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Eurasian Economic Union and Pakistan | Dr Kamal Monnoo

Eurasian Economic Union and Pakistan | Dr Kamal Monnoo

For Pakistan’s policy for the West, an important development has been the growing of the Eurasian Economic Union (EEU), the ground for which was originally laid in 2010. In fact as of this year, the European Union (EU) and Kazakhstan may be said to share a border, between Poland and the Belarus. Beyond it, there are no traffic or trade barriers between the two, thanks to the establishment of the EEU and now its new implemented rules that eliminate all internal trade borders between Belarus, Russia, Kazakhstan, Kyrgyzstan and Armenia. The development effectively puts it on the EU investor radar, as it will save considerable time and trouble for European travellers and traders in terms of cross-border formalities. Moreover, investors within the zone have free access to a market of global size. More importantly, the EEU is not “Putin’s brainchild” as some western media tries to portray it, but an initiative primarily led by Kazakhstan. It allows each member state to build separate bi- and multilateral relations with other countries. In short, the new economic area creates huge opportunities without imposing restrictions on third parties.

The EEU has an integrated single market of 176 million people and a gross domestic product of over $4 trillion. What makes it one of the most interesting emerging markets is that it introduces free movement of goods, capital, services and people, and provides for common transport, agriculture and energy policies, with provisions for a single currency and for even greater integration in the future. The union operates through supranational and intergovernmental institutions, and is thus considered to be a congregation adumbrate. The supranational institutions are the Eurasian Commission (the executive body) and the Eurasian Development Bank. National governments are usually represented by the Eurasian Commission’s Council. In addition, all member states participate in the Collective Security Treaty Organisation, an intergovernmental mutual defense alliance.

From Pakistan’s perspective what is important is that the EEU opens doors not just to Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia or to the EU, but also to nearly all others. China and India have already declared their readiness to create privileged trade and financial links with the fast emerging new bloc. With our improving relations with Afghanistan, paving way for land connectivity as well in our case, Pakistan is ideally placed to take advantage of the EEU by strengthening its trade and financial linkages with this bloc. However, we need to move quickly to avoid missing the bus, because China, India and Latin American are already actively busy pursuing economic opportunities available in the bloc. China, is trying to create a chain that directly connects them with the EU through the EEU. In this they have recently announced a most advanced trade and transport hub of Khorgos, on the border between Kazakhstan and China, which is also a privileged Special Economic Zone.

The development of Khorgos Dry Port, is intended as the staging point at which cargo enters the Special Economic Zone and feeds, and is fed from, the planned Logistics Zone and the Industrial Zone. This Dry Port will also supply the local markets and will act as a transshipment facility for through traffic. Tax and customs privileges inside the Special Economic Zone include zero rates of corporate-income, land, property and value added tax, land lease at near zero rates (for a period of up to 10 years) and no import duties on necessary equipment. Last but not least, a rail link is being carved out by China connecting the former Soviet rail network to that of China.

On the other hand the Indian government is also facilitating tangible initiatives to see Indian public and private sector corporations to gain a foothold in EEU industries that include chemicals, metallic and non-metallic half-fabricates hardware, pharmaceuticals and others. Further, in addition India has proposed extending technical cooperation of every sort to it, in the fields of energy and technology systems.

It will be nice to see our Commerce Ministry to also timely wake-up to this opportunity and to the new trade and investment challenges of the 21st century. For the first time in history, an economic union with a powerful natural and resource potential, strategically important in terms of global and regional transport, energy and agriculture, is being created on the vast expanses of Eurasia on a voluntary, equal and mutually beneficial basis and even more uniquely, for the first time a bloc is extending an invitation to anyone who wishes to join in or is in a position to connect itself with the EEU. It will be a shame if we were to miss out on such an offer.

The writer is an entrepreneur and economic analyst.

kamal.monnoo@gmail.com

Eurasian Economic Union and Pakistan | Dr Kamal Monnoo

Source: http://nation.com.pk/columns/01-Jul-2015/eurasian-economic-union-and-pakistan

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