Eurasian Economic Union: a Long Way to Go
Nigmatzhan Isingarin, Acting Secretary General of the Eurasian Economic Union, Doctor of Economic Science
Approaching the end of its first decade, the Commonwealth of Independent States is facing big new challenges, such as the pressing needs to accelerate implementation of the free trade regime, enhance the regional security of the member states and intensify co-operation in other areas.
Now that the differences in approach and attitude towards the integration processes have taken their final shape, these variations are being mirrored by the different paces and levels of integration in the member states, as well as the initiatives and plans of some regional associations. A remarkable trend towards integration is represented by the forthcoming rise of the Russia-Belarus united state, and work is underway to devise the legal and institutional framework for this merger. An emphasis is being put on the implementation of the provisions contained in the Treaty of 8 December 1999.
Meantime, the Central Asian Economic Union is focussing on pressing regional security problems; this does not, however, indicate a withdrawal from the areas of economic, political and social integration. Common ground and ways of coming together are being actively sought by Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova, which are looking forward to benefiting jointly from the vast transport and communications potential of the Europe-Caucasus-Asia route within the GUUAM framework. Co-operation between Belarus, Kazakhstan, Kyrgyzstan, Russia and Tajikistan has been given a new impetus by the signing, on 10 October 2000 in Astana, of the Treaty on the Eurasian Economic Union, and further by the adoption of its detailed provisions on 31 May 2001 in Minsk. The time has now come when the future success of both the Commonwealth and regional organisations depends on whether or not they can cope with a number of common problems that are identical for all of them.
The key issue to be resolved concerns the legal personality of the inter-governmental organisations and steering bodies that have been created to serve the goal of integration. This factor will become increasingly important alongside the integration progress itself. The legal personality of an organisation is said to have been realised when its designated body is fully entitled to represent the organisation during international contacts with other associations and governments.
The next task is to establish a legal/institutional mechanism to ensure that the set objectives and problems of political, economic and social integration are addressed in a consistent, stepwise manner; this needs to be detailed in high-level treaties.
This mechanism should consist of two complementary elements. The first is the internal mechanism comprising the institutional framework and procedures for ratification and implementation of legislative and executive initiatives in the countries concerned, in order to tune the domestic political and economic environment to the integration processes. The second element is the international mechanism, which should include inter-governmental bodies with adequate powers and a legal framework for joint decision making and implementation.
The fact that neither legal personality nor legal/institutional mechanisms have been clearly articulated by the CIS member states has been their key weakness, and is leading the integration process into a dead end. Whilst hundreds of treaties, concepts and memoranda have been adopted within the Commonwealth, none of the countries has provided an adequate mechanism to put these initiatives into effect, and the inter-governmental bodies have not been in a position to control or supervise the process. The decisions adopted in 2000 to enhance the capacity of the CIS bodies did not bring about any development. These problems persisted even in closer, practically-oriented subgroups within the CIS, such as the Customs Union Treaties of 1995 and 1999 and the Treaty on the economic and humanitarian integration of 1996, which involved three or four members.
However, in the EAEU Treaty comprising five member states, some sound provisions (referred to as steps) have been established to ensure the efficient performance of the newly formed organisation.
Step 1. The legal personality of EAEU has been defined in an international context.
In line with the Treaty of 10 October 2000, the member states have constituted an international organisation entitled the Eurasian Economic Union (EAEU). The EAEU has powers which are voluntarily delegated by the member states as provided for in the Treaty. The EAEU has the capacity to execute any of its powers in the territory of the member states, in order to achieve its objectives. The EAEU may establish relations and conclude agreements with countries and international organisations. The EAEU enjoys the rights of a legal entity, particularly, to conclude agreements, acquire and dispose of property, lay matters before a court, open bank accounts and carry out financial operations.
Step 2. The organisation’s goals have been clarified
In line with the Treaty of 26 February 1999, the member states have undertaken to finalise the formation of a Customs Union and set up an Integrated Economic Area based on the Union.
The key objectives of the Integrated Economic Area are to:
• ensure effective and efficient performance of common (internal) commodities, services, capital and labour markets;
• facilitate economic reform with a view to increasing living standards in the member states;
• ensure that uniform tax, credit, finance, trade, customs and tariff policies are pursued by the member states;
• develop integrated transportation, energy and information systems;
• set up uniform and integrated policies of public support for priority industries and co-operate in the production and science/technology areas.
Apart from the above goals, the EAEU is adhering to the goals and tasks outlined in the Treaty on economic and humanitarian integration of 1996.
Step 3. Principles of mandatory involvement in EAEU activities have been established.
Each member state is represented on the EAEU integration steering groups. Any resolution needs to be signed by all the member states, as per the established procedure. The resolutions that are approved are compulsory for all the member states, which have to ensure that necessary national legal framework is in place. Agreements within the EAEU come into effect only after all domestic preparatory procedures are finalised by the member states. The latter precondition is to be strictly observed so as to ensure uniformity of approach and full implementation of the approved initiatives.
Step 4. A more efficient implementation and control mechanism has been defined.
