socialbites.ca: In March, you said that when the EAEU countries gradually agreed to switch to consensus in their national currencies, Union members wanted to move away from the dollar in reciprocal agreements. How soon will this agreement come into effect?
Dmitry Volvach: The question of the transition to reconciliation in national currencies did not arise yesterday. We have been working on this since the founding of the Eurasian Economic Union and we are already seeing the results.
In 2021, payments in national currencies in local settlements have already reached 75%. At the same time, the share of the dollar fell from 30% to 21%.
Naturally, the current geopolitical situation has strengthened the confidence of all members of the EAEU in the further minimization of mutual agreements in the currencies of third countries.
Together with our partners in the Union, we have taken a number of important decisions.
First, we approved a temporary procedure for payment of import customs duties between our countries in Russian rubles.
Secondly, in April, the EEC Council approved the List of Measures to Improve the Stability of the Economies of the EAEU Member States and identified a set of measures to expand the use of national currencies in mutual agreements between them.
We are working on infrastructure problems: we enable the interaction of our countries’ payment systems, we increase the trading of currency pairs in exchanges of financial messaging systems with the Central Bank. Thus, we reduce administrative barriers and improve legislation and practices by creating favorable conditions for businesses to conclude contracts in national currencies. For example, for the first quarter of 2022 trading in the ruble/tenge currency pair increased almost 50 times.
“Western countries have seriously made it clear that those who help Russia get rid of sanctions can be held responsible for this. How do you think these threats will affect cooperation between countries in the Union?
The functioning of the EAEU is not aimed at circumventing sanctions, but at the common and mutually beneficial development of economies by increasing the stability of the member states within the framework of previously accepted obligations.
From 2016 to 2021, the real total GDP of the countries of the Union grew by 9.1%, which is approximately 0.66 persons/p. (approximately 10 billion dollars) is the gain for countries from integration.
The economies of all EAEU member states are highly interconnected, so if sanctions are imposed on any of them, the results may have an indirect impact on all EAEU members. We are in constant dialogue with the countries of the Union on the most sensitive issues. For example, at the EAEU level, we quickly coordinated and adopted decisions on zero duties on 1.3 thousand commodity products with total imports estimated at $3.8 billion.
At the same time, we proceed from the fact that the restrictions affecting the Russian market create new opportunities to replace outdated goods and increase demand for joint projects.
– Timur Suleimenov, vice-president of Kazakhstan’s presidential administration, said it was important for his country to show its European partners that Kazakhstan would not be a tool to circumvent anti-Russian sanctions. But what if such steps are necessary as part of the development of Eurasian integration?
— We have no intention of turning any EAEU country into a tool to circumvent sanctions. Considering the legal documents of the EAEU in our country, besides the principle of “consensus” of taking key decisions in the Union, there is no such possibility even theoretically.
At the same time, we proceed from the basic understanding that unprecedented sanctions against Russia should not affect the development of the EAEU and the implementation of already reached agreements. That is why we have jointly developed and are continually completing the Common List of Measures to Improve the Resilience of the Economies of the EAEU Member States. All members of the association participate in this work.
If you look at the situation as a whole, new threats that have emerged but only added to the previous ones can be turned into new opportunities, and that’s exactly what we’re doing constructive work. committed to.
— In a recent interview, you mentioned that the EAEU has accumulated high-quality experience in developing joint measures to stabilize economies in the face of external challenges. As an example, you mentioned an anti-COVID measure package. How can this experience help in the current environment?
— At the height of the COVID-19 pandemic, within the framework of the EAEU, our countries actively cooperated to both prevent and prevent the spread of coronavirus infection and stabilize the economic situation. In particular, certain components and materials for the manufacture of drugs and disinfectants, medicinal preparations, were exempted from paying taxes when imported into Union territory. Conditions were created for the recovery and further development of the economy, including the digitization and acceleration of cargo deliveries, macroeconomic stability, price and financial stability.
Thanks to joint actions, it has been possible to reduce the downturn in the economy and the slowdown in trade within the Union. The economic decline observed in the EAEU area in 2020 was 2.7%, and for comparison, the decrease in global GDP was 3.3%.
