Eurasian Integration Yearbook 2012

Customs Unionand the Single Economic SpaceAs regards mutual trade in energy commodities Kazakhstan and Russia willclearly remain net exporters in the foreseeable future and Ukraine and Belarusnet importers.In the context of the existing trade and economic relationships it appears thatintegration will not have a significant effect on trade in primary commodities.The distribution of product flows from these sectors in trade within the SESand between the SES and third countries will depend on demand. It should beassumed that, in the foreseeable future, the production capacities in the primarysectors will continue to significantly exceed domestic demand in post-Sovietcountries. This will keep sectors such as metallurgy, chemical production, andfuel and energy export-oriented.A more complex and pressing task is to provide scenarios for mutual trade inhigh value-added products, primarily mechanical engineering products.At present, 70-90% of all mechanical engineering products are imported to theSES countries and Ukraine from other countries. In 2010, Russia imported 92%of all of its mechanical engineering products from third countries, Ukraine 83%,Belarus 75%, and Kazakhstan 72%.The high share of third countries in equipment imports by the SES countries andUkraine is explained primarily by the gap in technological development andefficiency of their mechanical engineering sectors.Table 1.10.Assessment of thegap in economicefficiency andscientific andtechnologicaldevelopmentcompared to theOECD countries(Europe, times)Source: EIA,calculations by IEFRASIn terms of energy intensity of GDP, Russia lags significantly behind Europe.In 2010, Russia’s energy expenditures per $1 of GDP (in constant 2005 pricesrecalculated to reflect purchasing power parity) were almost 300% higher thanthose of European OECD countries. Importantly, these are the countries thatare the main suppliers of mechanical engineering products to the SES countriesand Ukraine.2010 2020 2030Russia 3.7 2.7 2.5Kazakhstan 4.3 2.9 2.5Belarus 4.9 3.2 2.5Ukraine 5.4 3 2.5The forecasts of the US Department of Energy 5 and IEF RAS for the productivityof primary resources in the SES countries and Ukraine make it possible toassess their technological gap compared to European OECD countries (seeTable 1.10).5http://www.eia.gov34 EDB Eurasian Integration Yearbook 2012