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The first Russian-Chinese construction forum, held on Wednesday, March 2, in Moscow, brought news related not only to the construction and development of cooperation between the Russian Federation and China. According to First Deputy Minister of Economic Development Alexei Likhachev, the countries of the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO) are preparing an agreement on economic continental partnership, which also implies a free trade zone.

"In fact, we will now prepare approaches to some kind of economic continental partnership, a comprehensive agreement within the framework of the SCO. Moreover, we understand that today the SCO outlines countries such as, of course, China and Russia, the countries of Central Asia, but also involves them in this work, on the one hand, Armenia and Belarus, which are members of the EurAsEC, on the other hand, India, Pakistan, which have begun a difficult, but in the future, I think, a successful path of joining the Shanghai Organization," Likhachev explained. The Deputy Minister emphasized that about half of the world's population will become parties to this agreement.

The initiative of the SCO and the EAEU is not only a response to the largest US economic projects - the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), which are clearly directed against China and Russia. This is also a natural stage in the development of cooperation in the Eurasian space. It is no coincidence that three organizations actually participated in the summit in Ufa on July 8-10, 2015 - the SCO, BRICS and the Eurasian Economic Union.

The trade agreement between the SCO and the EAEU could indeed become the most ambitious in the world. The SCO member countries are Russia, China, India, Pakistan, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan, Iran may join. The total territory of the SCO countries is 60% of the territory of Eurasia, the total population is 3 billion 40 million people. Members of the EAEU - the Russian Federation, Armenia, Belarus, Kazakhstan, Kyrgyzstan, a candidate for entry - Tajikistan. The total population of the union is 183 million people, the territory is the first in the world, and the GDP is the fifth in the world.

On March 17, the agreement is scheduled to be discussed by the ministers of economy of the SCO countries, and the final point in its creation will be put at the meeting of the heads of state of the Shanghai Cooperation Organization on October 22, 2016 in Tashkent. While there are no details of the future agreement, Alexei Likhachev only outlined its contours. According to the official, there are at least three major components: freedom of movement of goods, promotion of trade, issues of the movement of capital, investment, a comfortable environment for increasing the share in national currencies and preferential access to the Russian service market.

"We will carry out a huge amount of work both within the framework of the Eurasian Union and within the framework of bilateral contacts between the People's Republic of China and Russia," Likhachev said, adding that "it will be broader than an FTA." Earlier, Beijing advocated the creation of a free trade area (FTA) within the framework of the SCO.

Obviously, Russia and China will be the informal leaders of the partnership, and its success largely depends on how Russian-Chinese bilateral relations develop and whether the countries find an optimal balance of interests.

MOSCOW, March 2 - RIA Novosti. The countries of the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO) will work on an agreement to create an economic continental partnership in the form of a free trade zone, said Alexei Likhachev, First Deputy Minister of the Ministry of Economic Development of the Russian Federation.

"An important point for us is the decision already taken by our prime ministers to seriously think about the SCO free trade zone. We not only received the Chinese delegation together, we developed it to the next one: in fact, we will now prepare approaches to some kind of economic continental partnership, a comprehensive agreement in Moreover, we understand that today the SCO outlines countries such as China and Russia, the countries of Central Asia, but also involves in this work, on the one hand, Armenia and Belarus, which are members of the EAEU, on the other hand, India and Pakistan, which have begun difficult, but, I think, in the future, a successful way to join the SCO," Likhachev said.

According to him, in this way, about half of the world's population will be a party to this huge agreement. “And there we see at least three major components: this is the freedom of movement of goods, the promotion of trade, these are, of course, the issues of the movement of capital, investments, a comfortable environment for increasing the share in national currencies, and, of course, preferential access to our service market ", he added, speaking at the first Russian-Chinese construction forum.

Likhachev noted that although Russia already has a similar experience in creating a free trade zone - with Vietnam - this project has a "completely different scale."

