…SEEK ELUSIVE FREE TRADE ZONE.

The prime ministers in the June 4 CIS meeting also signed a set of modified documents on setting up a free trade zone in the CIS by January 2000. That goal is generally shared among CIS countries, because they seek access to the Russian market for their substandard products (while trying to maximize exports of hard goods to hard currency markets) and need unimpeded transit on fair terms via Russia to third countries. That goal has, however, been frustrated by the prevalence of protectionist restrictions in intra-CIS trade, extortionate transit terms and–on the positive side–the aspirations of most CIS countries to expand trade with the European Union and join the World Trade Organization (WTO). Those goals militate against their joining a closed-off CIS trading system.

Indeed, as Armenian Prime Minister Armen Darbinian disclosed in connection with the Minsk meeting, “customs borders will not be eliminated in the free trade zone, as the CIS countries adhere to differing standards and approaches [to mutual trade], and some are closer than others to the goal of joining the WTO.” (Noyan-Tapan, June 4). Armenia’s economic and geographical circumstances render that country highly dependent on international trade and thus refractory to being drawn into a CIS common market–if one were feasible, which is far from certain. Although allied with Russia militarily, Armenia differs with Moscow on CIS economic issues and may well have been that unnamed sixth country to have voted against the Russian-drafted documents at the Minsk meeting.

The various CIS country governments are now expected to submit the documents on the free trade zone to their national parliaments for ratification. The documents include the original 1994 agreements on the abortive CIS Economic Union (which were ratified by only six countries), a recent protocol which brings more than seventy changes to that agreement, and presumably some of the documents just signed in Minsk at the meeting.

Even if ratification is accomplished in all countries by the January 2000 deadline–which seems doubtful–any CIS-wide free zone might be undermined by the existing systems of trade preferences in the quadripartite Customs Union (Russia-Belarus-Kazakhstan-Kyrgyzstan, with Tajikistan recently admitted) and the bilateral Russia-Belarus Union. These two unions do not operate as common markets or free trade zones any more than the CIS has. Ironically, the two subgroups would have to remain inoperative if the CIS-wide free trade zone is to become a reality (Itar-Tass, June 4-5).

…KEEP THEIR DISTANCE FROM MOSCOW.