Eurasian Economic Union Examining Free Trade Potential of South America

The Moscow-backed Eurasian Economic Union (EAEU) has been quietly making overtures to South America as Russia seeks to limit exposure to Western sanctions. Interestingly, this comes at exactly the same time that the United States is moving away from multi-lateral free trade deals and is concentrating purely on its own domestic economic might as a future sustainable development policy and is moving away from participation in multilateral trade agreements.

As I noted here, the EAEU has been making significant inroads into developing trade potential on the Eurasian continent itself, either entering into free trade agreements or commencing discussions over direct membership of the Union with multiple countries across Asia, North Africa, and Europe. South America is also being wooed as an extension of this globalization policy.

Much of the South American-EAEU diplomacy is being conducted via Mercosur, the free Trade bloc that includes Argentina, Bolivia, Brazil, Paraguay, Uruguay, and Venezuela. Associate members include Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname, while Mexico and New Zealand are observer nations. In April 2016, the Eurasian Economic Commission held a working meeting between Tigran Sargsyan, the Chairman of the Eurasian Economic Commission, and the Minister of Foreign Affairs of the Argentine Republic. The parties discussed the developing relations between the Eurasian Economic Union and Argentina as well as developing closer ties between the member states of Mercosur and the EAEU. A draft agreement concerning future cooperation on trade and economic issues between the EAEU and Mercosur is currently under consideration.

In addition to Mercosur, the following South American countries have been holding their own discussions with the EAEU.

Brazil 
n May 2017, government officials of Belarus, a full EAEU member, and Brazil met in Minsk to discuss the establishment and development of Brazil-EAEU relations. The parties discussed a wide range of issues from trade and economic investments, to the interaction between the Eurasian Economic Union and the South American Common Market (MERCOSUR).

Chile 
Eurasian Union member-states and Chile are examining the issue of the potential formation of a free trade zone. The next meeting of the joint commission will be held in 2019 in Chile and will be attended by business representatives from the EAEU states presenting their suggestions.

Ecuador 
It is expected that Ecuador will sign a free trade deal with the EAEU after a trade meeting was held between the Presidents of Ecuador and Belarus in the Ecuadorian capital Quito on February 12, 2015. Discussions remain ongoing.

These discussions effectively cover all of South America. While no trade agreements have yet been concluded, the talks demonstrate that the potential emergence of a vast new global trade bloc is actively being promoted and considered. That many of the nations concerned in South America have close ties to both Russia and China is to the advantage of the EAEU, as is the current isolationist policy of Washington, which has wasted a huge amount of regional trust in recent years.

Further north, Mexico and Canada also have early stage discussions with the EAEU, a situation I shall examine in more detail tomorrow.

Meanwhile, it is becoming obvious that a new world trade order is in the process of emerging. This will gather increasing traction should, as has been mooted, President Trump pulls the United States out of the World Trade Organisation. It may take time to begin to see the impact of this, however the mechanisms are being put in place. Businesses throughout the South American region need to keep abreast of these developments as they progress as new trade corridors and opportunities, especially in China, Russia, and Asia begin to open up.

Related Reading:

The Eurasian Economic Union. Gaining Massive Regional Traction Across Europe, Asia, & North Africa

After Trump, Putin and Xi – How the New World Trade Order Will Look in 2030

Dezan Shira & Associates’ Service Brochure

Dezan Shira & Associates´ brochure offers a comprehensive overview of the services provided by the firm. With its team of lawyers, tax experts, auditors and consultants, it is Dezan Shira´s mission to guide investors through Asia´s complex regulatory environment and assist with all aspects of establishing, maintaining and growing business operations in the region.