"I would like to emphasize that the task has already been reported to our leaders - the Chairman of the People's Republic of China, the President of the Russian Federation. And I think that the final point at the beginning of these negotiations, in the creation of this, perhaps the most ambitious trade agreement in the world, will be put at the meeting of the SCO heads of state" Likhachev summed up.

“We are inviting all SCO economic ministers to Alexey Ulyukayev on March 17 to discuss the substantives of this agreement,” he clarified to journalists on the sidelines of the forum.

According to the deputy head of the Ministry of Economic Development, the heads of the SCO countries gave a non-public order to the ministers of economy to meet and at the next meeting of the council of heads of government "report some kind of road map on the preparation of this agreement."

How the EAEU was created

The Eurasian Economic Union (EAEU) is an economic union that, as part of Eurasian integration, is being created on the basis of the Customs Union of Russia, Kazakhstan and Belarus on January 1, 2015. Cooperation in the field of interstate integration in the field of economy in the post-Soviet space has been carried out since the late 1990s. February 26, 1999 Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan signed the Treaty on the Customs Union and the Common Economic Space.

40% of the world's population lives in the countries that make up the space of the Shanghai Cooperation Organization and the Eurasian Economic Union (EAEU). The two alliances are well positioned to create a new platform for economic cooperation. The pairing of the EAEU and the SCO is beneficial, first of all, to the countries of Central Asia. This will help in the development of the economy and increase the level of security. It's no secret: stability is the basis for successful economic cooperation. These two organizations, despite a number of contradictions, can successfully complement each other. Cooperation within the EAEU is focused primarily on issues of economic interaction. As for the SCO, while proclaiming its fundamental commandment - "strengthening security in the region, helping to unlock the potential of good neighborliness, unity and cooperation between states and their peoples", it also declares the creation of mechanisms for economic cooperation. To assess the possibility of pairing the two organizations, it is necessary to recall the goals and objectives of each of them. Participants of the first summit, which created the "Shanghai Five" in 1996 (Russia, China, Kazakhstan, Kyrgyzstan and Tajikistan), signed an agreement on strengthening confidence in the military field in the field of border protection. A year later, Uzbekistan joined the SCO, the format of the organization turned into the "six". Russia and the young sovereigns of Central Asia no longer posed a military threat to China. All Soviet military garrisons were withdrawn from the Central Asian region. But at the same time, the economic balance was upset, including the deindustrialization factor, since many enterprises were “sharpened” to serve the Soviet military system. Having completed the task - to ensure stability along the perimeter of the borders of the former Soviet republics and China, the organization turned to the economic component. Not without controversy: Beijing insisted on the creation of the SCO Development Bank, while Moscow proposed to stop at the SCO Development Fund in order to financially support joint projects within the organization. The conflict was that China had a large amount of cash, and the SCO Bank would automatically become a Chinese tool. Russia, on the other hand, insisted on maintaining a balance within the SCO. Today, the SCO has entered a new phase of its institutional development as the "Shanghai G8" - in the summer of this year. India and Pakistan became full members of the Organization. If we talk about the EAEU, then this is a project in which, at the level of all official documents, only economic integration is laid down. The Presidents of Russia, Kazakhstan and Belarus in May 2014 signed the EAEU agreement on the basis of the Customs Union. Later, Armenia and Kyrgyzstan joined the integration association. Next up is Tajikistan. The EAEU was conceived as a confederation of sovereign states with a common political, economic, military and customs space. At the same time, of course, we are not talking about somehow influencing the political sovereignty of the countries participating in the organization, their currency and tax regime. The EAEU has clearly defined development paths as a subject of international law - this is the Free Trade Area (FTA). The direction is quite efficient and effective. The EAEU concludes an FTA agreement with specific countries. Recently, the main parameters of the FTA were also agreed with China. Indian delegations have repeatedly taken part in the meetings of the EAEU. About 50 countries around the world are showing interest in the FTA. In fact, for cooperation within the framework of the EAEU - FTA, it is enough to have bilateral relations: the EAEU - China, the EAEU - India, etc. This is the best option because all participants have different economies, a different structure of export-import trade relations. But it is difficult to imagine an FTA agreement within the framework of the EAEU-SCO organizations, since the interests of the countries that are members of these organizations are different. And most importantly, the SCO does not have legal personality under international law; no one can sign agreements on behalf of the SCO, while the EAEU has such a right. However, China proposed to create a regional free trade zone on the SCO site. To fully realize its plans, Beijing has proposed the concept of "One Belt One Road" as part of its "Silk Road Economic Belt" strategy. In May 2017, a presentation of this project took place in Beijing, where issues were discussed on the allocation of investments for the construction of industrial enterprises of oil and gas and transport infrastructure that will connect China with the countries of the Central Asian region, the European Union and Africa. China, in an effort to demonstrate the seriousness of its commitment, guaranteed $124 billion in investment. Kyrgyzstan has secured China's consent to build a railway that will connect the two countries' railway systems with access to Uzbekistan. The latter concluded agreements with China for $23 billion. As part of the program, Tajikistan plans to increase trade with China to $3 billion by 2020. Experts believe that by interacting with Central Asia through the SREB and the SCO, China is building long-term partnerships with each country in the region separately due to unresolved intra-regional problems. Beijing's consideration of such peculiarities is valued in the region and suits the parties. It is also expected to intensify the search for specific mechanisms for linking the Silk Road Economic Belt initiative and the EAEU. According to the head of the department of economic theory of IMEMO them. E.M. Primakov of the Russian Academy of Sciences Sergey Afontsev, the development of a full-fledged pairing of the Chinese initiative and the EAEU is hindered by several factors. The first is the interpretation of the OBOR project as predominantly infrastructural. The second is that large projects with the participation of state companies at the level of interstate discussions are always in the foreground. These are projects that require billions in investments and decisions at the level of the political leadership of countries. According to Afontsev, business circles are no less effective in identifying possible junction points. The potential for cooperation in the high-tech sector remains unclaimed. “This is a real opportunity for the Russian side to ensure the solution of the priority task of increasing the share of non-commodity products in exports, for the Chinese side to further expand its export potential through the production of fundamentally new goods customized for specific markets of the EAEU and EAEU partner countries. According to the economist, this direction is especially promising in the light of the opportunities that are currently opening up due to the fact that the EAEU is preparing a number of FTA agreements with third countries. The potential gain, according to expert Kubat Rakhimov, may be in building equal relations on the platform of the SCO Bank or the SCO Fund. “The SCO Bank should be a multilateral investor. It would be interesting. Equalizing the balance of geopolitical interests within the SCO through the emergence of India and Pakistan,” Rakhimov believes. In his opinion, the SCO is acquiring a new connection with the economic project of the EAEU.”

The Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organization (SCO) will work on the preparation of an agreement on economic continental partnership. This was announced by the First Deputy Head of the Ministry of Economic Development of the Russian Federation Alexei Likhachev. The agreement will provide for freedom of movement of goods, promotion of trade and freedom of movement of capital. Some analysts see a lot of positives in the likely upcoming merger. Others are full of skepticism.

The EAEU and the SCO will begin work on the preparation of an agreement on economic continental partnership, said Alexei Likhachev, First Deputy Head of the Ministry of Economic Development of the Russian Federation, speaking at the first Russian-Chinese construction forum in Moscow.

“In December 2015, at the council of the heads of the SCO, an idea was voiced from our Kazakhstani partners to seriously think about the SCO free trade zone,” he is quoted as saying. “We did not just accept together with the Chinese delegation, we developed this idea to the following one: in fact, we will now prepare approaches to some kind of economic continental partnership, to a comprehensive agreement within the framework of the SCO.”

He outlined the promising "boundaries" of the SCO: "Moreover, we understand that today the SCO outlines countries - such as China and Russia, the countries of Central Asia, but also involves in this work, on the one hand, Armenia and Belarus, which are members of the EAEU, on the other sides, India and Pakistan, which started a difficult, but, I think, in the future successful way of joining the Shanghai Organization. So, just think, about half of the world's population will be part of this huge agreement."

