The early 1990s saw drastic changes in global politics, trade, and geography in Europe and parts of Asia. With the dissolution of the Soviet Union, numerous independent states became recognized, and many would form an association of sorts to promote trade and financial support with each other and outside nations. The Commonwealth of Independent States, formed for the purpose of maintaining friendly relations among former Soviet territories, sought to create free trade boundaries with member nations, though this agreement was never officially ratified. Only recently have CIS nations consented to a formal trade agreement which will impact all members involved, in particular the Ukraine, which also seeks a relationship with the European Union.
CISFTA Member Nations
Officially, only eight nations within the Commonwealth of Independent States are involved in the current free trade agreement:
- Russia – Within the CIS, the Ukraine and Belarus are Russia’s major trade partners. Known for its mining and agricultural industries, Russia exports iron ore and precious metals, as well as various machinery.
- Ukraine – Ukraine is a major producer of coke and coal, and exports a good percentage of their petroleum and chemical output to Russia, the United States, and Germany.
- Belarus – Largely industrial, Belarus relies on trade relations with Russia and the Netherlands as they export vehicles and machinery.
- Kazakhstan – A smaller economy within the CIS, Kazakhstan produces on average 65-70 million tons of oil and gas condensate annually.
- Kyrgyzstan – Kyrgyzstan encountered difficulties economically following the dissolution of the Soviet Union, but continue to grow slowly. Main exports include precious metals and hydropower.
- Tajikistan – Turkey and Russia are major exports partners and benefit from Tajikstan’s production of aluminum and cotton, among other agricultural crops.
- Moldova – Moldova has struggled post-dissolution to establish a foothold in global trade beyond Russian borders, but has managed to export food and textiles to Turkey, Romania, and Germany.
- Armenia – Metals and mineral mining are prime industries in Armenia. Russia, Bulgaria, and Germany are among their top trading partners.
Current Issues Within CISFTA
Foremost in the media regarding the CISFTA agreement is Ukraine’s role and the effect, if any, it will have on relations with the European Union. While Ukraine’s involvement in CISFTA should not negatively impact the deep and comprehensive free trade agreement with the EU, it should be noted that both treaties are important to the country. According to OdessaTalk, the bulk of Ukraine’s trade, little over forty percent, is concentrated within the CIS borders. Trade with European Union members holds just under thirty percent, but could have the potential to grow. Should this potential be realized, one may find other member nations of CISFTA taking advantage of such a relationship.
Compatibility of CIS nations with the procedures of non-member nations is key in forging successful trade relationships beyond the old Soviet borders. It is worth watching Ukraine closely to see if others in CISFTA follow suit.