No Russia-UK Trade Deal, But Moscow & London Follow Similar Trade Strategies in Asia
- The UK is following an identical path to Russia in developing trade relations with India, ASEAN and East Asia
- Corporates from both could team up to take advantage of each other’s strengths, some including Free Trade Agreements one has but the other doesn’t.
Op/Ed by Chris Devonshire-Ellis
British Trade officials have stated that there is no basis for any trade deal at present between Russia and the United Kingdom, saying that “Russia needs to change its tune with Britain and be compliant.”
The attitude comes as the UK is open to new trade agreements in the wake of Brexit. But Russian trade is not on the menu. London has made it clear that trade can contribute to mutual prosperity but “cannot be the basis for normalizing relations with Russia”, and that “WTO rules will continue to apply to trade with Russia”. It was also made clear that ‘trade opportunities’ would be used as a lever for binding Russia to the rules-based international order increasing opportunities for UK businesses, in a statement that appears on face value to be adding political dimensions to any direct bilateral trade opportunities.
The Russian Foreign Minister, Sergey Lavrov has left the door open, saying “For our part, we are ready to resume the work of specialized bilateral mechanisms.”Despite the trade deal rebuff, Lavrov stated that bilateral trade between Russia and the UK reached £19 billion in 2020, an increase of 53.6 percent compared to 2019.
However, the two countries do have increasingly aligned trade ties in the wake of the UK’s Brexit and Russia’s Western sanctions: both are turning their trade faces to Asia. Russia is part of the Eurasian Economic Union (EAEU) which has recently signed Free Trade Agreements with Vietnam and Singapore and is currently negotiating others within Asia including several other ASEAN nations and China. Russia is a dialogue partner with ASEAN.
British Foreign Minister Dominic Raab visited Indonesia last week to discuss trade, Russia’s Foreign Minister Sergey Lavrov upgraded Russia’s trade ties with Indonesia to ‘strategic partner’ status last year.
Tie-ups in Asia between Russian and British companies can also not be ruled out. While it seems unlikely that the UK will pursue a trade deal with China, Russia is currently negotiating tariff reductions that will impact on Russia-China trade as part of a China-EAEU Free Trade Agreement that was signed off in 2018 but currently remains non-preferential. Both countries are looking to double trade to US$200 billion. British businesses may therefore want to look at partnerships in the Russian Far East to access favourable trade terms with China currently denied them by London.
Russia has good regional trade and diplomatic ties at present with China, Mongolia, South Korea, much of ASEAN in addition to India (Lavrov was in New Delhi last week, with India also poised to join the EAEU), while the UK has good trade and diplomatic relations with Brunei, Singapore, Malaysia, Vietnam, and Japan, while the UK Prime Minister Boris Johnson is set to visit India on April 26.
While Russia and the UK may not be getting on with each other in direct bilateral terms, there will be plenty of Russia-UK competition on the markets throughout Asia – which may in turn lead to future corporate alliances on a B2B basis as both Governments target the same trade space, yet corporate collaborations could offer each party strategic advantages.
- China-EAEU Trade Share Increases By 20% In 2020
- Chinese Ambassador – Russia-China Trade Set To Double To US$200 Billion By 2024
Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at email@example.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.