CIS Nations Eye Free Trade Zone in 2013

The latest top-level meeting of the oldest post-Soviet grouping, the Commonwealth of Independent States (CIS), pledged to enact their free trade arrangements next year. However, the CIS free trade zone (FTZ) agreement has not been ratified by some signatory nations, while other CIS member states have continued to refrain from joining the deal. 

During the meeting of the CIS prime ministers at the investment forum in Yalta on September 27–29, Ukraine’s Prime Minister Nikolai Azarov urged for all CIS member states to join the FTZ agreement. He voiced hope that the CIS free trade arrangements would take effect at the beginning of 2013 (RBC, September 28). 

The prime ministers of the CIS, which includes 11 former Soviet states, were keen to present their grouping as a viable institution. Russian Prime Minister Dmitry Medvedev described speculations that the CIS was dropping into irrelevance as "groundless" (government.ru, September 28). 

Medvedev told the Yalta forum that the CIS free trade zone came as an effective institution based on the principles of the World Trade Organization (WTO). He said the FTZ agreement was already ratified by Russia, Belarus, Ukraine, Armenia and Moldova. Medvedev invited other nations to join the FTZ agreement (government.ru, September 28). 

During the CIS meeting in St. Petersburg on October 18, 2011, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Ukraine signed the new free trade agreement. Meanwhile, Azerbaijan, Uzbekistan and Turkmenistan refrained from joining the FTZ. 

The new CIS free trade agreement replaced an earlier agreement on establishing a free trade zone concluded in 1994. However, this earlier agreement was not ratified by many CIS member states, including Russia. But last year, Russia’s top officials insisted that the new CIS free trade arrangements would not contradict the WTO principles and norms as Armenia, Kyrgyzstan, Moldova and Ukraine are also WTO member countries (Interfax, October 18). 

Separately, Russia has been pursuing its customs union with Belarus and Kazakhstan that was designed to evolve into a new Eurasian economic alliance. Yet despite repeated Russian invitations, other CIS member states, notably Ukraine, have remained reluctant to join the customs union. 

The Yalta meeting approved further expansion of the CIS free trade zone and noted that Uzbekistan indicated plans to join the FTZ. The CIS prime ministers also adopted a blueprint to expand information technology (IT) cooperation, to develop the joint Mir-24 television channel and some other agreements. They also decided to continue financing the joint air-defense system in 2013 (The Russian governmental press-service statement, September 28). 

According to Russian media outlets  the CIS membership was not exceedingly burdensome, at least for some member states. Russian business daily Kommersant commented that the CIS nations agreed to continue modest payments for the grouping’s membership. While Russia is due to pay 429 million rubles ($13.9 million) in 2013, Ukraine will pay 69 million ($2.2 million), Kazakhstan—52 million ($1.7 million), Belarus—30 million ($970,246), and Turkmenistan—only 785,000 rubles ($25,388). Medvedev also used the opportunity to promote the Russian ruble as a potential reserve currency (Kommersant, September 29). 

Although the CIS has remained an important element of the post-Soviet diplomacy, officials have conceded their CIS-related expectations have become increasingly limited. For example, the Yalta meeting decided to discontinue the CIS oil and gas council. It was created in 1993 as a venue for energy discussions, but the council has remained idle since 2003 (Kommersant, September 29). 

Furthermore, in recent years even the CIS top-level meetings happened to be ignored by some member states. In September 2011, Tajikistan hosted the CIS summit that was marked by a number of abstentions as the leaders of Azerbaijan, Belarus and Uzbekistan refrained from coming. 

These top-level no-shows apparently indicated that some member states were becoming increasingly reluctant to prioritize the grouping. The next CIS summit is due in November 2012 in Ashgabat. It remains to be seen whether the grouping’s top-level meeting could be able to strengthen the viability of the CIS. 

Meanwhile, Russia has been keen to promote closer economic ties between member states and the CIS and the new FTZ agreement was in line with that goal. However, continued Russian efforts to lure the CIS member states into closer forms of economic integration have entailed limited results so far.