MONTREAL, February 5 (ATimes) - The heads of government of the participating states of the (CIS) concluded a free-trade zone (FTZ) agreement last week, meeting in St Petersburg. The heads of state of Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Ukraine signed the document.
Armenia, Kyrgyzstan, Moldova and Ukraine are already members of the World Trade Organization (WTO), and the WTO's rules do not prohibit FTZs. Russia has been seeking WTO membership for 18 years. Accession talks are stalled by Moscow's insistence on support for agriculture and automobile production. Russia's President Dmitry Medvedev stated on the day after the signing ceremony that Russia "can live without" WTO membership "if we are told that we are not fit for it for some reason".
The first FTZ protocol among CIS leaders was signed in 1994, and the prospect of a final agreement has perennially been headlined at CIS summits over the last decade. Azerbaijan and Uzbekistan are also CIS members but did not attend the meeting; neither did Turkmenistan, which has observer status.
In an article published by Izvestiia two weeks earlier, on October 4, Russian Prime Minister Vladimir Putin separately announced the creation of a "Eurasian Union" as a goal of Russian foreign policy during his soon-to-be presidency.
The Eurasian Union is supposed to be a political superstructure sitting on top of the already existing "CIS Customs Union", qualitatively differentiated from it by the existence of supranational institutions.
However, in his October 4 article, Putin incongruously attributed to the Eurasian Union (which has only Belarus, Kazakhstan and Russia as members) the "practical agenda" of implementing the CIS-wide FTZ treaty that Russia had proposed in 2010. It was left unexplained how the Eurasian Union's yet-to-be institutionalized bureaucratic apparatus will administer the FTZ for the whole CIS, including Customs Union non-members.
Moreover, he wrote those words knowing that the St Petersburg summit of the CIS would approve the new FTZ treaty. For although he pretended there that the success of the FTZ agreement was a surprise, Moldova's deputy economy minister, Octavia Calmac, told the RFE/RL news service that the agreement was ready in May.
It was not signed then, she explained, because Azerbaijan, Turkmenistan, and Uzbekistan (which did not attend the St Petersburg summit and so have not yet signed it) had some misgivings. They were given six months to reach accommodations; six months later, in October, it was signed without them. Each has now said pro forma that it will consider acceding to the agreement.
The agreement has still to be ratified by the signatories' national legislatures where their constitutions requires this. Ukraine is one of these places. It is potentially one of those hinges of history, that Ukrainian President Viktor Yanukovych signed the FTZ in St Petersburg on the day after the European Union disinvited him from a planned visit to Brussels, following the jailing of former prime minister Yuliya Tymoshenko.
Meetings had been planned to put finishing touches on an association agreement (AA) between the two parties, which includes provisions for a "deep and comprehensive" free-trade area (DCFTA).
The European parliament will have to approve the DCFTA and the AA. There, four parliamentary party groups have already offered an agenda point to link approval with "the state of democratic values" in Ukraine. A spokeswoman for the European Commission separately expressed the same point slightly more diplomatically.
The commission, she said, "would like to see progress [in Ukraine] on subjects such as law, the application of law, the independence of the judiciary, which are at the heart of our eastern partnership". She said the meeting had not been cancelled but only postponed, although it has not yet been rescheduled for a definite date. Neither has the December signing summit for the AA been cancelled.
The scheduled October meetings in Brussels nevertheless took place in Yanukovych's absence. Marketwatch reported that on October 20 the two sides agreed on all key trade aspects of the association agreement, including a "deep and comprehensive free-trade zone" between the EU and Ukraine.
Ukraine insists that the document include language specifically referring to the possibility that Ukraine becomes an EU member in the less distant future, whereas the EU had preferred language about a "long-term perspective", which they have apparently abandoned.
Long-time Moscow-based observer Isabel Gorst, writing in a Financial Times blog, noted that the FTZ may open a window for resolving the current Russia-Ukraine gas pricing dispute. She states that Ukraine has been seeking to import gas from Turkmenistan undercutting the price for which Russia sells its own gas to Ukraine, but that Russia has denied Ukraine access to its own pipeline system for transit.
Ukraine's Prime Minister Mykola Azarov explained that his country "cannot receive cheap gas from Turkmenistan" because it does not have access to pipelines on Russian territory. Ukrainian participation in the FTZ may set the stage for a compromise with Russia even if Moscow refuses to adjust the contractual delivery price. (See Ukraine moves to trim gas lines, Asia Times Online, September 8, 2011.) Gorst reports that Azarov said on Ukrainian television that Russia will allow Ukraine such access once the CIS FTZ has been operating for six months.