Economic cooperation agreement between China and EEU takes effect
The China-Eurasian Economic Union Economic Cooperation Agreement signed May 17, 2018 will take effect on Dec 6[When?], according to a decision made at the Supreme Council meeting of the Eurasian Economic Commission (EEC).
The first institutional agreement on economic and trade cooperation between China and EEU
The Eurasian Economic Union (EEU) was established in 2015. Its current members include Russia, Belarus, Kyrgyzstan and Armenia, all of which are key partners of China’s Belt and Road Initiative (BRI) development. China’s economy is complementary to that of the EEU and its members. Therefore there is great potential for trade cooperation between them. The trade volume between China and EEU members reached $109.4 billion in 2017.
China’s Vice-Minister of Commerce Fu Ziying signed an economic cooperation agreement with Tigran Sargsyan, chairman of the board of the EEC, and representatives of EEU member countries this May. This was the first time China and the EEU had reached such a significant institutional agreement on economic and trade cooperation, marking a new phase for economic cooperation between China and the EEU. It is of great significance to the construction of the BRI as well as the construction of the EEU.
The agreement covers 13 chapters including customs cooperation, trade facilitation, intellectual property rights (IPR), department cooperation, government procurement, and new topics cincerning e-commerce and its competition. The two sides agreed to further simplify customs clearance procedures and lower costs of commodity trade by strengthening mutual cooperation and exchanges of information and experience. The agreement is intended to cut down non-tariff barriers to trade and improve trade facilitation to create a better environment for industrial development, build closer ties between China and the EEU, bring benefits to enterprises and people of both sides, and offer institutional guarantees on mutual economic and trade cooperation.
The two sides continue to reinforce cooperation on trade facilitation. They vowed to work hard to simplify customs clearance procedures, improve the transparency of laws and rules, carry out the pre-ruling mechanism, use information technology to accelerate the customs clearance of low-risk goods and legitimate goods, offer single-window services, and coordinate border management. Moreover, Customs on both sides will work together to speed up the Customs clearance of goods and improve trade facilitation.
The agreement takes into consideration the difference in IPR rules between China and the EEU, and their current development situation. It involves the content of collective management of copyright, genetic resources, traditional knowledge, and folk literature and art.
The two sides agreed to exchange information about their laws and rules and e-procurement, and share experiences in e-procurement. Meanwhile, they require each other to make government procurement more transparent, and to release their related laws and rules, universal administrative regulations and bid information in government procurement, such as bidding announcement, procurement documents and results of procurement. They said they have to ensure the public can access this information. Additionally, they agreed to set up a liaison office for better cooperation.
E-commerce is a topic which interests both sides. The agreement encourages business exchanges and cooperation between companies of both sides, and encourages them to co-develop e-commerce projects. It will give the companies more convenience to tap into new markets, which will help them to improve quality and efficiency and promote further development of bilateral trade.
Opening up the BRI market to EEU member countries
Gao Feng, spokesman from the Ministry of Commerce of China, explained three features of the agreement. One is the strengthened connection of policies and rules, which lays a solid institutional foundation for improved economic and trade cooperation between the two sides. The second is a consensus reached in Customs, quality inspection and technical standards, which will improve trade facilitation, transparency and predictability. The third involves new topics such as IPR, government procurement and e-commerce, broadening space for mutual economic and trade cooperation.
Insiders at the Ministry of Commerce also said that the participation of the EEU in BRI construction may cause an increase in Chinese enterprises’ exports to EEU member countries. There is huge development potential for logistics, warehousing and related services in the EEU and at the borders with the European Union (EU), which to some extent will bring convenience to Chinese enterprises’ export to the EU. China’s export products will have a foothold in the markets of EEU member countries, and will reach EU and other Commonwealth of Independent States (CIS) countries.
As previously mentioned, EEU member countries are important partners for the development of China’s BRI and their economies are complementary to China’s. EEU member countries are rich in oil and gas, and used to be known as a giant granary as they have vast fertile lands, all of which are things that China needs. Meanwhile, they are weak in industries, and China’s strength in manufacturing makes it possible to continuously export industrial products to EEU member countries.
It can be seen on the map that EEU member countries form a new channel to Europe that bypasses the Middle East. Therefore, some people think that China-EEU economic development is not only for the benefit of both sides, but also for the layout of future land routes linking Asia and Europe.
It has to be clear that the current economic cooperation agreement is non-preferential. It doesn’t stipulate eliminating tariffs or reducing non-tariff barriers to trade. Many officials of EEU member countries consider that working with China to develop free trade zones has promising prospects.
Statistics show that more than 40 countries and international organizations have expressed their intention to build free trade zones with the EEU, including China, Thailand, Egypt and India. The EEU signed a free trade zone agreement with Vietnam in May 2017, and a temporary free trade zone agreement with Iran in 2018.