Breaking Down EU-Eurasia Trade Relations

EU-Eurasia trade relations are complex and driven by economic interests and geopolitical factors.

For the EU, Eurasia represents a critical source of energy, raw materials, and emerging markets. However, Eurasia benefits from access to European goods, technology, and investments.

However, these trade and economic ties are often overshadowed by political tensions, regulatory differences, and competing interests, making the EU-Eurasia trade relationship a multifaceted and evolving dynamic.

Key Players in the EU-Eurasia Trade Relations

• The European Union (EU): The EU represents a bloc of 27 member states with a robust economy focused on trade, sustainability, and regional integration.
• Eurasia: Vast landmass that includes Europe, parts of Asia, and some parts of the Middle East. Key countries or regions include Russia, Turkey, Central Asia, and countries in the Caucasus region. Also, it serves as a vital trade corridor connecting Europe to Asia.

Overview of the EU-Eurasia Trade Relations

• The European Union (EU) is an important trading partner for many Eurasian countries.
• Top EU Exports to Eurasia: Machinery, chemicals, vehicles, pharmaceuticals, medical devices, and consumer electronics.
• Top Eurasia Exports to the European Union: crude oil, gas, and refined petroleum (Russia and Kazakhstan); metals, minerals, and timber (Kazakhstan); and agricultural goods (Ukraine & Moldova).
• EU Total Trade with Eurasia:
  • Imports: €150 billion.
  • Exports: €120 billion.
• Major Eurasian Partners:
  • Russia: Sharp decline in trade post-2022 sanctions.
  • Ukraine: €65 billion in bilateral trade, with increasing EU imports of agricultural products.
  • Kazakhstan: €30 billion in trade, dominated by oil exports.
• Bilateral Agreements:
  • Deep and Comprehensive Free Trade Areas (DCFTAs): Agreements with Georgia, Moldova, and Ukraine to incorporate these states closer to the EU market.
  • Partnership and Cooperation Agreements (PCAs): Frameworks for trade with Central Asian nations.

EU-Eurasia Trade: Russia

Russia’s strategic location spans Europe and Asia, making it a key geopolitical and economic player.

• Pre-2022 Relations: Russia was one of the EU’s largest trading partners, primarily due to energy exports (oil and gas).
• Russian piped gas supplied to Europe was 155 billion cubic meters in 2021. In 2022, it was around 62 billion cubic meters and just 28 billion cubic meters in 2023 due to sanctions
• Regarding crude oil, the EU imported an estimated 48.5 million metric tons per day of crude oil from Russia in 2021. In 2022, it was 8.7 million metric tons, and in 2023, it was 1.2 million metric tons.
• In terms of trade volume, in 2021, the total trade in goods between the EU and Russia amounted to €252.82 billion. The EU’s imports were worth €163.7 billion. Thus, the EU’s exports in 2021 totalled €89.2 billion.
• By 2023, the total trade in goods between the EU and Russia had crashed to €89.02 billion. The EU’s imports were worth €50.7 billion. Thus, the EU’s exports in 2021 totaled €38.4 billion.
• Sanctions: Unfortunately, the EU-Trade trade ties have been strained due to Russia’s Invasion of Ukraine in February 2022. In response, the EU imposed sanctions against Russia. These sanctions target key sectors of the Russian economy, such as finance, defense, technology, and energy.
• Despite the EU’s efforts to diversify energy sources, Russian energy exports remain significant despite ongoing geopolitical tensions.

EU-Eurasia Trade: Türkiye 

Located along the Anatolian plateau of West Asia is Türkiye. It forms a land bridge that links Iran, the Caucasus (Russia, Georgia, Azerbaijan, and Armenia), and the Levant (Iraq and Syria) with southeastern Europe (Greece and Bulgaria). Thus, Türkiye is at the crossroads of three continents (Asia, Europe, and Africa), converging across the Mediterranean Sea. Thus, it is a Eurasian Bridge.

• The EU is Türkiye’s largest trading partner, accounting for nearly half of Türkiye’s total trade.
• Conversely, Türkiye became the EU’s 5th largest trade partner in 2023, representing 4.1% of the EU’s total trade in goods with the world. 
• Turkey has been in a Customs Union with the EU since 1995, which allows for the free movement of industrial goods between Turkey and EU member states.
• The EU-Türkiye bilateral trade hit a record high of nearly €206 billion in 2023. EU’s exports of goods to Türkiye totalled €111 billion in 2023. The EU’s imports of goods from Türkiye amounted to €95.5 billion
• Türkiye exports machinery, vehicles, and textiles to the EU, but the EU also exports high-tech machinery, chemicals, and agricultural products to Türkiye.
• In addition, Türkiye serves as a transit country for energy supplies from the Middle East, the Caspian Sea, and Russia to Europe. Key oil and gas pipelines that transit Türkiye include the Baku-Tbilisi-Ceyhan (BTC) Pipeline, the Southern Gas Corridor, and the Blue Stream Pipeline.

EU-Eurasia Trade: Central Asia

Central Asia is at the intersection of Europe, Asia, and the Middle East. It historically served as a key region along the Silk Road, facilitating trade between East and West. It also shares borders with major powers, including Russia, China, and Iran, enhancing its geopolitical significance.

