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The CIS – a space for developing economic and business collaboration

May 29, 2017, 21:06 UTC+3
1 pages in this article

The CIS is Russias strategic direction for building trade and economic ties. With long-standing economic relations among the CIS member states, mutual trade and investment volumes remain significant, while the conjugation of the CIS and the EAEU economic dimensions offers new opportunities. Despite numerous pessimistic forecasts and concerns about the Commonwealth's future, the CIS is still a valuable platform for the member statesintegration efforts.

Russia chairs the CIS in 2017. Moscow will host the Commonwealth Leaders’ Summit in October.

  • President Vladimir Putin, at a meeting of the Council of CIS State Leaders last year, said that “improving the CIS will be one of Russia's priorities as Chair of the Commonwealth in 2017”.
  • At the latest CIS summit, he highlighted the need to make economic cooperation more effective by proposing to grant broader decision-making powers to ministerial, departmental and sectoral CIS councils and commissions.

Even though the CIS economic relations are important, Russia's trade ties in this area are not as intense as those with non- former Soviet Union countries.

  • The Russian Federal Customs Service's data show that in 2016 the percentage of trade turnover between Russia and the CIS countries in the foreign trade mix declined by 0.5 p.p. to 12.1%.
  • Russian exports to the CIS countries dropped by 18% to USD 38.5 billion, while imports decreased by 8% to USD 20 billion.
  • Investments saw similar trends last year as direct investments from Russia into the CIS countries fell by 26%, and investments from the CIS countries into Russia also on a downward path, with the slowdown in both directions mainly attributed to the situation in Ukraine.

Russia’ key CIS trade partners are Belarus and Kazakhstan.

  • The exports from Russia to the CIS are dominated by energy products, taking 32.6% of the overall mix, but this component has materially narrowed down, by 6.7 p.p., with physical volumes also shrinking.
  • On the back of Russia’s counter-sanctions against the EU, the share of food products in the CIS import mix has been gradually increasing to reach 23.3% in 2016. CIS countries gained a competitive edge on the Russian market thanks to convenient logistics and low prices.

The Commonwealth was focused on trade deregulation in its work last year.

  • All CIS countries, except Azerbaijan and Turkmenistan, have joined the 2011 Free Trade Area Agreement by now (with Ukraine having withdrawn in 2016). However, trade growth is capped as the countries do not have access to a single government procurement market.
  • Last year, the countries signed a memorandum to the agreement which will provide access to government procurement in the free trade area. The document is under ratification in the member states.
  • Until 2019, the signatory countries will be implementing and harmonising the laws and then they will start discussing specific agreements that would “open up” government procurement markets.
  • In the longer term, this process may well boost economic cooperation within the CIS.

Another promising line of work is coordination and integration of efforts to deregulate trade within the CIS and the EAEU.

  • In particular, Russia has emphasised the need for the CIS Executive Committee to be represented under the Eurasian Economic Commission. This will enable regular information exchange and increase overall cooperation effectiveness among FSU countries.

At the same time, Russia is working to improve economic ties with the CIS countries in other areas.

  • In April, Russia and Belarus made arrangements intended to straighten out their relations in the oil and gas sector on a long-term basis.
  • A number of agreements have been approved, specifically those with Uzbekistan (on interregional cooperation and tourism), Turkmenistan (on industrial cooperation), Moldova (on road transportation) as well as the CIS nuclear energy agreement.
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