Russia, Kazakhstan and Belarus signed a treaty creating a vast trading bloc known as the Eurasian Economic Union.
Russian President Vladimir Putin, Kazakh President Nursultan Nazarbayev, who is credited with coming up with the idea of the union in the early 1990s, and Belarussian President Alexander Lukashenko signed the treaty at a ceremony in the Kazakh capital Astana, Reuters reported.
The signing creates a union - due to come into force in January, pending parliamentary approval - that will boast a combined market of 170 million people with an annual GDP of $2.7 trillion.
Russian news agency ITAR-TASS said that devising the provisions of the 700-page treaty had involved 30 different federal agencies in Moscow.
The pact will see the countries “assume commitments to guarantee free movement of goods, services, capital and manpower and pursue a well-orchestrated policy in such key economic industries as energy, production industries, agriculture and [the] transport sector”, the news service said.
The organisation, which was preceded by a customs union for the past four years, will allow citizens of the three states freedom of movement and of labour within the union.
At the signing, Putin described the aim of the union as being “to gain a natural competitive advantage as an economic bridge between the East and the West, between Europe and Asia".
"This document brings our countries to a new stage of integration while fully preserving the states' sovereignty," he said.
Putin also highlighted the large oil & gas reserves the new group would boast, which would add up to a fifth of the world's natural gas reserves and 15% of its oil reserves even though Belarus is not a producer.
The new association has drawn criticism from the West as an attempt to recreate the Soviet Union, a claim denied by Putin in recent days.
"They try to stick this label on us - a label that we are trying to restore an empire, the Soviet Union, make everyone subordinate. This absolutely does not correspond to reality," Putin was quoted as saying on Saturday.
Ukraine, Turkmenistan, Azerbaijan and Uzbekistan all declined to join the new organisation, while Armenia, Kyrgyzstan and Tajikistan said they may join in the future.
Ukraine’s former president Viktor Yanukovich was toppled from power earlier this year after rejecting an association agreement with the European Union and seeking observer status with the new union as part of a drive for closer ties with Russia.
Kiev's new government now plans to sign an association agreement with the EU in the coming weeks, possibly as soon as president-elect Petro Poroshenko is inaugurated, Interfax Ukraine reported.