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EAEU begins joint studies on prospects for concluding free trade agreements with Mongolia and Indonesia

EAEU begins joint studies on prospects for concluding free trade agreements with Mongolia and Indonesia

9/15/2020

The Eurasian Economic Commission’s Council has decided to form joint research groups (JRG) to study the expediency of concluding free trade agreements with Mongolia and Indonesia. According to experts, trade and economic relations with these countries have significant undeveloped potential.

​"In September 2019, the Commission’s Council set a task to identify new potential partners of the EAEU under free trade agreements. As part of its implementation, experts of the EEC and the EAEU countries have conducted extensive preliminary work with a number of trade partners to assess their mutual interest in continuing to study the perspectives for forming a free trade regime. Currently, we and our colleagues from Ulaanbaatar and Jakarta have not only identified such mutual interest, but also agreed on a range of issues to be studied in detail by our countries’ experts in the JRG format," stated Andrey Slepnev, Member of the Board - Minister in charge of Trade of the EEC.

Therefore, despite the relatively small size of Mongolia's economy, this country has historically developed ties with the EAEU. As the Union’s geographical neighbor, Mongolia is implementing a number of major joint investment projects with its Member States. Currently, they are discussing, in particular, projects for developing the Ulaanbaatar railway, the supply of rail cars to Mongolia, cooperation in the fields of civil aviation, electrical energy, use of subsurface resources, automation of state administration and road construction. Other areas of cooperation include industrial cooperation, military-technical cooperation and interaction in the atomic energy industry and the supply of petroleum products. Last year, an Agreement on establishing the Russian-Mongolian Investment Cooperation Fund was signed. Kazakhstan and Mongolia are also creating a direct investment fund with a total capitalization of 100 mln US dollars.

The favorable trade regime which can be established in case of signing a free trade agreement between the EAEU and Mongolia will help eliminate barriers in the field of technical regulation, customs procedures and other areas, thus opening the floodgates to further development of cooperation, including the regional component. According to the EEC estimates, mutual trade may grow in total by 250 mln US dollars. A possible increase in the supply of industrial products to Mongolia from the EAEU countries may be accompanied, inter alia, by an increase in purchases of environmentally friendly agricultural products from this State.

In turn, Indonesia is the world's fourth most populous country and the largest market in terms of volume among the ASEAN countries. This State’s economy belongs to the agro-industrial type and is one of the most promising among developing countries. Today, Russia and Indonesia are discussing investment projects for the supply of trucks and cooperation in the energy and space sectors. The Republic of Belarus supplies trucks and agricultural machinery, it works in the field of industrial cooperation, healthcare and infrastructure projects.

In general, supplies of both industrial and agricultural products may be of mutual interest for the EAEU and Indonesia partnership. The conclusion of the Free Trade Agreement can ensure the growth of trade between Indonesia and the Eurasian "five" countries by 1.4 bln US dollars.

"Apart from the potential for developing trade between our countries amid possible removal and elimination of obstacles in tariff and non-tariff protection, in terms of trade facilitation, any experts who will join the JRG will study in detail the overall current state of trade and economic relations between our countries and give their recommendations on a wide range of issues. We expect that the current state of investment cooperation will be evaluated and proposals will be formulated on how to deepen cooperation between the economic operators of our countries within projects of mutual interest as well as in the context of the broader task of forming infrastructure and harmonizing regulations within the future Greater Eurasian Space,  considering the role of Indonesia in the ASEAN," Andrey Slepnev added.

For reference

In accordance with the EAEU law, after primary analysis of the prospects for forming a free trade regime with third countries and its positive findings received, the prospects for concluding a free trade agreement shall be comprehensively studied within the JRG which comprises representatives of the potential contracting partner of the Union along with experts from the Eurasian Economic Union countries and the EEC. Such work should mandatorily precede a possible decision to start direct negotiations by the EAEU.​