May 30, 2019
_ Yuri Kofner, Head, Eurasian sector, CCEIS, HSE, Research assistant, IIASA, Editor-in-chief, analytical media “Eurasian Studies”. Nur-Sultan, 29 May 2019.
During the first five years of its existence, the EAEU became an indisputable economic reality in Eurasia. Despite the international pressure and relative youth of the Union, it is bringing concrete benefits to the member states. Generally speaking, two of the so-called “four freedoms” of movement described in integration theory have already been implemented.
First, a common commodity market and a single customs area were established on paper and carried out. The removal of customs posts at the borders between our countries has led to a significant increase in mutual trade, and from 2015 to 2018 the volume of mutual trade increased by 31%. As for the external borders of the Union, the modernised Customs Code (in force since 2018) introduced an electronic declaration and reduced the waiting time for customs clearance to a maximum of four hours (before that, it was possible to wait up to 24 hours).
At the same time, over 2/3 of the common market goods are covered by advanced EAEU technical regulations, which not only ensure the safety and quality of products within the Union, but are also designed so that in the future, it would be theoretically possible to create a common market with the EU.
Second, there is another often-forgotten, but colossal achievement of the EAEU integration – the common labour market. Now all citizens of member states are free to move and work throughout the entire territory of the Union. Regardless of their citizenship, they enjoy the same rights as people in the country where they reside: to get a job without special permission, free ambulance care, medical coverage, the right to family residence and education for children, and the transition of their tax residency to the country of work. On May 28, at the last Eurasian Economic Commission Council in Nur-Sultan, the draft Agreement on the provision of pensions in the EAEU was also approved. This summer, it can enter into force.
Third, we benefit from the “scale effect”: not only through the creation of a large domestic market (184 million people), but also from new opportunities to export to third-country markets. The EAEU allows member states to collectively defend their economic interests abroad. Free trade agreements have already been signed with Vietnam and Iran, an agreement on trade and economic cooperation has been reached with China, as well as memorandums of cooperation were inked with MERCOSUR, ASEAN, and the remaining non-EAEU states of the CIS.
The main problem remains non-tariff barriers hindering the full functioning of the domestic market. Periodically, trade disputes arise between the EAEU countries. This concerns milk, sugar, and transit, for example But this is normal for any integration process. Perhaps our disagreements are a bit more acute due to the similarity and structural features of the economies of the member states. However, all of them are solvable and the latest series of events have underscored that in the end, the parties can still manage to find a compromise.
Another problem is the presence of sanctions and counter-sanctions. In any event, the Agreement on the mechanism for traceability of goods imported into the customs territory of the EAEU, adopted by the Supreme Eurasian Economic Council in Nur-Sultan, is intended to combat the illegal re-export of goods affected by sanctions.
It is always important to find a compromise. Not only between countries, but also between economic agents of the market. For example, at the anniversary summit of the Supreme Eurasian Economic Council, an international Agreement on the Establishment of a Common Electricity Market was signed. Its implementation may lead to the fact that some out-dated power supplies will no longer be competitive. However, the result will be cheaper electricity prices for industry and for ordinary citizens.
By 2025, the EAEU countries plan to create a common oil and gas market. In this regard, the Belarusian side is very concerned about the so-called Russian tax manoeuver – the abolition of export duties (which previously went to the budget of the Republic of Belarus) and the introduction of a tax on crude oil production. In exchange, the government of Russia offers its companies compensation for oil refining. Since the EAEU operates under the principle of fair competition and common rules for the provision of subsidies, a compromise solution could be the expansion of these compensations to the Belarusian refineries, perhaps in the framework of the Union State.
Integration is like riding a bike. Barriers and disputes have always existed, and always will. To spin the pedals is to work on their elimination. It is always necessary, otherwise we will fall down. However, and most importantly, we see the desire of the leaders of our countries to take into account the interests of each other and agree on a mutual basis. And it’s okay if we delay everything a little with deadlines. Integration should be high in quality, rather than for show, per se.
In a quarter of a century, the modern idea of Eurasian integration has emerged. The EAEU countries have pursued a thorny path with many starts and stops during the first five years of de facto integration. Much has already been achieved – first and foremost, a common market for goods and labour. More needs to be done – common services markets, digitalisation, industrial corporation, institutional renewal, and the Greater Eurasia project. Nevertheless, the last five years have shown the correctness of the chosen path, which presents us with new peaks and new horizons. It’s only the beginning.
Source: http://valdaiclub.com/Author : Kofner