EU – EAEU neighborhood linkages

_ Yuri Kofner, head, Eurasian sector, CCEIS, HSE; research assistant, IIASA. Moscow, 19 November 2017.

Vassilis Maragos, Head of Unit, DG NEAR, European Commission (EC) stated, that the European Commission is in general open to the idea of enhanced cooperation between the EU – Eastern Partnership countries and EAEU and a potential inter-linkage of integrations in Eastern Europe. [1] However, until yet we have only seen “competing integrations“ in Eastern Europe, rather than “integration of integrations“.

The European Neighborhood Policy (ENP) is a foreign relations instrument of the European Union, which seeks to tie those countries to the east and south of the European territory of the EU to the Union. These countries, primarily developing countries, include some who seek to one day become either a member state of the European Union, or more closely integrated with the European Union.

The Deep and Comprehensive Free Trade Agreements (DCFTA) are three free trade areas established between the European Union, and Georgia, Moldova and Ukraine respectively. The DCFTAs are part of each country’s EU Association Agreement. They allow Georgia, Moldova and Ukraine access to the EU’s internal market and grant EU investors the same regulatory environment in the associated country as in the EU. The agreements with Moldova and Georgia have been ratified and officially entered into force in July 2016, although parts of them were provisionally applied already earlier. The agreement with Ukraine is provisionally applied as well, but has not been ratified yet.

The EU Association Agreements are aimed at helping the signatory states to implement the “aquis communitaire” in order to benefit from the common market.

However, as yet the DCFTA countries (Moldova, Ukraine, Georgia) have shown significant difficulties in complying with the higher European standards.

When thinking about any potential interlinkage between the DCFTAs and the CIS FTA, implementing the rules of origin would be a logical way to proceed.

The “Lisbon to Vladivostok” working group of the German business is regularly conducting meetings with the Chambers of Commerce of Poland and Ukraine to convince them to support deepened cooperation between the EU and the EAEU.  [2]

It would be beneficial, not least by relieving Ukraine and other EaP/DCFTA countries from impossible “either/or” integration choices as Armenia and Kazakhstan examples illustrate, when they maintain and develop economic relations with both the EU or with the EAEU.

Examples of EAEU member states cooperating with the EU

Belarus

In October 2016, the EU and the Republic of Belarus formally launched a Mobility Partnership to ensure a better management of migration flows. Minsk officially abolished visas for EU citizens and Brussels, on its side, introduced visa facilitation measures for Belarusian citizens.

Kazakhstan

Kazakhstan, together with Belarus and Russia, was one of the three founding members of the Eurasian Customs Union (2010), and later, of the Eurasian Economic Union (January 2015). Kazakhstan has traditionally been one of the driving forces behind the Eurasian integration process.

At the same time, in December 2015, the European Union and Kazakhstan signed the Enhanced Partnership and Cooperation Agreement (EPCA). This new agreement, which constitutes the first of its kind signed by the EU with one of its Central Asian partners, elevates relations between the EU and Kazakhstan to a new level. The new Agreement replaces the Partnership and Cooperation Agreement in force since 1999. Its provisional application started on 1 May 2016.

Armenia

In January 2015, Armenia joined the Eurasian Economic Union (EAEU) (with Russia, Belarus, Kazakhstan and Kyrgyzstan). Despite Armenia’s decision in September 2013 not to sign the Association Agreement with the EU, including a Deep and Comprehensive Free Trade Area (AA/DCFTA), Armenia and the EU continue their political and trade dialogue in areas where this is compatible with Armenia’s participation to the EAEU.

In March 2017 the EU and Armenia initiated a Comprehensive and Enhanced Partnership Agreement (CEPA).

Within this agreement, Armenia will try to promote the adoption by the EAEU of the EU TBT and SPS standards, or the implementation of new Eurasian supranational standards, that are compatible with those of the European Union.

The CEPA divides TBT/SPS regulation into three baskets: 1. Supranational legislation of the Eurasian Union, which is not covered in the agreement; 2. Armenia’s national TBT and SPS standards, that ought to be be brought in line with the European level; 3. Unregulated aspects.

The special case with Moldova

In April 2017, the EEC and Moldova signed a Memorandum of Cooperation and Understanding. The heads of the member states of the EAEU welcomed the intention of the Republic of Moldova to obtain observer status at the EAEU and instructed the Eurasian Economic Commission to develop and submit to the next session of the Supreme Eurasian Economic Council a position paper on the status of an observer state.

The long process of granting Moldova the quite modest status of an observer within the Eurasian Economic Union is explained by the Eurasian Economic Commission’s, and especially Kazakhstan’s position, that they do not want to provoke an even deeper divide in the Moldovan society on the decision of the country’s participation in either the European or the Eurasian integration projects. The Eurasian Economic Union does not want to provoke a situation similar to what happened in Ukraine, where one part of the population wanted integration with Europe and another part wanted closer ties to Russia.

Strengthening trade and economic cooperation between Moldova and the EAEU should not be perceived as a “zero sum game”, but rather as conceived within the wider concept of a common economic space from Lisbon to Vladivostok.

As long as the EU does not recognize the international legitimacy and subjectivity of the Eurasian Economic Union, the Eurasian side should not chase after a “mega deal” between the European and Eurasian commissions. Rather, a potentially successful experience of cooperation of the smaller Eastern European countries, such as Serbia, Georgia and Moldova, with both the EU and the EAEU, may pave the way for an agreement between the two unions in the future. (Kofner)

The Association Agreements between the European Union and Georgia, the Republic of Moldova and Ukraine do not exclude the possibility of creating a free trade zone with third parties. However, any such initiative must be approved by the European Union and must not conflict with the provisions of AA/DCFTA.

Similarly, the Treaty on the Eurasian Economic Union (2014) provides for the possibility of establishing free trade zones between the EAEU and third parties (article 7 of the Treaty), and does not prevent the Member States of the Union to sign other international agreements, as long as they do not contradict the purposes and principles of the Treaty (article 114 of the Treaty).

It is technically possible to match the EU and CIS free trade zones by implementing and monitoring “rules of origin”, which would allow to prevent the re-export of European goods to the Eurasian market by illegally marking them as goods from Moldova that would be exempt from customs duties in the EAEU. The “rules of origin” institute is successfully being used worldwide.

The creation of a trilateral commission consisting of representatives from Moldova, the EAEU and the EU could be proposed for conducting consultations and to find a mutually beneficial format of cooperation. A prototype of such a negotiation platform in a scientific and expert format could be based at IIASA.

***

Finally, many Western politicians and experts, when talking about the Eurasian Economic Union, call it a Russian neo-imperialist project. This is unfair and incorrect, since; firstly, all EAEU member states have an equal voice in the governing bodies of the Union – the High Eurasian Economic Council and the Council of the Eurasian Economic Commission. All decisions are based on a consensus. Secondly, modern Eurasian economic integration was proposed and initiated not by Russia, but by Kazakhstan as early as 1994.

Notes: 

  1. Kofner J, Balás P, Emerson M, Havlik P, Rovenskaya E, Stepanova A, Vinokurov E, & Kabat P (2017). High-level consultation meeting on Eurasian Economic Integration. IIASA project “Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space” Workshop Report.
  2. http://www.iiasa.ac.at/web/home/research/researchPrograms/AdvancedSystemsAnalysis/171027-L2V-IIASA.html

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