WILL THE CIS CREATE A "COMMON AGRICULTURAL MARKET?"

The meeting of CIS heads of state in Chisinau concluded last week with an agreement to create a "common agricultural market". (Russian agencies, October 23) Of the 12 CIS member states, only Uzbekistan and Azerbaijan refused to sign the agreement. However, the history of most of the 500 resolutions adopted at the previous 12 CIS summit meetings strongly suggests that the decision to create such a common agricultural market is unlikely to be honored in the breach.

Post-1991 attempts at promoting regional economic integration among the Soviet successor states have foundered on two obstacles. First, in order to be economically beneficial, integration must occur under liberalized trade and market conditions that allow buyers to purchase the most attractive goods and sellers to expand into new markets. For most of the post-1991 period, however, controls on both domestic and international economic transactions have prevented consumers and producers from realizing many of the benefits of a liberalized trading system. Second, many member countries have viewed CIS economic integration as a vehicle for Russian attempts to strengthen Moscow’s influence in the region. These factors have precluded the creation of institutions that would help resolve intra-CIS trade disputes, not to mention punish those states that fail to implement trade liberalization agreements. CIS trade arrangements have instead been marked by inflexible inter-governmental bilateral agreements that are combined with informal (and poorly measured) "shuttle trading" — or smuggling — by individuals and small businesses.

It is difficult to see why the agreement to create a common agricultural market should turn out any differently. Indeed, the barriers to its successful implementation would seem more extensive than with most previous economic integration initiatives. The wide variance in agricultural reform across CIS countries could make devising a common trade framework extremely difficult. Also, other regions that have created a common agricultural framework, such as the European Union’s Common Agricultural Policy, have done so through extensive systems of subsidies. In addition to their costs — which would seem prohibitive for the cash-strapped CIS countries — such schemes often entail significant financial transfers from non-agricultural to agricultural countries. This could mean that relatively wealthy food-exporting countries like Moldova and Ukraine could be subsidized by the poorer Central Asian countries, who would likely emerge as food importers under a CIS common agricultural market.

The most direct way to create a common agricultural market would simply be to liberalize intra-CIS trade in food and agricultural products on a multilateral basis. Were the CIS countries to do this — as well as to introduce the domestic liberalization required for liberalized foreign trade (neither of which is likely, for the reasons mentioned above) — these steps would raise two other questions: 1) why stop at agriculture? and 2) why stop at the borders of the former Soviet Union? This suggests that the multilateral World Trade Organization, with which most of the CIS countries (including Russia) are currently conducting membership negotiations, may ultimately be more successful at promoting trade liberalization in, and ultimately integration between, the CIS countries.

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