The Eurasian Economic Union is intended to boost trade. Members do not set import tariffs on each other’s goods, and goods coming from outside the bloc are taxed at the same rates. These rules protect members from outside competition and encourage trade within the group, according to Eurasianet.
Russia dominates the EAEU trade. In 2018 trade with Russia reportedly accounted for 96.9 percent of all trade within the EAEU; trade among the four smaller countries accounted for the remaining 3.1 percent.
In 2000, total trade turnover between the five countries that would one day form the EAEU was worth $14.1 billion. Of this, turnover between Russia and the four other members stood at $13.9 billion – meaning Russia accounted for 98.6 percent of trade within the future bloc.
Eurasianet says the total value of trade within these countries rose steadily over the next decade or so, reaching a peak of $73.1 billion in 2012. Then the 2014-2016 regional slowdown (driven by the slump in global energy prices and Western sanctions on Russia after it annexed Crimea) led to a sharp decline in trade within the EAEU. In a way, the formation of the EAEU could be seen as Russia’s response to the economic slowdown and a way to guarantee a captive market for its exports.
Yet even with the creation of the EAEU in 2015, total trade turnover between member economies has not recovered to its 2012 peak.
Armenia is the only member to see the share of its trade with EAEU nations rise over the past two decades or so. In 2000, trade with the countries that would become the EAEU accounted for 15.6 percent of Armenia’s total foreign trade turnover; this rose to about 27 percent by 2018. Again, trade with Russia dominates: Of Armenia’s $2 billion trade with the EAEU in 2018, trade with Russia accounted for about $1.92 billion. By contrast, Armenia’s trade with Kyrgyzstan is negligible: on average, over the past decade turnover between the two countries has remained below a million dollars.
Belarus, on the other hand, is deeply plugged into the EAEU. Some 51 percent of Belarus’s total foreign trade is with other EAEU members (overwhelmingly Russia) – although this is actually lower than it was (60 percent) at the start of the millennium.
In fact, with the exception of Armenia, every other EAEU member is seeing the portion of its foreign trade with the bloc fall – meaning they are diversifying.
Around 35 percent of Kyrgyzstan’s trade is with EAEU members. Again, this is a fall since 2007, when it reached a peak of 57 percent.
Russia’s share, at 8 percent in 2018, is actually the lowest among EAEU members, and has fallen slightly, from around 10 percent in 2000. In other words, despite dominating trade within the EAEU, Russia is least dependent on the bloc for foreign trade.
With the way Russia dominates, the EAEU is not a traditional customs union. Flows of capital and labor from/to the smaller EAEU economies are mostly concentrated around Russia. It is only natural that the smaller countries would seek to target this much larger Russian market rather than expand trade with each other. And when it comes to the free movement of labor, for two countries, that is the big benefit of membership: migrants from Armenia and Kyrgyzstan send home billions of dollars from Russia each year. But from the perspective of trade, the EAEU is largely a channel for Russia’s bilateral relations with the other four parties.
The Eurasian Economic Union (EAEU) is an economic union of states located primarily in northern Eurasia. A treaty aiming for the establishment of the EAEU was signed on May 29, 2014 by the leaders of Belarus, Kazakhstan and Russia, and came into force on January 1, 2015. Treaties aiming for Armenia's and Kyrgyzstan's accession to the Eurasian Economic Union were signed on October 9 and December 23, 2014, respectively. Armenia's accession treaty came into force on January 2, 2015. Kyrgyzstan's accession treaty came into effect on August 6, 2015.
The Eurasian Economic Union has an integrated single market of 183 million people and a gross domestic product of over 4 trillion U.S. dollars (PPP). The EEU introduces the free movement of goods, capital, services and people and provides for common transport, agriculture and energy policies, with provisions for a single currency and greater integration in the future. The union operates through supranational and intergovernmental institutions. The Supreme Eurasian Economic Council is the “Supreme Body” of the Union, consisting of the Heads of the Member States. The other supranational institutions are the Eurasian Commission (the executive body), the Eurasian Intergovernmental Council (consisting of the Prime Ministers of member states) and the Court of the EEU (the judicial body).
