Recently, the Eurasian Economic Union (EAEU) comprising 5 member states with combined GDP of US$ 5 trillion and nearly 200 million population, has decided to study the prospects of free trade agreements with Mongolia and Indonesia. The Eurasian Economic Commission (EEC), responsible to prepare proposals for further integration and implement decisions of EAEU, is researching the significant unrealized potential in trade and economic relations with Mongolia and Indonesia.
Mongolia, a geographical neighbour of EAEU members Kazakhstan and Russia, is already implementing joint investment projects of railways, cooperation in the fields of electric power engineering, subsoil use, civil aircraft construction, automation of public administration, and infrastructure development. EEC notes that an increased supply of industrial products to Mongolia from EAEU may see a possible rise in purchase of organic agricultural products from this country. Similarly, the ASEAN member Indonesia with its 4th largest population and huge market volume is an agrarian-industrial developing economy. As per estimate, mutually beneficial free trade agreements between EAEU and Indonesia for supply of both industrial and agricultural products can increase trade to US$ 1.6 billion.
Such developments naturally prompt the idea of free trade between Pakistan and EAEU. The prospects of such free trade arrangement with Pakistan are very high, since the avenues of mutual trade and commerce are quite obvious, not requiring much investigation. In this context, let us analyze some relevant facts and figures:
Pakistan has close relations with EAEU member states like Kazakhstan, Belarus and Kyrgyzstan. While Russia, the major EAEU state has already shrunk its distance with Pakistan in recent period.
EAEU states share membership along with Pakistan, interchangeably, in various organizations like Shanghai Cooperation Organization (SCO), Central Asia Regional Economic Cooperation (CAREC), Conference on Interaction and Confidence-Building Measures in Asia (CICA), Economic Cooperation Organization (ECO), and Organization of Islamic Conference (OIC).
In the emerging multipolar world scenario, Russia aims an eminent position through Greater Eurasian Partnership (GEP) by pairing Eurasian Economic Union (EAEU) with Belt and Road Initiative (BRI). Pakistan is already part and parcel of BRI with its flagship project of China Pakistan Economic Corridor (CPEC).
EAEU states are landlocked with inability to carry out the cheaper marine trade. CPEC presents the opportunity to connect to the Gowadar port of Pakistan in Baluchistan.
Then, the EAEU members Kazakhstan and Kyrgyzstan are part of Quadrilateral Transit and Trade Agreement (QTTA) for transit traffic and trade. Due to security issues of Afghanistan, the QTTA presents an alternative gateway for Central Asia to Gowadar port by completely circumnavigating Afghanistan. It would link landlocked Central Asia to China’s Xinjiang region that is connected with Karakoram Highway towards sea port of Gowadar.
” In December 2019, a 64-member delegation of Russian businessmen led by Russian Minister of Industry and Trade travelled to Pakistan for a four day visit. During the visit, Russia promised an aggregate investment of US$ 14 billion in Pakistan’s energy sector besides financial assistance in constructing a railway track from Quetta to Taftan, and 26% investment in Pakistan Stream Pipeline Project with the estimated cost of US$ 2.2 billion. Russia will also provide a financial aid of US$ 1 billion for the upgrading and rehabilitation of Pakistan Steel Mills (PSM) project. After participating in multilateral Kavkaz-2020 military drills in Russia’s southern city of Astrakhan, now Pakistan is hosting joint naval exercises in February 2021 as AMAN-2021 Piracy Exercise where Russia is also a participant.
Another EAEU member Belarus is already in an MOU to take trade with Pakistan to US$ 1 billion through mutually benefitting joint ventures in the areas of textile, agricultural implements, health, pharmaceutics, mining, construction equipment, agricultural products (rice, vegetables, fruits, nuts, milk, ice cream, yogurt, meat) and Belarusian machinery like tractor, trucks, buses, loaders etc.
Kyrgyzstan is already serving as a hub of medical education for Pakistani students. Currently, over 8000 Pakistani students are studying in the medical institutions of Kyrgyzstan. Moreover, Higher Education Commission of Pakistan has already made a lot of progress in setting up world class comprehensive research intensive University of Central Asia and Pakistan (UCAP) in Islamabad. Under Central Asia-South Asia Electricity Transmission and Trade Programme (CASA-1000), Pakistan is supposed to receive 1300 megawatt hydel energy from Kyrgyzstan and Tajikistan. The shortest route from Chinese city of Kashgar to Kyrgyzstan is about 200 km, through two Kyrgyz passes of Torugart and Erkeshtam. It should be utilized for linking to the warm waters of Gowadar port. Then, Pakistan International Airlines (PIA) has started direct flights to Bishkek.
Above developments and linkages vindicate an immense scope for EAEU to take on free trade agreements with Pakistan. PTI government of Mr. Imran Khan has evolved very conducive environment for international trade and commerce. In the global ease of doing ranking, Pakistan has climbed 28 places. Having remarkable progress in pandemic times, Pakistan has secured current account and fiscal surplus. As fifth largest market of the world with 220 million populations, Pakistan has a youth bulge of 65%. Pakistan is also 4th biggest freelance market of the world after US, UK and Brazil. Besides being a star performer of UN peace-keeping missions, Pakistan’s security forces fought a successful war on terror. Pakistani vegetables, fruit, rice, tea, textiles, sports goods, medical equipment, surgical instruments and pharmaceuticals etc. are very attractive for Eurasian market. Moreover, giant Pakistani companies like National Logistic Cell, Fauji Fertilizer Corporation and Habib Syndicate can involve in joint ventures for mega projects.
In turn, Pakistan could be a market for Eurasian energy, oil products, copper, steel, ore, chemicals, wool, wheat, electronic machinery, mechanical appliances, transport goods, metals, cotton fibre, plastics, gems, and aluminum etc.
A research paper titled “Pakistan’s Role in Russia’s Greater Eurasian Partnership” by Vladimir Morozon and Andrew Korybkov contains an in depth analysis and policy guidelines that can serve as a framework for a free trade agreement of Eurasian Economic Union (EAEU) with Pakistan.
The writer is Country Manager of a Pakistani bank in Kazakhstan, with interest in Central Asian studies. He can be reached out at [email protected]