Russia, Belarus, and Kazakhstan signed the historic Eurasian Economic Union which will come into effect in January 2015.
Cutting down trade barriers and comprising over 170 million people it will be the largest common market in the ex-Soviet sphere.
"The just-signed treaty is of epoch-making, historic importance," Russian President Vladimir Putin said.
The troika of countries will cooperate in energy, industry, agriculture, and transport.
"In fact, we are shaping the largest common market in the CIS, with huge production, scientific and technological potential and enormous natural resources," the President added.
Citizens of Russia, Belarus, and Kazakhstan will have the right to work freely throughout the member states without having to be issued any special work permits, Putin said.
Over the last three years, trade within the Customs Union has increased by $23 billion, or nearly 50 percent. At the end of 2013, it stood at $66.2 billion.
Belarus and Kazakhstan are in third place in foreign trade with the Russian Federation, after the EU and China, Putin said.
The Russian leader said that the document brings Russia, Kazakhstan and Belarus to a new level of integration yes lets each individual state fully retain its sovereignty.
“We ensure a close and coherent economic collaboration and cooperation. Today we have created a powerful and attractive center of economic development, a large regional market that brings together more than 170 people. Our union has huge reserves of natural resources, including energy, which accounts for one fifth of the world’s gas reserves and 15 percent of oil reserves,” Putin said.