Emerging Markets, Frontier Markets

Russia-Led Eurasian Economic Union Eyes Free Trade Zone With Hong Kong

Hong Kong - Flickr - Dhilung KiratThe Russia-led Eurasian Economic Union (EEU) is interested in expanding eastward and is looking to sign a free trade agreement with Hong Kong, according to Russia’s Deputy Prime Minister Arkady Dvorkovich.

“We recently concluded the free trade zone agreement between the Eurasian Economic Union and Vietnam and are currently negotiating with Israel. We are ready to discuss this issue with Hong Kong,” said Dvorkovich, speaking at the Asia Financial Forum in Hong Kong.

Western sanctions have pushed Russia to work more actively with Asian partners. In May of last year, Russian President Vladimir Putin and Chinese President Xi Jinping signed a decree for cooperation in tying the development of the EEU with the New Silk Road economic project. Also in May of last year, the EEU and Vietnam signed a free trade zone agreement. It became the first free trade zone between the trade bloc and a third party.

In December, Russia and Israel announced the start of free trade zone talks. In October, Israeli Minister Zeev Elkin said Tel Aviv wants a free trade agreement with the EEU as soon as possible. According to him, the deal could be clinched within two years.  Potential free trade zone agreements are also being negotiated with Iran, India, and Egypt. According to Russia’s First Deputy Minister of Economic Development Alexey Likhachev, a free trade zone with India may appear in 2020.

This year, the countries of the union plan to agree and sign a road map of intersection of the Eurasian Economic Union and the Silk Road Economic Belt projects with China. Russia has also proposed talks between the EEU, SCO, and ASEAN on the formation of economic partnerships.

The Eurasian Economic Union is an economic and political bloc which consists of 5 member states: Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan; while Tajikistan is a prospective member.  The treaty to form EEU went into full effect on January 1, 2015. The Eurasian Economic Union has an integrated single market of 183 million people and a gross domestic product (GDP) of over $4 trillion.

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