INTEGRATION IN GREATER EURASIA AND THE ASIA-PACIFIC REGION: WHERE DO INTERESTS INTERSECT?
02 September 2016
The key session ‘Integration in Greater Eurasia and the Asia-Pacific Region: Where Do Interests Intersect?’ was held as part of the EEF business programme theme ‘Developing the Russian Far East – Advantages and New Opportunities for the Asia-Pacific Region’.
Session moderator Sergey Karaganov, Dean of the School of International Economics and Foreign Affairs at the National Research University Higher School of Economics, Honorary Chairman of the Presidium of the Council on Foreign and Defence Policy and a member of the Valdai Discussion Club, noted that the concept of Greater Eurasia emerged two years ago and is now proving its viability.
It is essential to note a few macro trends:
– Asia, which previously worked for the rest of the world, is now refocusing on its domestic market;
– China has begun to pivot towards the West and Southwest;
– Russia is pivoting towards the East, albeit with a delay.
Greater Eurasia has begun the process of establishing new centres for growth and policy. The concept of Greater Eurasia is only now being formed, but it should be open to the West and include Greater Europe.
Timofei Bordachev, Programme Director of the Valdai Discussion Club, continued with the list of macro trends.
Greater Eurasia is the cumulative result of a number of key global processes. Sergey Karaganov already cited a number of them. Among such processes, I would also include the reduced unity of our world.
Trade and economic blocks are actively being formed today. Essentially, this is the process of de-globalisation. This process is being led by the rich nations since the benefits from the previous globalisation have shifted in favour of new leaders. An example of this is the United States, which is promoting the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership.
Russia is counting on strengthened economic ties in the Asia-Pacific region, up to and including integration with ASEAN nations and the establishment of free zones based on the principles of sovereignty, democracy, cooperation and mutual development. The first such zone with Vietnam has already been launched.
Shamshad Akhtar, Executive Secretary of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), said that, according UN estimates, the Asia-Pacific region has the integration potential and traditions of partnership. Infrastructure needs to be developed and corridors need to be opened, including the Silk Road. We are in favour of expanding the Shanghai Cooperation Organisation and the Eurasian Economic Community. The potential of regional markets needs to be unlocked and their effectiveness needs to be improved. The Trans-Pacific Partnership (TPP) is a positive trend on the whole. Political will is needed to lift barriers that are keeping it from further advancing.
Xian Zhu, Vice President and Chief Operations Officer of the New Development Bank, noted that there is currently a high level of competition in the Asia-Pacific Region. The appropriate infrastructure is needed to implement projects and reduce costs in the region.
We have numerous opportunities to integrate and implement projects under different conditions, including in Russia’s Far East. Russia is an important partner for us.
Hans-Paul Buerkner, Chairman of the Boston Consulting Group, believes that Europe only stands to benefit from the establishment of such partnerships as Greater Eurasia from Lisbon to Vladivostok and Shanghai. Without opening borders it is difficult to find points of intersection and develop economically and politically. We need to think about what can be done to integrate companies into regional production chains. This would promote growth in companies and develop regions and economic zones.
Southeast Asia, the Middle East and the Far East will only benefit from such links. Cooperation is a key factor in development. There will be several challenges on this path that we will have to overcome. This reality must be kept in mind in the process of developing and adopting decisions and agreements.
Competition is an essential aspect in the system of our cooperation. It drives growth. I am referring to healthy competition and not confrontation.
According to Veronika Nikishina, Member of the Board and Minister in Charge of Trade at the Eurasian Economic Commission, “the global economy develops in the direction in which it is advantageous”. If integration becomes a growth driver, the region will become a leader in integration processes.
The Asia-Pacific region has long been permeated with a system of bilateral and multilateral agreements that continue to expand and deepen economic cooperation. They served as the foundation for the Trans-Pacific Partnership (TPP).
The Eurasian Economic Community took a different path. From a free trade zone through a customs union, it has settled on the model of a trade partnership.
The first model entails a conservative approach that was developed during the process of accession to the WTO. The result was an uncompetitive regime for Russian trade in the Asia-Pacific region.
The second model involves repudiating the protectionist regime and a transition to an integration-based partnership. Integration is a driver of exports. We need to open up export markets by changing the trade regime. The volume, speed and depth of integration are questions of the second order.
We urge the Russian Government and business to see the strategic benefits from integration processes in trade.
Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs, noted that the integration processes in the Asia-Pacific region certainly affect the conditions for doing business. They include a reduction in tariffs and tariff regulation, technical regulatory barriers and standards as well as a competitive policy. Russian business is not standing on the side-lines from these processes and is not afraid of these barriers.
In addition to the regulatory environment, the infrastructural environmental associated with transnational projects is also important to business. General infrastructure is required both to develop the economy as well as for business and ordinary citizens.
A current buzz word is ‘interconnectedness’. Many projects on this theme will be discussed in Hangzhou at the G20 Summit in the coming days. The project ‘Interconnected Global Infrastructure” will be a key theme at the B20 Summit in Hangzhou on September 3–4.
The Trans-Pacific Partnership (TPP) contains several components that may be utilised in other partnerships involving Russia. The idea of establishing a mega-regulatory system is being brought to life step by step.
In pivoting to the East, we must not forget about the European Union. Sooner or later we will have to resume negotiations according to the framework agreements of 2014.
Igor Shuvalov, First Deputy Prime Minister of the Russian Federation, said: “We currently have numerous universities, institutes and expert centres working on the idea of integration since new paths for development are sought through integration.”
China is worried because it is unable to dominate. When we established the Eurasian Economic Community, everyone thought that Russia would also dominate since its contribution makes up 85.0%. This is not happening because all decisions are made via a consensus.
We ourselves need to form the agenda for establishing partnerships both in the West and the East. We are ready to take part in the Trans-Pacific Partnership (TPP) with the temporary preservation of the free trade and customs duty zones. For now Russia cannot fully open its market for China and the EU, which do the same thing.
The Russian and Chinese prime ministers will hold a meeting on 7-8 November in St Petersburg at which scientists and experts will give a report on the theme: why do we need or not need a large economic union in the Greater Eurasian space? A major agreement may be signed in the next two years in a different format: Russia-China; Eurasian Economic Community-China, and be open for other countries to join. The most important thing is to move forward and not go around in circles. Such a partnership would be akin to the TPP, and it would be impossible to resolve global trade issues without us.
If this does not occur, the outdated format of the WTO and existing partnerships will create real limitations for Russia. We must not allow others to dictate to us the conditions for how to integrate and develop our business.
Victor Vekselberg, Co-chairman of the Foundation Council and President of Skolkovo Foundation, spoke about the scientific and technical cooperation of the Skolkovo Foundation.
Yaroslav Lissovolik, Chief Economist of the Eurasian Development Bank, pointed out that integration processes are currently under way in all the world’s regions, yet voids remain such as the North Pacific region: Russia, the U.S., Canada and Japan. The intensity of trade relations between these countries is low. An anchor project is needed for long-term cooperation that would bring Greater Eurasia and the Asia-Pacific region closer together and complement the Trans-Pacific Partnership (TPP). Such an alliance could be a North Pacific Partnership, and investment in scientific and technical cooperation could serve as its basis.