According to Likhachev, the following components are seen in the agreement: freedom of movement of goods, freedom of movement of capital and investment, a comfortable environment for increasing the share of settlements in national currencies, preferential access to service markets, in particular, to construction.

Discussion of the contours of the future agreement is scheduled for March 17 at a meeting of the ministers of economics and trade in Moscow.

Work on the preparation of the agreement will be carried out within the framework of the Eurasian Union and within the framework of bilateral contacts between China and Russia. “I would like to emphasize that this task has been reported to our leaders - the Chairman of the People's Republic of China, the President of the Russian Federation. I think that the final point at the beginning of these negotiations, in the creation of this, perhaps, the most ambitious trade agreement in the world, will be set at a meeting of the heads of state of the Shanghai Cooperation Organization, ”Likhachev quotes.

Later, Likhachev told reporters, the agency notes, that by the next meeting of the SCO heads of government, the economy ministers should propose a "road map" for preparing an agreement.

He cites his words, spoken to journalists on the sidelines of the forum: "We invite all SCO economic ministers to Alexei Valentinovich Ulyukaev on March 17 to discuss the substantive of this agreement."

What do Russian experts think about this?

Director of the Center for East Asian and SCO Studies at MGIMO Alexander Lukin is full of skepticism.

“I perceive the current statement by Alexei Likhachev as quite bold,” he said. - The Shanghai Cooperation Organization consists of many countries. Even Russia is having a hard time with China to have a free trade zone. For Tajikistan and Kyrgyzstan, the creation of a free trade zone will mean the elimination of the remnants of any production. Will countries go for it? Kyrgyzstan, say, is a member of the WTO, but there are heated discussions within the country about this as well.”

The expert strongly doubts that "a free trade zone will be formed in the near future."

On the contrary, the idea of ​​future integration is approved by Vladimir Mantusov, head of the world economy department at the Diplomatic Academy of the Russian Foreign Ministry.

“The idea of ​​integrating the SCO and the EAEU is clear to me and seems attractive,” he told a SP correspondent. - What will happen in practice? We need to look at specific agreements. Maybe this will be the first stage of international economic integration, that is, a free trade zone. Maybe it will even be a customs union that will grow into an economic union.”

According to the expert, the two associations have thought about formalizing their economic relations, which de facto already exist, and this is good. “Almost half of the members of one association are simultaneously members of another,” the scientist explained. - Say, Belarus is a member of the EAEU, but it is not in the SCO, but Russia and Kyrgyzstan are included in two structures. The very idea of ​​integration is correct.”

The expert explained the likely benefits for the parties to the agreement using an example: “Suppose there are agricultural products that are expensive to produce. Theoretically, oranges and bananas can be grown in Russia, but this is impractical. But we have products that are needed in China. The PRC produces goods that we and the Belarusians do not have. And so the need for products from a particular country determines the preferential trade regime for deliveries from abroad to the domestic market.

Alexander Lukin is much more categorical and sees no reason for optimism: “There may be limited agreements, but this is not a free trade zone. We do not know what will happen in 20 and 30 years. But now there will be no free trade zone.”

The idea of ​​economic partnership (integration) between the EAEU and the SCO, let us add on our own, has actually been voiced before.

On February 11, the Kazakh news portal published a statement by Chairman of the Supreme Eurasian Economic Council Nursultan Nazarbayev, with which he addressed the heads of the EAEU member states.

According to him, the EAEU is organically integrated into the world economic system as a reliable bridge between Asia and Europe. The current year, according to the head of Kazakhstan, should start work on the formation of a free trade zone of the EAEU and SCO states in the future.

Nazarbayev also proposed declaring 2016 the year of deepening economic relations between the EAEU and third countries and major integration associations.

On February 18, an article by Marat Yelemesov appeared on the website of a Kazakh social and political newspaper under the heading “Kazakhstan proposes to create a free trade zone between the SCO and the EAEU.”