• Central Asia’s key countries (Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan) have growing trade ties with the EU.
• The EU is one of Central Asia’s largest trading partners, with Kazakhstan being the dominant player, accounting for more than 80% of the region’s trade with the EU.
• Therefore The total trade volume between the EU and Central Asia reached approximately €52.8 billion in 2023, with Kazakhstan accounting for €42.4 billion (80%).
• EU exports to Central Asia: Machinery and equipment, vehicles, pharmaceuticals, and consumer goods.
• The EU imports oil, gas, metals, uranium (especially from Kazakhstan), agricultural products, and textiles (Uzbekistan) from Central Asia.
• Enhanced Partnership and Cooperation Agreements: The EU has signed EPCAs with Kyrgyzstan, Kazakhstan, and Uzbekistan. The agreements seek to boost trade, investment, and political cooperation between the EU and Central Asia.
• Energy: Kazakhstan and Turkmenistan are crucial energy suppliers for the EU. Projects like the Trans-Caspian Pipeline (under discussion) could facilitate direct gas supplies from Central Asia to Europe, bypassing Russia.
• Connectivity: In 2021, the EU established the Global Gateway strategy, a counterpart to China’s Belt and Road Initiative, to improve infrastructure connectivity between Central Asia and Europe through investments in transportation, digital, and energy projects.

EU-Eurasia Trade: Caucasus (Armenia, Georgia, Azerbaijan)

The Caucasus is a region spanning Eastern Europe and Western Asia. It is between the Black and Caspian Seas, mainly comprising Armenia, Azerbaijan, Georgia, and parts of Southern Russia. Situated at the junction of Europe and Asia, connecting the Black Sea to the Caspian Sea. Acts as a transit hub for trade routes between Russia, Turkey, Iran, and beyond.

• The EU is the largest trading partner for the Caucasus. Azerbaijan is the dominant player, accounting for over 80% of the region’s trade with the EU.
• Therefore The total trade volume between the EU and Central Asia reached approximately €28.7 billion in 2023, with Kazakhstan accounting for €21.4 billion (75%).
• EU trade with Armenia and Georgia totalled €3 billion and €4.4 billion, respectively.
• Azerbaijan is a key player in the EU’s efforts for energy security. Hosts critical pipelines such as:
  • Baku-Tbilisi-Ceyhan (BTC) pipeline: Transports Caspian oil to global markets from Baku (Azerbaijan) via Turkey.
  • Southern Gas Corridor: Supplies natural gas from Azerbaijan to Europe

EU-Eurasia Trade: Belarus

Belarus lies at the crossroads of Eastern Europe and Eurasia, linking the European Union with Russia and the Caucasus. It shares borders with Russia, Ukraine, Poland, Lithuania, and Latvia, positioning it at the crossroads of European and Eurasian geopolitics.

• EU-Belarus bilateral trade in goods in 2023 hit €9.5 billion, with EU exports totalling €8.1 billion.
• Belarus’ main exports to the EU include wood, mineral products, and base metals. The EU’s main exports to Belarus include machinery, chemicals, and transport equipment.

EU-Eurasia Trade: Moldova

Moldova is at the crossroads of Eastern Europe and the Eurasian region, between Ukraine to the east and Romania to the west. It lies between Russia and the European Union (EU), thus a buffer zone between Russia and the EU/NATO.

• The EU is Moldova’s biggest trade partner, accounting for 53.7% of its total trade in 2023.
• 65.4% of Moldovan exports are destined for the EU market.
• EU-Moldova bilateral trade in goods in 2023 hit €7.2 billion, with EU exports totalling €4.8 billion.
• Key EU exports include machinery and appliances, vehicles, chemicals, and pharmaceuticals. The EU’s main imports from Moldova are machinery, mineral products, and chemicals.

EU-Eurasia Trade: Ukraine

Ukraine sits at the crossroads between Russia and the European Union, making it a critical buffer state in the ongoing geopolitical competition between Russia and the West. It shares borders with Russia to the east, Poland, Slovakia, Hungary, Romania to the west, and Belarus to the north. In contrast, its southern coast is bordered by the Black Sea.

• The EU is Ukraine’s largest trading partner, accounting for 56% of its trade in goods in 2023. Ukraine is the EU’s 16th biggest trading partner.
• Total trade in goods between the EU and Ukraine reached €61.9 billion in 2023.
• The EU’s imports from Ukraine amounted to €22.8 billion in 2023. Ukraine’s main exports to the EU by value include cereals, animal or vegetable fats and oils, ores, slag and ash, oil seeds, and iron and steel.
• However, the EU’s exports to Ukraine include oil, motor vehicles, machinery, electrical machinery, and arms and ammunition.

Challenges in EU-Eurasia Trade Relations

• Geopolitical Tensions: Ongoing conflicts in areas like Ukraine, Transnistria, and Nagorno-Karabakh destabilize the region and affect trade.
• Infrastructure and Connectivity Challenges: Despite China’s BRI, inadequate infrastructure and transport networks between the EU and Eurasia hinder trade.
• Regulatory and Legal Barriers: Differences in regulations, customs procedures, and intellectual property protections between the EU and Eurasian countries make it difficult for businesses to operate across borders.