A free trade zone in services will appear in the CIS

The heads of government of the countries of the Union of Independent States (CIS), after 11 years of negotiations, agreed on free trade in services and investment. The agreement was signed by the Prime Ministers – Mikhail Mishustin (Russia), Nikol Pashinyan (Armenia), Roman Golovchenko (Belarus), Alikhan Smailov (Kazakhstan), Akylbek Zhaparov (Kyrgyzstan), Kokhir Rasulzoda (Tajikistan), as well as the Ambassador Extraordinary and Plenipotentiary of Uzbekistan to Russian Botirzhon Asadov.

This document has been developed for 11 years, stressed the Minister of Economic Development Maxim Reshetnikov. “Today’s agreements should organically complement the preferences for commodity trade and stimulate the growth of trade between our countries,” the minister explained. The document regulates services, as well as the development of industry and agriculture, he added. According to the minister, the decision will stimulate the growth of mutual investments, the development of industrial relations, the formation of new value chains.

The document defines a list of sensitive sectors in which each of the countries can maintain restrictions for foreign companies, Reshetnikov noted. In particular, Russia will retain the right to apply the current legislation to restrict foreign investment in strategic companies, Tajikistan is going to limit foreign investment in the mining industry, Uzbekistan – in the field of electricity, nuclear energy, engineering and others.

Since 2012, an agreement on a free trade zone for goods has been in force in the CIS. It assumes the non-application of import duties in mutual trade between member states.

The agreement will enter into force a month after it has been ratified by at least three participating states – this will require the adoption of a federal law by the State Duma, Marya Baranova, deputy director of the trade negotiations department of the Ministry of Economic Development, explained to Vedomosti.

“Traditionally, Russia exports more to the CIS countries than it imports, so such an agreement will be beneficial for us,” believes Vladimir Salnikov, head of the real sector of the TsMAKP. According to him, in 2021 (the latest Central Bank statistics), Russia exported $8 billion worth of services to the CIS countries, which is 11% of all service supplies. The balance between exports and imports of services in the CIS amounted to $ 2 billion. The removal of barriers will contribute to the development of these ties and, in general, will have a small but positive impact on Russia’s trade balance, the expert pointed out.

The decision will increase the total export of services by about 5%, the head of the center of the Institute of International Economics and Finance VAVT Nikita Pyzhikov calculated. Imports will also increase – this will contribute to the formation of a favorable investment climate between countries.

The agreement will lead to the mutual opening of the markets of the participating countries, respectively, and Russian companies will have access and the opportunity to be present and develop in the markets of the CIS countries, said Anastasia Trubochkina, manager of the Department of Taxes and Law of the DRT company. The share of services in the gross product of individual countries can account for about two-thirds of GDP, she added. The growth of trade in the service sector, in one way or another, leads to an increase in trade in goods, Trubochkina pointed out.

Among other decisions of the CIS Council of Heads of Government is the approval of the concept and a set of measures for the development of industry until 2030. This should make it easier for companies from the CIS to enter the markets of the participating countries.