Friday, August 12, 2016

China’s One Belt, One Road Initiative and the Sino-Russian Entente

Getty Alexander Gabuev, Greg Shtraks Op-Ed

CARNEGIE MOSCOW CENTER - August 9, 2016

The declaration on the integration of the EEU and OBOR, announced last year, has ambiguous wording, and the language about coordination is limited to trying to find a link between the two initiatives. What was proposed was not a merger but a linking up. The language is vague and the main challenge over the last year has been to find practical means and models for connecting the projects. The first avenue that Russia and China have explored involves finding and identifying investment projects, particularly logistics and infrastructure projects that would increase connectivity. The second avenue involves implementing the third pillar of OBOR: increasing trade by establishing a free trade zone or an economic partnership that would enable and facilitate trade.  This second avenue is looking more advanced right now. During the recent visit of President Vladimir Putin to China, Commissioner Veronika Nikishkina—head of external relations for the Eurasian Commission, the upper supranational body of the EEU—signed a document with the Chinese minister of commerce Gao Hucheng to formally start negotiations on an economic partnership. This partnership is focused on trade-facilitation measures, such as improving investment protections, removing red tape on customs, and merging different standards on intellectual property, customs, and other areas. The next step will likely be the establishment of a free trade zone. Based on conversations with negotiators on both sides, I expect the talks to last at least seven to ten years. This would be a realistic expectation of the time needed to conclude this deal. The economies of the EEU and China are all protectionist, but China is much more experienced in international trade negotiations than Russia, Kazakhstan, Belarus, Kyrgyzstan, or Armenia. The road obviously won’t be easy, but it is the one that all these countries want to explore.

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