The journalist asked experts to evaluate Nazarbayev's proposal to create a free trade zone between the SCO and the EAEU.

Yury Solozobov, Director for International Projects at the National Strategy Institute, recalled the turning point in the global economy: “The fact is that today the global economy is going through a turning point. The US and the EU are preparing to sign an agreement on the Transatlantic Trade and Investment Partnership (TTIP), which will create a common market for goods and services of 800 million people. Recently, 11 countries of the Pacific coast and the United States, providing 40% of world GDP, signed an agreement on the Trans-Pacific Partnership (TPP). These two major agreements, TTIP and TPP, have the potential to destroy WTO rules. They can impose their obviously unfavorable rules of the game on the participants in the world economy. Washington is the locomotive of these "marine" integration projects, which can lead to the rupture of Eurasia into two parts. There is an urgent need for a new integration program for the continental countries of Eurasia, which would take into account the interests of China, Russia, Kazakhstan, Iran and India as the main world players of the 21st century. Together, these countries already account for almost a third of the world economy in purchasing power parity terms, and their importance in global affairs will only grow.”

Associate Professor of the Department of Financial Markets and Financial Engineering of the RANEPA Sergey Khestanov told the correspondent that the economy of the EAEU member countries is noticeably slowing down. The Chinese economy is also slowing down, but its growth rates remain significant (+6.9%). This means that strategic cooperation with the SCO looks promising. Yes, the FTA between the EAEU and the SCO carries the risks of increased competition with Chinese producers, but it also provides an opportunity to enter the Chinese market. The expert believes that producers of raw materials and foodstuffs will benefit from such a free trade zone. In addition, the FTA will clearly stimulate the arrival of Chinese investors, and this is also a plus.

Researcher at the Institute of Economics of the Russian Academy of Sciences Alexander Karavaev believes that the enlargement of the EAEU FTA is a forced measure. This is one of the ways to preserve the integration association during the crisis.

Thus, the opinions of experts on the possible integration of the EAEU and the SCO and the creation of a free trade zone differ. Some believe that the consolidation of associations is forced in a crisis, and they do not believe in an FTA at all; others welcome integration and believe that the preferential trade regime and the diversity of the economies of the participating countries will lead to positive results of cooperation.

In the 21st century countries are finding new ways to stimulate economic growth, including through international trade and economic integration. Integration agreements "all with all" within the framework of the WTO Doha round, which has been going on since 2001, are moving very slowly: among the latest decisions, one can single out only an agreement on the immediate elimination of agricultural export subsidies in developed countries and their elimination by developing economies postponed until 2023.

This is hardly evidence of the beginning of deglobalization: the foundation laid by multilateral agreements within the WTO will set the boundaries beyond which national protectionism will not go. On this foundation, the building of the future world trade and economic system will apparently grow, in the architecture of which the emerging bilateral and bloc preferential trade agreements (PTA), such as the Trans-Pacific Partnership (TPP), the EU transatlantic trade and investment partnership, will play a decisive role – USA (TTIP), Mercosur, Chinese Silk Road Economic Belt Initiative and other mega-regional blocs.

Such “globalizing regionalism” is due, among other things, to fundamental changes in the structure of world production caused by world trade. More and more goods that are traded internationally are produced not in a single country, but in global chains that pass through several countries. So, for example, in the proceeds of the iPhone exported from China, only about 1.4% of the added value comes from China itself (66% from the USA). Boeing aircraft manufactured in the United States consist of more than 6 million parts supplied from more than 30 different countries (including Russia). Under such conditions, the promotion of economic interests does not require protectionism within national borders, but the protection of existing chains, including the reduction of production and trade costs, the facilitation of trade procedures and the provision of smooth multiple border crossings.

More and more countries are stimulating trade and economic cooperation through the mechanisms of trade agreements, closing production chains within mega-regional blocks. The integration process is becoming much more complicated, the emphasis is shifting from trade in goods to the service sector, investment, knowledge and technology transfers. Modern TCPs are characterized by extreme depth and breadth of coverage, many of them have the features of a common market, providing preferential access to the domestic market for partners under the agreement.

