Chris Devonshire-Ellis has been interviewed by Sputnik International and Sputnik India concerning the Eurasian Economic Forum in Moscow, during which discussions are being held to unify the BRICS, EAEU and SCO.
Also on that agenda is India, with the country already a member of BRICS and the SCO and negotiating a Free Trade Agreement with the EAEU. Speculation is rife in New Delhi over the prospects of a deal. Russia-India trade has boomed in the last 18 months, while the majority of that has been in energy, Delhi is looking for Russia market access to balance the bilateral trade figures.
We reproduce Chris’s (CDE) Q&A with Sputnik in full:
Sputnik: Many experts note the growing economic weight of the Global South in recent decades. How do you assess the role of regional economic integration projects in a changing economic environment?
CDE: At the end of Chinese President Xi Jinping’s visit to Moscow earlier this year, he famously remarked to Russian President Putin that “great changes are happening.” Events such as the Eurasian Economic Forum currently taking place are beginning to lay down the structure for these changes to take place, and especially within the BRICS, EAEU and SCO. Each of these have recently gone through expansion and development with increasing numbers of countries joining some or all of these organisations. Discussing the cooperation mechanisms between them is a complex issue, however all are emerging nations with young populations possessing a dynamic mindset that global change is required. If the desire is there and the political will and freedoms are given opportunity, this is more likely to occur than not. It is too early to give timeframes; however, the process of change has begun.
Sputnik: How do you see the EAEU playing this role? What potential does it have in the development of international business relations?
CDE: The EAEU is different from the BRICS and SCO as it is a free trade bloc. The entity has learned now I feel about the need for, yet difficulties in agreeing multilateral tariff reductions, customs harmonisations and the impacts on industry. Tariffs can be used as a carrot and stick to direct investment where it should be; China has been very successful with this approach. A realisation that economic analysis is required to reap the ultimate rewards has also now been understood: not all countries are ready for such liberalisation. However at the same time, new digital solutions and blockchain technologies are paving the way for streamlined customs. The technology will help push the economic case for Free Trade along. I would expect to see a few more FTA agreed with the EAEU and other nations first, however eventually I think this type of agreement will spill over into Free Trade agreements with other Free Trade blocs such as Mercosur, or ASEAN first, then members of the BRICS grouping in time will be absorbed as Free Trade partners with the EAEU via their own regional Free Trade Areas.
Sputnik: Why do you think international investors should pay attention to the EAEU?
CDE: The EAEU has to some extent been ridiculed in the West as being moribund and slow moving. In fact, it has, despite a difficult start, been growing. Internal trade systems to ensure intra-EAEU trade flows improve have been implemented, with intra-EAEU trade now at record highs, although some technical regulatory bottlenecks still need to be overcome. It has also reached out to engage in other FTA with other countries, such as Vietnam, which has been on the whole successful, although covid and the current situation have slowed progress down a bit. The main reason that international investors should take note is that it offers access to nearly all of Central Asia as well as Russia, and that it has a lengthy queue of other nations wishing to sign agreements with it. It has nowhere near reached its full potential: investors should be looking to get a foothold, adapt, learn and progress before the competition for EAEU market share starts to arrive.
Sputnik: You own an international company with offices in various countries. Does your company participate in the Forum events? If yes, what are your objectives in the EAEU business meetings?
CDE: Yes, my firm attends a lot of events – and holds them – throughout Asia. The main objective is to learn, feel and listen to what is going on. I usually attend the St. Petersburg SPIEF and the Far Eastern Economic Forum in Vladivostok; these provide a lot of clarity and new thought and directional intelligence as where to look for new opportunities. The latter is especially important for understanding how Russia fits into Asia.
Sputnik: Sputnik readers in India are following the talks on a free trade agreement between India and the Eurasian Economic Union (EAEU). Could you please clarify for them: how would both the Indian economy and the overall trade in Eurasia benefit from such an agreement? How do you estimate the chances of the agreement being signed before the end of 2023?
CDE: Indian politicians can be very conservative when it comes to trade agreements, the political make-up has a strong business lobby and they want to protect their own domestic market. It is for this reason India pulled out of the CPTPP trade bloc as it included China. They were fearful the Chinese would come in and take their Indian domestic market share and not confident enough about investing in the China market. For this reason, an India-EAEU FTA makes better sense for India, there is a sense that Russian companies are unlikely to compete in India with them as vigorously as the Chinese would, while it also presents opportunities for Indian exporters, which is has become a new political concern as India is buying so much oil and gas from Russia the bilateral trade figures are a concern. Having access to Russian and EAEU markets would be a boom for Indian exporters while providing less of a domestic market risk in the opposite direction.
Sputnik: How do you personally assess the prospects for business cooperation between the EAEU countries in the future?
CDE: There are still some bottlenecks and some old-style protectionist thinking to be smoothed over, however I think the next two years will see considerable progress. The Ukraine situation has also acted as an intra-EAEU trade conduit. While the infrastructure requirements in places still exist, a combination of new energies in Russian trade, the regional commitment by China to Belt & Road Initiative highways and railways in Central Asia, and a new need for regional security and cooperation I think augurs well for the EAEU. These are markets well worth spending some investigative time and money on looking at where the growth and opportunities are developing.
Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. He established the firms China practice in 1992, their India practice in 2002 and their Russia practice in 2012. He has lived in all and has established China Briefing, India Briefing and Russia Briefing over the years. The firm is now devolved from Russia however works with unsanctioned Russian partners. The firm assists international companies establish operations throughout Asia, while Chris is a recognized global influencer and regularly quoted in global media.
By Chris Devonshire-Ellis