According to our estimates, the full implementation of measures to improve the sustainability of the economies of the member states will have an additional economic impact, expressed in the growth of the total GDP of the EAEU by 2.5% or $49 billion compared to 2021.
Due to its strategic nature, we expect the greatest impact from the “Internal market and cooperation” bloc measures.
They enable the creation of new supply chains and encourage industrial cooperation and investment. Together, they could provide an additional 1%, or $18 billion, in the Union’s GDP.
Another aspect is the development of cooperation with third countries. The partners of the EAEU today under preferential agreements are Vietnam, Iran, Serbia. Similar agreements are being negotiated with Egypt, India and Israel. Joint studies are carried out on the feasibility of concluding trade agreements with Indonesia and Mongolia.
Liberalization of trade with countries such as Vietnam and Singapore, as well as access to their domestic markets, creates opportunities for companies from the EAEU to promote their products to the markets of these countries’ partner countries and for cooperation. For example, the EAEU-Vietnam agreement supplements the Protocol on the promotion of motor vehicle production in Vietnam. GAZ aims to localize SKD assembly of SUVs, trucks and special vehicles in Vietnam by creating joint ventures (JV) with the participation of UAZ, KAMAZ. At the same time, the operation of a joint venture based in Vietnam should result in at least 55% of the added value of a motor vehicle.
— You said earlier that Russian and Belarusian experience will be in demand on the Eurasian platform.
– According to expert estimates, the implementation of the integration package for the Belarusian side will contribute to an additional GDP growth of more than 2%. The positive impact for Russia is about 0.05% of GDP.
One of the key areas of this work is the introduction of a unified system of indirect tax administration in the Union State, as well as the creation of Union customs and tax structures.
— The Russian Ministry of Foreign Affairs accuses some Western countries of hindering the so-called “twinning” of EAEU projects and the Chinese One Belt, One Road initiative. For diplomats and representatives of the highest authorities, it is clear that this is a big image story. But don’t you think that from an economic point of view the scale of the two projects is incomparable? Do you agree that China may suddenly see the EAEU as a competitor that can be “swallowed”?
“These projects are not really directly comparable, because in one case the EAEU is about regional economic integration, and in the other it is about an attempt to develop trade and cooperation between China and foreign economic partners. However, there is no contradiction here. The EAEU and China have developed ties, created and expanded transport routes, and aim to develop a modern transport and logistics infrastructure. China accounted for about 20% of EAEU foreign trade in 2021.
In order for entrepreneurs and manufacturers to interact effectively and avoid potential risks, more joint steps need to be identified to link the EAEU and the One Belt, One Road initiative, the EAEU needs to be prepared and agreed with the Chinese side on a roadmap. Member states have agreed on this task by setting it out in the Strategic Guidelines for the Advancement of Eurasian Economic Integration by 2025.
— One EEC report says the EAEU and China have potential for trading in automotive products, pharmaceutical and medical products, and dishwashers. Isn’t it too small for the trade of two big regional unions?
— EAEU countries have close trade and economic ties with China. Trade turnovers in 2021 are more than $166.5 billion, 32% higher than 2020 and 12% higher than 2019.
The potential to expand trade between China and the EAEU goes far beyond the identified commodity groups. According to our calculations based on the methodology of the International Trade Center, the unrealized export potential of China to the markets of the EAEU countries is about $ 37 billion. What goods are we talking about? These are electrical equipment, light and chemical industry products, transportation engineering and industrial engineering products.
Altogether, they account for about 70% of the stated volume of the total export potential. In turn, EAEU countries also have significant opportunities to increase supply to the Chinese market. The estimated unrealized export potential of EAEU countries to the Chinese market is $21 billion, based on metal and metal products, food products, chemical products and transportation engineering products.
To realize this export potential, systematic studies are needed to remove the barriers to trade between the EAEU and China. For this purpose, we have a Trade and Economic Cooperation Agreement with China, which entered into force in 2019.