EURASIAN ECONOMIC INTEGRATION

02-04-2014

Eurasian economic integration milestones:

• In 1995 Russia, Belarus and Kazakhstan signed an Agreement on the establishment of the Customs Union (CU);

• In 1999 three countries concluded an Agreement on the Customs Union and Single economic space (SES);

• In 2000 Russia, Belarus and Kazakhstan established the Eurasian Economic Community (EurAsEC), an international organization that was responsible for efficient promotion of the CU and the SES;

• In 2007 the Commission of the Customs Union became the first joint permanent governing body of the CU;

• Eurasian economic integration process gained impetus during 2010. In January 2010 Russia, Belarus and Kazakhstan launched the CU within EurAsEC by coordinating tariff and non-tariff regulation;

• In July 2010 three countries eliminated customs clearance procedures and all customs restrictions on the goods exchanged between them as well as commenced to pursue a uniform tariff policy toward non-member nations;

• In July 2011 the CU of Russia, Belarus and Kazakhstan became fully operational with the customs control having been transferred to the external borders of the CU and the Customs Code of the CU entering into force;

• 17 treaties establishing SES came into force on the 1st of January 2012;

• The Eurasian Economic Commission, a supranational body that is in charge of all integration processes, started functioning as of February, 1, 2012.

Key stages of Eurasian economic integration

• CIS Free Trade Area: customs duties and economic restrictions are not applicable in mutual trade between CIS countries (except for trade remedies) with specific exemptions

• Customs Union:

• common customs territory of Russia, Belarus and Kazakhstan with population of approximately 170 million people (which accounts to 2.5% of world population), total GDP of 2,7 trn. US$ (4 % of world GDP) and with free movement of goods both produced in the CU and imported from 3rd countries. Total volume of external trade equals 913 bln. US$.

- uniform customs tariff (January, 2010);

- unified customs regulation and customs procedures (July 2010);

- a unified regime for trade with third countries.

• Single Economic Space:

- common economic regulation procedures;

- common infrastructure;

- coordinated tax, monetary and customs policies;

- free movement of goods, capital, services and labour force.

• Eurasian Economic Union: the Declaration on Eurasian Economic Integration signed in November 2011 defines the goals of our integration. This document may be considered as a sort of ‘roadmap' with an ultimate objective of establishing the Eurasian Economic Union.

Eurasian Economic Commission

• The Eurasian Economic Commission (the EEC), a single permanent regulatory body of the CU and SES, started its activity as of February, 1, 2012 on the basis of the Treaty on the Eurasian Economic Commission signed by Russia, Belarus and Kazakhstan in November 2011.

• The EEC has replaced the Customs Union Commission. In accordance with international agreements it acquires supranational functions.

• The EEC shall gradually take over powers from each of the countries. In accordance with the Treaty establishing the EEC (article 3) the Commission operates in the spheres of tariff and non-tariff measures, technical regulation, sanitary and phytosanitary measures, statistics of external and mutual trade, competition policy, industrial and agricultural subsidies, energy sector, government procurement, transportation, monetary policy, intellectual property rights, labour migration, services and investment, financial markets.

• The main objective of the EEC is to "ensure conditions for the CU and SES operation and development as well as to elaborate economic integration initiatives within the framework of the CU and SES.

Bodies of the CU and SES

• The Supreme Eurasian Economic Council comprises the heads of state or government of the Customs Union member states. It defines the strategy and the objectives of further development of the CU and the CES.

• The EEC is a two-level body with the Commission Council uniting deputy prime-ministers and the Board of the Commission, a working body to which member-states delegate their representatives in the capacity of international independent officials. The EEC ensures functioning and development of the CU and SES, elaborates economic integration initiatives. The EEC Departments and consulting bodies assist in interacting with national authorities.

• The EurAsEC Court is a dispute settlement body.

Members of the Commission Council and the Board of the Commission

The Commission Council: Igor Shuvalov (Russia), Sergey Rumas (Belarus), Baktyzhan Sagintaev (Kazakhstan).

The Board of the Commission is headed by Chairman of the Board Viktor Khristenko (Russia) and comprises eight commissioners:

Tatiana Valovaya (Russia) is a member of the Board in charge of integration development and macroeconomics;

Valery Koreshkov (Belarus) is a member of the Board in charge of technical regulation;

Danial Akhmetov (Kazakhstan) is a member of the Board in charge of energy and infrastructure;

Andrey Slepnev (Russia) is a member of the Board in charge of trade;

Sergey Sidorsky (Belarus) is a member of the Board in charge of industry and agriculture;

Nurlan Aldabergenov (Kazakhstan) is a member of the Board in charge of competition;

Vladimir Goshin (Belarus) is a member of the Board in charge of customs cooperation;

Timur Suleimenov (Kazakhstan) is a member of the Board in charge of economics and financial policy.

The EEC acts within the powers provided by the Treaty on the EEC, international agreements forming the legal base of the CU and SES as well as decisions of the Supreme Eurasian Economic Council.

Areas of Competence of the Eurasian Economic Commission under the Treaty on the EEC:

• tariff and non-tariff regulation

• customs administration

• technical regulation

• sanitary, veterinary and phytosanitary measures

• enrolment and allocation of import customs duties

• establishment of trade regimes with third countries

• statistics of external and internal trade

• macroeconomic policy

• competition policy

• industrial and agriculture subsidies

• energy policy

• natural monopolies

• state and municipal procurement

• internal trade in services and investment

• transport and transportation

• currency policy

• intellectual property and copyright

• migration policy

• financial markets (banking, insurance, foreign exchange market, stock market)

• other areas

The decisions in the EEC are taken unanimously.

The EEC is currently dealing with the task of codification of the EurAsEC, CU and SES treaties and agreements with an aim of conclusion of a comprehensive treaty of the Eurasian Economic Union by 2015.

The Customs Union and Single Economic Space are open to accession by new participants.

Eurasian economic integration and WTO

· All the economic integration processes on Eurasian space are based on the regulations and principles of the WTO. In order to ensure that the Russian Federation and other potential WTO members are able to implement and comply with WTO provisions on those issues where Customs Union Bodies were the competent authorities, the Customs Union Parties had concluded a Treaty on the Functioning of the Customs Union in the Framework of the Multilateral Trading System (entered into force in July 2012). According to this Treaty from the date of accession of any Customs Union Party to the WTO the provisions of the WTO Agreement become an integral part of the legal framework of the Customs Union.

EurAsEC prospects

· In respect of Eurasian Economic Community (EurAsEC) our countries agreed to carry out a stock-taking of this organization, to keep the positive momentum created in EurAsEC, on the one hand, and to make it possible for the states that are currently not in the Customs Union and Single Economic Space (Tajikistan and Kyrgyzstan) to be promoted to a higher level of integration.

Cooperation with third parties

· The CU states are interested in close cooperation with key international players. The above-mentioned Declaration confirms our intention of further consolidation of comprehensive, mutually advantageous and equal cooperation with other countries and integration organizations including the EU that would entail creation of common economic space.

· The joint Customs Union delegation currently participates in free trade negotiations with European Free Trade Association (EFTA), New Zealand and Vietnam.