12:48 GMT +322 September 2018
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    Pivot to Asia

    Possible Trade Agreement Between the EEU and ASEAN

    Pivot to Asia
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    John Harrison
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    Something is quietly brewing between the Eurasian Economic Union (EEU) and the Association of Southeast Asian Nations (ASEAN). The two organizations may well sign a free trade agreement in November.

    Paul Goncharoff, an American businessman in Moscow joins the program.

    Paul starts off the program describing what EEU and ASEAN are. "The EEU is the Eurasian Economic Union, which contains a number of countries: Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia. These countries work together for trade and investment purposes. It is a non-political organization….The same goes for ASEAN, which is a growing number of nations in South East Asia that are not the primary drivers in Asia — ASEAN does not include India or China but it does include strong growth economies such as Singapore, Thailand, Vietnam, Myanmar, Malaysia and so on. There is strength in numbers; they have attempted to create a good trading environment, between their countries."

    "The economic interests of both of these groups are similar. Politics aside, there is the issue of what role can they play outside of corridors of influence; be that US foreign policy through the US dollar, or Chinese foreign policy through the increasingly powerful Yuan."

    These two trading blocks are in different parts of the world, and their peoples are very different culturally. However there seems to be common ground between them and one of these is the desire to get away from dollar dependency. Paul says that this is a major issue. "At the end of the day, you follow the money. Today, if you believe what the Bank of International Settlements says, I do, 80% of all global trade is contracted in US dollars… The default currency of the world is the US dollar. That has actually prompted many countries to move away from the dollar — Russia didn't have much of a choice, it was sanctioned into a corner, so it has to do its trade outside of the dollar corridor. China is now in the same situation, and so is Iran….However, the context of the US dollar in the world is changing, rapidly. For the first visible time, it is driving the world's financial pulse through American political affairs, and political affairs are driving economic indicators. A decision has to be made, and one may be made soon, which will make the dollar more expensive, draining dollar availability in global banks, in other words, playing havoc with let's say ASEAN or EEU national currencies….We have had a dollar that was literally given away for nothing at such low interest rates that it was absurd….For instance, let's take one country that is part of ASEAN — Indonesia. They have taken a massive hit on their currency. They are an oil exporter primarily, along with a lot of other things, and they are fairy dynamic….Indonesia is now taking serious steps to trade on the Shanghai Oil Exchange instead of trading in the traditional way using the petrodollar. For the few months that the Shanghai Oil Exchange has existed, they have achieved a level of growth that it took the Brent crude price 20 years to achieve. We are living in different times in terms of speed."

    In reply to a question about whether an agreement between the two trading blocs is actually going to happen or not, Paul says: "I am a trader, I do listen to rumors, and when the frequency of rumors hits a certain level that means that there is something happening….I believe that when Putin arrives in Singapore, that he will be presented with a document to sign to make it official. It would be in the interests of Russia, of the EEU, and ASEAN to get the show on the road. 

    We'd love to get your feedback at radio@sputniknews.com

    Tags:
    economy, trade, EEU, ASEAN, Russia, Kyrgyzstan, Belarus, Armenia, Kazakhstan
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