Decisions of the EAEU steering bodies are implemented by the member states through the adoption of the necessary national legal acts. The fulfilment of agreements and obligations is subject to supervision by the EAEU steering bodies within the scope of their powers. The EAEU Integration Committee monitors the adherence to approved initiatives by the member states and drafts proposals regarding the controlling measures, which are to be considered by the Inter-Governmental Council. Thus, a monitoring system has been put in place which enables the supreme integration bodies to assess and compare levels of adherence directly, i.e. based on the actual implementation status, rather than on information from other sources.
Step 5. New approaches towards the unification of legal frameworks.
The Inter-Parliamentary Assembly, which succeeded the abolished Inter-Parliamentary Committee, has been given powers to draft the Guidelines for development of the legal framework, which are to be approved by the Inter-Governmental Council. Unlike some model acts, the Guidelines are meant to provide compulsory patterns, not recommendations. After ratification by the Parliaments, the Guidelines will be incorporated into the national legal systems of the member states, so as to ensure that Union-level decisions have an immediate influence on the domestic political and economic situation. At present, preparation of a draft Treaty on the EAEU Legislation Guidelines is under way, in which a detailed implementation mechanism will be defined.
Step 6. Main criteria of EAEU membership
EAEU membership is open to any country, subject to its consent to be bound by the Treaty of 10 October 2000 and other agreements in effect within the Union, as listed by the Inter-Governmental Council, and its ability and willingness to fulfil the obligations accepted, as judged by the member states. Any member state which fails to comply with the Treaty of 10 October 2000 or other agreements in effect within the Union, may be suspended from participation in EAEU bodies at the discretion of the Inter-Governmental Council. In case of persistent non-compliance with the above agreements, a member state may be expelled from the Union at the discretion of the Inter-Governmental Council, effective from a date to be determined by the latter. Similar provisions are in place for non-fulfilment of financial obligations regarding the EAEU budget.
Step 7. Interaction with international economic organizations
The declaration on the establishment of the EAEU issued by heads of the member states on 10 October 2000 outlined the tasks of the new Union as follows:
• to implement an integrated and uniform customs preference system in foreign trade;
• to establish uniform regulations governing the domestic commodities and services markets;
• to develop a uniform position by the member states in relations with the WTO and other international economic organisations;
• to set up a uniform customs control system based on standardised procedures and rules;
• to enhance economic security at the external EAEU borders, i.e. to fight smuggling and other customs violations;
• to strengthen the defence of the EAEU borders and related infrastructure.
The EAEU may conclude treaties with other countries and international organisations, including the WTO, and act on behalf of the member states; this, however, does not preclude individual WTO membership by any of the states.
The prospect of joining this influential organisation has been discussed in the EAEU for a long time, both at Union and domestic levels. The decision to hold to a uniform position during negotiations over potential WTO membership, which was agreed upon by heads of the member states, appears to be the only sound alternative. Based on a uniform platform, common goals would be achieved in a variety of fields, such as access to the commodity and services markets, tariff initiatives, agricultural development, etc. The Customs Union member states have an excellent chance to enhance their negotiating potential through well co-ordinated joint efforts, given the enormous consumer market that they have. Therefore, a merger of our domestic markets would provide our countries with an extra trump card to be played, while protecting our economic interests in a world context. Primarily, joining the WTO will improve the situation of export-oriented industries. Although success is unlikely to be instant, it is a realistic scenario that, a few years after joining the WTO and removing antidumping barriers, these industries could reach billion-dollar turnovers. On the other hand, failure to achieve a uniform approach towards WTO membership might entail adverse consequences for those sectors of national economies which need to be restructured and protected. The level of competitiveness of domestic businesses must be the key criterion. To open up the internal market to the world without appropriate protective measures, including unification of the member states’ legislation, is effectively to doom a wide range of businesses, especially in the service sector. In this context, the role of integration as a shield for the member states’ economies will be critical.
As a conclusion: the Committee for Integration is interacting with many concerned ministries in the member states; thus, its activities are not limited just to liasing with the Foreign Ministry. The Committee monitors and assesses the implementation of agreements, brings out shortcomings, analyses problems and processes proposals from the member countries. The Committee’s vigour and systematic approach are highly appreciated throughout the EAEU.
Table of contents
Eurasian Economic Union: a Long Way to Go Nigmatzhan Isingarin
Restructuring and Privatisation of Kazakhstan’s Power Industry: Basic Results and Achievements Kenzhemurat Dukenbayev
Development of Mineral Resources in Kazakhstan: a Five Year History Elvira Jantureyeva
Transfer Pricing in Kazakhstan BILL PAGE
Implementing Subsoil Use Contracts: Contractor’s Obligations and Control over their Fulfillment Olga I. Chentsova
Excess Profits Tax in the Republic of Kazakhstan: Methods and Problems Arising when Calculating Excess Profits Tax Anvar Yaushev
Rights to Land for Foreign Citizens, Persons without Citizenship and Foreign Legal Entities in the Republic of Kazakhstan Yuliya Mitrofanskaya, Saida Akhmetova
Court of Arbitration in Kazakhstan: Opportunities and Prospects Pyotr Greshnikov
