On 16 May 2017, Jurij Kofner, director, Center for Eurasian Studies, research fellow, IIASA (Vienna, Austria) gave a presentation at the young experts school “International Cooperation of the Eurasian Economic Union” that took place from 15 to 19 May 2017 at the Embassy of the Republic of Belarus in Moscow. The joint organizers of the young experts school were the Eurasian Economic Commission (EEC) and the Russian International Affairs Council (RIAC). The report was titled – “Prospects and challenges of creating a common economic space between the EAEU anf the EU”.
The presentation contained the results of the three-year international research project IIASA “Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space”.
According to a report by the Eurasian Development Bank, the EU is the second largest trade partner of the Eurasian Economic Union (the trade turnover was equal to 40.8%), coming behind the Asia-Pacific region (42.3%) for the first time in 2016.
The creation of a common economic space between the EU and the EAEU seems to be a mutually beneficial project for both parties. This has been shown by a recent study of the Munich based Ifo-Institute. In particular, in such a case exports from Russia to the EU are projected to increase by 30%, and exports from the EU to the EAEU countries would increase by 60%, resulting in the growth of real incomes especially in the Eastern Europe at a level of 1.2 – 1.8%. At the same it is obvious, that the results will be different for each country – with wins in some economic sectors and losses in others.
The interests of the parties coincide in some areas and do not in others. Brussels would be primarily interested in: 1. establishing a simple free trade zone and the removal of tariff barriers to increase the volume of exports to the EAEU market; 2. the liberalization of the Union’s anti-trust legislation and the enforcement of a national regime for European companies; 3. improving the investment climate in Eurasia. For the Member States of the Eurasian Economic Union a “simple” FTA, however, is not profitable. They are more concerned with increasing FDI and technology transfer needed for the modernization and reconstruction of their own competitive economy. Thus the EAEU would prefer a non-preferential agreement on trade and economic cooperation with a focus on industrial cooperation.
The most promising areas for cooperation between the EU and the EAEU are: energy, transport and communications infrastructure (including the Silk Road Economic Belt), as well as the harmonization and reduction of non-tariff barriers to trade.
After the report there was an open discussion where the young experts posed a lot of questions about the role of the Eastern Partnership, the prospects for the resumption of dialogue between Russia and the EU, and the concept of the Big Eurasian Partnership (BEP).