Integration is an important source of economic growth: the specialization of the economy in industries with comparative advantages increases welfare; trade and foreign investment promote efficiency gains through technology transfer and increased human capital, and provide the competitive environment necessary for sustainable technological development. Higher (compared to the world average) growth rates in the Asia-Pacific region over the past 15 years are largely associated with the development of integration processes.

Since the early 2000s, while the processes of preferential liberalization in the world were gaining momentum, Russia played the role of an outside observer of the emerging rules of the world trade and economic system, practically not participating in the processes of international economic integration with far-abroad countries. The Eurasian Economic Union (EAEU), being a regional trade agreement that unites Russia with some other countries of the post-Soviet space, either integrates into the world trade and economic system, taking into account all its modern features (and this should be done at the stage of its formation), or, otherwise In any case, the rules of the game will be established without our participation, and the EAEU countries will suffer losses due to missed opportunities to integrate into the new architecture of world trade and economic relations.

At present, the integration potential of the Eurasian Union is not being used to its full potential. The economies of the EAEU countries are poorly integrated into global value chains. Within the integration association, there are many barriers that impede mutual trade and investment. On the track of integration with non-CIS countries, so far there is only an agreement on a free trade zone (FTA) with Vietnam (0.6% of Russian trade turnover). In order to increase in the near future the benefits from international trade in the Asia-Pacific region, it is necessary to intensify the integration agenda, increase the power of negotiations on an FTA with the ASEAN and SCO countries. In the future, there is no getting away from discussing the format of cooperation with the TPP and TTIP.

In the President's latest address to the Federal Assembly, promising FTA agreements with ASEAN and the SCO are mentioned as immediate foreign economic priorities. What benefits can the economies of Russia and EAEU partners get from such integration?

Our calculations show that an agreement on an FTA of the Eurasian Union with the SCO countries (primarily with India and China) could bring significant benefits and increase the competitiveness of the EAEU. Integration within the SCO, whose countries together generate about 28% of world GDP and 20% of Russian trade, will have a number of features.

First, as a result of a simple mutual zeroing of duties on trade in goods, the annual total macroeconomic gain for Russia will be ~$10 billion, or 0.6% of GDP in 2015 (for the EAEU - ~$13 billion). At the same time, the gains will be different for industries, for some of them (agriculture, food industry, certain types of manufacturing industries) there are also risks of a fall in output.

Secondly, a deeper agreement on an FTA between the SCO members, which means the harmonization of technical standards, agreements on sanitary regulation, the reduction of technical barriers to trade, can significantly (1.5–2 times) increase the gain for Russia and the EAEU countries.

It should be noted that an agreement on an FTA within the framework of the SCO will not mean a transition to a China-centric foreign economic strategy or an irreversible “turn to the east”, since it does not imply the creation of a single customs territory and the transfer of the trade policy of the EAEU countries to the competence of any supranational structure. Therefore, such an initiative, on the one hand, can contribute to the integration of the Russian economy into the changing landscape of the world trade and economic system, and on the other hand, it will not hinder the possibility of obtaining benefits from integration with other countries and blocs, primarily with the most significant trading partner - the EU with which, as far as possible, taking into account the current political restrictions, it is necessary to support the maximum development of joint infrastructure and humanitarian projects, and in the future - to move towards the formation of a single market.

International integration is one of the few sources of economic growth left at our disposal, and this source should definitely be used. This requires the development of a mechanism for resolving internal contradictions in the EAEU and the formation of a common integration agenda with access to deep trade and economic cooperation with structures that form comprehensive agreements of a new generation. In the current conditions of internal and external political restrictions, the only relatively painless development resource for the Russian economy that can give results in the medium term is integration into large economic processes, for which there is less and less time left. A passive position in the foreign economic direction carries the risks of both the loss of the possibility of political positioning and the loss of economic benefits.