreement on the Eurasian Economic Union signed in Astana in May, 2014 by leaders of the countries which were the center of regional integration - Belarus, Kazakhstan and Russia.

The economic union functions since the beginning of last year based on the Customs union and a common economic space. Armenia and Kyrgyzstan joined it last year. Since 2010 the total market with a single customs border works though there were non-tariff barriers and restrictions constraining trade and economic relations and activity of business. It should be noted that the EEU is created in the conditions of deep world crisis of 2008 reasons and consequences of which are completely not eliminated of economic downturn in Russia – the main engine of regional integration, serious deterioration in its relations with the West around Ukraine and preserving between them reciprocal sanctions. However, despite external and internal problems, the begun integration process continues state members of EEU.

Similar interests

China keeping rate of economic growth despite it decrease becomes the largest player, the producer and the investor in global economy. Respectively the Chinese initiative "Economic belt of the Silk way", conformable to the Kazakhstan program "Nurly zhol" attracts interest. For the embodiment of the initiative China created new financial institutions of development - Fund of the Silk way (the authorized capital of $40 billion) and the Asian Infrastructure Investment Bank ($100 billion) which equities will be directed, first of all, to implementation of infrastructure projects.

Kazakhstan pays also much attention to acceleration of implementation of such projects, allocating within "Nurly zhol" in 2016 76 billion tenge at the request of the Head of state at the enlarged meeting of the Government on February 10, this year. An important role in their implementation will be played by various forms of public-private partnership, including concessions. It should be noted, new opportunities for business opened with entry into force in November of last year of the Law on public-private partnership. To private investors, the central and local state bodies recently the Kazakhstan center of public-private partnership actively is engaged in an explanation of its provisions.

Last year became extremely difficult for the foreign trade communications of Kazakhstan because of the slow growth of economy of the USA and the EU, recession in the Russian economy and decrease in rates of development of economy of China, deterioration in a price environment and reduction of the external demand by primary goods.

Cooperation figures

According to Committee of the statistics Ministry of National Economy of Kazakhstan, in 11 months of last year a foreign trade turnover of the country decreased almost by 37% by the same period of 2014 and constituted over $70 billion. Nevertheless, $53 billion, or 75% to a general result are the share of three main vectors of foreign trade (the EU, EEU and China). At the same time mutual trade of Kazakhstan with the countries of EEU decreased more slowly, than with the EU and China. So, trade with the EEU countries in 11 months decreased by 33% (nearly $15 billion) whereas with the European Union - for 42% ($29 billion), with the People's Republic of China – for 38% (about $10 billion). Foreign trade with the third countries for January-November constituted $56 billion, or decreased almost by 40% by the same period of previous year.

For the last year some increase in a share of Russia in a foreign trade turnover of Kazakhstan was planned. However, if to look in a retrospective in 15 years, then the increased role of the EU and China in foreign trade of Kazakhstan is noticeable. So, the share of the EU increased from 22% in 2000 to 44% in 2014 and 41% in 11 months 2015. The share of China grew according to 6% to 14%, having kept this level last year.

Thus, the European Union remains the leading trading partner of our country whose share exceeds shares of Russia and China combined. Expansion of trade relations with Europe, certainly, is promoted by the agreement on expanded partnership between Kazakhstan and the European Union signed in Astana on December 21 last year.

Where allowances are covered?

Deterioration in an environment in the foreign markets staticizes opportunities and prospects of a trade and economic cooperation of Kazakhstan with the nearby countries, first of all with partners in the regional integration directed to forming of Big Eurasia.

Regional integration is the long process requiring not only laborious consideration, discussion and adoption of numerous regulating documents, but also carrying out extremely clear and clear approved economic policy. The further prospects of regional integration for development of trade relations of Kazakhstan in the next years will be caused in many respects by two key moments.

The first: formation of Kazakhstan as full-fledged member of the WTO what was announced on November 30, 2015, requires coordination of the undertaken obligations within the WTO and EEU as concerning 3.5 thousand goods items import duties in Kazakhstan were lower, than in EEU. It is connected with the fact that Kazakhstan completed bilateral negotiations on accession to WTO to the accession to EEU. On average the Kazakhstan import duties will be at the level of 6.5% that there are lower than the level of duties in EEU where they constitute 8.5%.

Second moment: the work on interface of EEU with the Chinese initiative begun since May of last year "Economic belt of the Silk way" is aimed at development of the international and regional trade also on the basis of forming of the general free trade area. At the same time it is necessary to consider that Kazakhstan, along with Armenia, Belarus, Kyrgyzstan, Moldova, Russia and Ukraine, is included into the free trade area, created in 2012 within the CIS. Respectively, successful promotion and development of Kazakhstan requires carefully verified line item of our country at negotiations on a free trade regime taking into account national interests.

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