The EEU needs to tie up loose ends

Or the Eurasian Economic Union might face significant problems

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Strengthening the integration of the Union and getting rid of the trade bans on Russia are the main goals for Belarusian EEU representatives this year. The Eurasian Economic Union (EEU) treaty which united three countries forming an integrated single market came into force on January 1, 2015. In the beginning of this year Armenia joined the union, there is also reason to believe that Kirgizstan might also be joining the EEU in March.

The treaty has just come into force only recently but is already showing signs of disintegration.

Recently the government of Kazakhstan stated that it could possibly ban imports on Russian goods due to the fact that devaluation of the ruble makes the goods too cheap for the Kazahstan markets. It appears that this fall in prices will make domestic manufacturers unable to withstand the competition. For the time being, on March 5 it was announced that there will be a limit set on imported oil products from Russia for 45 days (due to devaluation Russian fuel is a lot cheaper in comparison with domestic diesel fuel and gasoline).

Devaluation has also had a negative influence on the financial health of several Belarusian companies. The Belarusian government suggested the companies do business with Russia in dollars instead of rubles.

It seems that despite the loud statements made by politicians the integration may fall apart.

The Belarusian side is worried by these tendencies.

“Dear colleagues, let’s be honest. Today our Eurasian “house” is, of course, a strong structure of international magnitude. This fact cannot be denied even by our adversaries. But it appears we rushed the construction of the house and there are some flaws in it. These flaws were incorporated directly into the certificate of acceptance, in other words, they were included in the treaty as “transition periods” which could go on until 2025,” said the Belarusian Prime Minister Andrei Kobyakov on February 6 during the first session of the Eurasian Intergovernmental Council .

According to the PM of Belarus other shortcomings were “hidden defects” in the form of bans against Belarus on good imports and transit which were discovered at the end of 2014.

“For the Eurasian Economic Commission the flaws were concealed so well, that the heads of state had to get involved in order to clarify the functions and powers of the commission in ensuring that the fundamental principles of the EEU were enforced,” noted Andrei Kobyakov.

“Moreover, even the base of the construction – which is free movement of goods – is not monolithic,” added the PM.

At the end of last year there were around 600 different exemptions and restriction in the Eurasian troika. Andrei Kobyakov noted that there is no decline in the tendency and on the contrary it is on the rise.

Belarus, which will be presiding in EEU in 2015, intends to work hard to eliminate the defects. Andrei Kobyakov gave some insight into how he plans to achieve this goal.

The Eurasian Economic Commission (EEC), a supranational governing body, has been assigned several task. In particular, one of the tasks is to resume work on the list of exemptions and restrictions in the nearest future and a report on it must be made at the next session of the Intergovernmental Council.

The EEC needs to provide an analysis of the implementation of the agreed upon policy in the industrial and agricultural sectors along with specific conclusions and proposals to all four member-states. The Belarusian side also noted lack of real action in terms of measures in import substitutions in the EEU.

Another important topic concerning national economy was raised by the PM: “It’s time to figure out the future for the label “made in the Eurasian Economic Union”. All member-states, including Belarus, are not quick to follow through with this idea. First we have to find an answer to the question: which domestic producers will be the ones whose products will be marketed by joint efforts within the EEU and outside of it. We believe that this issue requires close scrutiny,” said the Belarusian Prime Minister.

Before April 1 the EEC has to come up with a plan on how to develop export through joint forces (this may include measures to support export, development of joint distribution networks, utilization of goods and services by member-states in the framework of large investment project in third countries, etc.)

Andrei Kobyakov also noted that another problematic topic was unilateral prohibitions and restrictions imposed by Russia on Belarusian products. The PM demanded that the EEU look into the reasons which brought on such a situation.

“Previous experience shows that we need to work out a common mechanism for the Union to function in circumstances where one of the members has to impose unilateral measures to protect the domestic economy against third countries,” noted Anrei Kobyakov. In relation to this the Belarusian side expects concrete proposals for a revision of the legal framework of the EEU to be put forward.

Such a great number of problems within the EEU have, naturally, brought about discussions concerning the supranational governing body of the Union. It would be reasonable to conduct a thorough analysis of the role and powers of the EEC in these matters. It would also make sense to give more responsibility to board members of the EEC. They should be the ones making the calls and initiating investigations when the rules of the Union are broken.

The Belarusian side hopes that the report by the EEC will hold the member-states responsible for not fulfilling the conditions of the agreement and the board members of the EEC for failing to effectively carry out their duties.

The plummeting Russian ruble has caused problems for all the countries in the EEU, especially for Belarus as they are in closer ties.

Andrei Kobyakov admitted the fact that the Belarusian side doesn’t have any readymade recipes for carrying out a common macroeconomic policy despite the fact that “current events in the region and in the world require coordinated actions”.

“I think the government agencies who typically handle these matters (Ministry of Economy and National Banks) should be involved in solving the problems as soon as possible,” noted the PM.

Another important topic for Belarus is entering the WTO. The Belarusian side will readily provide the necessary information for negotiations to take place.

In 2002 Member-states of the EurAsEC had already agreed to work together towards entering the WTO. At that time tariff commitments made by Russia were the foundation base; there were “no other agreements in force”. In connection with this Andrei Kobyakov noted that “if the Belarusian side doesn’t know about progress being made in the negotiations between her partners and the WTO, Belarus can consider itself free of making any additional commitments related to other member-states entering the WTO”.

 

Original text from belmarket.by