ASEAN & Russia Agree Roadmap For Potential Trade Integration

By Dezan Shira & Associates  

ASEAN and Russia have agreed to enhance and widen economic cooperation at the 10^th ASEAN Economic Ministers (AEM)-Russia Consultations held last month (September 2021), including the adoption of a revised ASEAN-Russia Trade and Investment Cooperation Work Program for the 2021-25 period.

ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Russia is a member of the Eurasian Economic Union which also includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan. 

Commonwealth Relevance 

The discussions of are note to British and Commonwealth countries as many have trade agreements with ASEAN and some with Russia.  The UK for example has free trade agreements with Singapore and Vietnam, while Brunei, Malaysia and Singapore are all Commonwealth members. Singapore and Vietnam also have free trade agreements with the Eurasian Economic Union. Should these discussions turn into trade agreements between the two then this may open access potential for UK and Commonwealth nations to these trade blocs. 

Enhanced Agreements

At the meetings, ASEAN and Russia agreed on a revised ASEAN-Russia Trade and Investment Cooperation Roadmap (the “Roadmap”), which is a high-level agreement setting the goals for trade between the two parties. The ASEAN-Russia Trade and Investment Cooperation Work Program (the “Program”) is an associated agreement – also updated at the meetings – that guides the implementation of the Roadmap.

Russia, while the principal member of the EAEU, is also a dialogue partner with ASEAN, giving it a seat at the table and therefore able to understand the mechanisms and dynamics of Southeast Asia. Russia actively participates in ASEAN-led multilateral mechanisms, including the East Asia Summit, and the ASEAN Regional Forum amongst others. The UK also has a seat at the same table – it joined ASEAN as a dialogue partner earlier in the year. 

Here, we look at the details of the Program and its direction for the upcoming 2021-25 period.

The Work Program: An Overview

The Program is an implementation agreement in support of the Roadmap’s broader goals. The Roadmap’s main goal is to enhance economic cooperation to address emerging challenges and opportunities for trade and investment between ASEAN and Russia. To do so, the Roadmap seeks to:

• Improve two-way trade and investment flows between ASEAN and Russia;
• Support ASEAN’s deepening economic integration;
• Bring about broader economic integration between ASEAN and Russia as well as within ASEAN; and
• Cooperation towards contributing to the multilateral trading system.

The agreement describes the Program as a “living document” subject to review on a regular basis. The following is an overview of the six tasks included in the most recent publicly available Program from August 2020.

High-Level Policy Dialogue

The objective of the high-level policy dialogue is to provide overall policy direction to enhance ASEAN-Russia economic relations and to promote ASEAN-Russia cooperation and strengthen regional integration.

The main activity under this objective is to organize annual AEM-Russia Consultations.

Consultations At The Senior Economic Officials Level

There are four objectives for consultations at the Senior Economic Officials level. These are:

1. To oversee the implementation of economic cooperation programs and activities;
2. To exchange views on ASEAN and Russia’s dialogue with economic cooperation partners;
3. To provide a venue in discussing issues of mutual interest, including regional economic integration; and
4. To support the AEM-Russia consultation process.

Activities under these objectives include organizing Senior Economic Officials meetings, ensuring the timely delivery of the Roadmap, and exploring joint ASEAN-Russia responses.

ASEAN-EAEU Trade Scope Potential

ASEAN has a GDP of US$3 trillion and a population of 661 million, of whom about 250 million are at the middle-class consumer level. The Eurasian Economic Union (EAEU) has a GDP of US$4.78 trillion and a population of 183 million, of which about 90 million are to middle class consumer standards. The EAEU sits in a geographic space between China and the EU. ASEAN member states Singapore and Vietnam already have FTA with the EAEU with all other members expressing strong interest. The EAEU is also conducting free trade negotiations with China, India, and Egypt and has an FTA with Iran.

ASEAN has free trade agreements with China and India as well as with Australia, New Zealand, Japan, and South Korea and is a member of the RCEP trade bloc expected come into effect next year. It is also a member of the CPTPP which when enacted will also provide access to Canada and the West coast LatAm nations, and which the UK has also applied to join. 

