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Russian Prime Minister Vladimir Putin is calling for a free trade agreement between Russia, Belarus and Kazakhstan with the European Union (EU). The three former Soviet states recently formed a common economic space (CES) similiar to the formation of the EU. Putin maintains that the CES could reach a free trade agreement with the EU easier than any of the countries could if acting individually.
Russia, Belarus and Kazakhstan no longer maintain customs stations between their countries. Customs stations were dismantled July 1, 2011. Putin said talks to create a free trade zone have been initiated with the European Free Trade Association, uniting Liechtenstein, Iceland, Norway and Switzerland. Trade with the three CES countries, Putin maintains, is a more attractive proposal than trade with one single country.
The Kazakhstan Democracy is an attractive trade partner in her own right, however. Escaping the shadow of the dreaded Dutch Disease (where fluctuations in oil prices effect non-oil manufacturing in a country), Kazakhstan is establishing itself as a world-class player in oil production as well as many other industries. Kazakhstan is a large exporter of grain, rare-earth metals necessary for high-tech manufacturing and gold.
Russia’s major exports are oil, natural gas and minerals, and Belarus’ major exports are manufactured industrial products like tractors, trucks, motorcycles, tools, construction machinery and synthetic fibers. While all three CES countries are in a position to offer favorable trade agreements, Kazakhstan is the most promising. Kazakhstan has 13 billion barrels of oil more than originally estimated, and grain exports for 2011 are expected to be 75 percent higher than predicted.
Putin made the statement to leaders of the CES in a meeting on August 16, 2011. No word has yet been released on the other countries’ response.
