1. Anastasia Makarenko PhD researcher, ESI-MGIMO
Perspectives of the new Free trade agreement: EU-EAEU Symposium Relations between EU and EAEU in the framework of the WTO   University of Hamburg December 4, 2017
Anastasia Makarenko
PhD researcher, ESI-MGIMO

2. A free trade agreement (FTA) is a treaty between two or more countries to establish a free trade area where commerce in goods and services can be conducted across their common borders, without tariffs or hindrances but capital or labor may not move freely. Member countries usually impose a uniform tariff called common external tariff on trade with non-member countries.

3.  Art. XXIV of GATT:
A free-trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories.

4. Why are FTAs important? Are they needed?
Open new markets for goods and services
Increase investment opportunities
Make trade cheaper - by eliminating substantially all customs duties
Make trade faster - by facilitating goods' transit through customs and setting common rules on technical and sanitary standards
Make the policy environment more predictable
Over the next 10 to 15 years, 90% of world demand will be generated outside Europe
If the EU was to complete all its current free trade talks tomorrow, it could add 2.2% to the EU's GDP or €275 billion

6. EAEU trade policy

7. EU EAEU around 45 agreements on free trade in force
different types of agreements
negotiations pending on about 20 agreements
1 free trade agreement in force (with Vietnam)
the trade-economic agreement between the (EAEU) and China (joint statement on finalizing the negotiations process)
Around 40 countries are EAEU FTAs potential partners

8. EAEU main potential partners
South Korea
Singapour
India
Iran
Indonesia
Ecuador
Malaysia
Israel
New Zeland
China
SCO EU

9. The idea of EU-EAEU agreement
1 negotiation round – trade agreement between EAEU EFTA (Iceland, Liechtenstein, Switzerland, Norway) – now the negotiations are suspended because of the general political situation and the regime of economic sanctions
The initiative by Russian President Vladimir Putin at the EU-Russia summit in Brussels in January 2014
The idea of common economic space from Lisbon to Vladivostok
Political crisis, Ukrainian factor

10. Interests
EU:
EAEU:
Trade liberalization (i.e., creation of a comprehensive FTA with the EAEU);
Elimination of the measures  hindering competition on equal terms between domestic and foreign companies in the EAEU member states;
Guarantees of energy security (supply security).
A comprehensive FTA with the EU only in the long term and with substantial transition periods;
Growth of European investments;
 Transfer of technologies from the EU;
Stability of demand for energy in the EU (demand security).

11. Importance of the EAEU for EU trade
Country/trade bloc
Trade volume (EUR, bn)
% of EU trade with third countries
2016
2013
USA
609
488
17.6
14.3
China
515
428
14.9
12.5
Switzerland
264
7.6
7.7
EAEU
218
371
6.3
10.8
Turkey
145
128
4.2
3.7
Japan
125
111
3.6
3.2

12. EAEU trade

13. EU-EAEU potential agreement: main points
This is not Russia, but the EAEU which has supranational powers needed that should be party to such an agreement (regardless of its legal form).
Full-fledged negotiations between the EU and the EAEU will not be impossible as long as all member states of the EAEU become members of the WTO.
The list of issues that need to be solved in the context of the EU — EAEU agreement, includes dozens of positions
Long-term perspective only

14. Problems/obstacles
No dialogue on the official level (European Commission – Eurasian Economic commission) political crisis in the relationship between EU and Russia
lack of confidence and understanding
Not all of the EAEU members are members of the WTO (Belarus)

15. Positives
+ Dialogue in the field of business: Business Forum «Eurasian Economic Union – Greece: A New Bridge for Cooperation and Development» held in Thessaloniki (Greece) (September 2017), Memorandum on Common economic space: from Lisbon to Vladivostok in frames of the conference organized by German- Russian Chamber of commerce (November 29th, 2017) +/- Increasing imports to the EAEU from the APEC countries. In 2014, the APEC share was 38.6%, in the period from January to September 2016, the APEC share is 42.1%

16. Thank you for your attention!