 Sectoral Dialogues Between ASEAN And Russian Officials

There are 14 objectives for sectoral dialogues between ASEAN and Russian officials, the most of any category in the Work Program. These are:

1. To share best practices, experiences, and expertise, and discuss possible joint cooperation on mutually agreed priority areas;
2. To pursue economic cooperation programs and activities in the mutually agreed areas;
3. To enhance ASEAN-Russia bilateral trade in agriculture and agricultural and fisheries products;
4. To enhance cooperation in the sphere of energy;
5. To enhance the development of profitable, safe, and secure supply chains between Southeast Asia and Europe;
6. To enhance industrial cooperation;
7. To enhance cooperation in the sphere of science and technology, innovation, intellectual property creation, commercialization, and management;
8. To enhance cooperation in the field of information and communication technologies (ICT), including e-government, digital economy, and information society development;
9. To enhance human resources development cooperation;
10. To enhance cooperation in the tourism sector;
11. To encourage cooperation on MSME development;
12. To develop cooperation between ASEAN and Russia in electronic commerce;
13. To develop cooperation between ASEAN and Russia in the sphere of women’s economic empowerment;
14. To develop cooperation between ASEAN and Russia in the sphere of Remote Areas Development; and
15. To develop cooperation between ASEAN and Russia in the sphere of the development of smart cities.

Due to the industry-specific nature of this category, activities for this task include establishing workshops, studies, exchanges, guidelines, and other mechanisms for industry bodies in ASEAN and Russia to cooperate.

Facilitating Trade And Investment

There are three objectives for facilitating trade and investment. These are:

1. To promote transparency and information sharing on matters relevant to the flow of trade and investment between ASEAN and Russia;
2. To enhance the development of national single windows; and
3. To enhance investment facilitation.

Activities under these objectives include exchanging information and sharing best practices on practical trade facilitation issues. In 2020, trade between ASEAN and Russia surpassed US$15 billion. Vietnam and ASEAN countries agreed to cooperate with Russia to expand mutual trade and investment, to support global chains of supplies and strengthen the partnership with the Eurasian Economic Union. Key trade and investment sectors between the two include energy, agriculture, telecommunications, oil and gas, digital transformation of the economy, transport, and green infrastructure.

Enhancing Dialogue With Business

There are two objectives for enhancing dialogue with business. These are:

1. To encourage business-to-business and business to government dialogues between ASEAN and Russia to raise mutual awareness on trade and investment opportunities in ASEAN and Russia; and
2. To seek private sector inputs in identifying trade barriers between ASEAN and Russia.

Activities under these objectives include organizing business summits, industry dialogues, investment symposia, and others for business associations.

Supporting Regional Integration Processes Within The ASEAN Economic Community And The Eurasian Economic Union

The objective for supporting regional integration processes within the ASEAN Economic Union and the Eurasian Economic Union is to explore the perspectives for mutually beneficial cooperation between ASEAN and the EAEU.

Activities for this task include exploring areas of mutually beneficial cooperation between ASEAN and the Eurasian Economic Union and expanding contacts between the two groupings.

Priorities For 2021-25 

ASEAN and Russia recently came to an agreement on the Work Program’s direction for the upcoming 2021-25 period at the 10^th AEM-Russia Consultations in September 2021. While the details of the revised Work Program remain to be seen, the two sides outlined their priorities in a joint statement.

According to the joint statement, the Roadmap and Work Program for 2021-25 envisions cooperation between ASEAN and Russia in trade and investment, digital transformation, and sustainable development cooperation in emerging industries as the key to a post-pandemic recovery. The statement emphasizes micro, small, and medium-sized enterprises, agriculture, medicine, energy, digitalization, and climate change issues.

Further, emphasis on micro, small, and medium-sized enterprises reflect the need to ensure an inclusive recovery for individuals and businesses hardest hit by the pandemic. As the Work Program for 2021-25 kicks off, further details will emerge on how ASEAN and Russia will put these plans into action.  Opportunities for investments into each other’s zones will be significant.

This article was provided with the kind permission of Dezan Shira & Associates Singapore and Moscow offices. The firm assists British & Commonwealth businesses establish trade and investment throughout Asia and have offices throughout the ASEAN region and Russia. For assistance, please email info@dezshira.com or visit www.dezshira.com

Further reading: www.aseanbriefing.com, www.russia-briefing.com 

A complimentary guide to Doing Business In ASEAN can be downloaded on a complimentary basis here: https://www.asiabriefing.com/store/book/doing-business-asean-2020-21.html

A complimentary guide to Doing Business In Russia can be downloaded on a complimentary basis here: https://www.asiabriefing.com/store/book/introduction-doing-business-russia-2021.html