What is the Eurasian Economic Union (EAEU)?

_ EEC. Moscow – Astana, August 2017.

The Eurasian Economic Union (EAEU) is an international organization of regional economic integration, under which freedom of movement of goods, services, capital and labour is provided for.

The Treaty on the Eurasian Economic Union was signed on May 29, 2014 at a session of the Supreme Eurasian Economic Council in Astana and entered into force on January 1, 2015. The Treaty on the Union is a legal and regulatory basis for the functioning of the EAEU. This is a single core document developed by taking into account the best international practices.

In developing the Treaty on the EAEU, the work on systematization of international treaties concluded within the framework of the CU and SES was conducted: contradictions were excluded, existing rules were optimized and updated, gaps were filled, and a single conceptual framework was formed. The Treaty included rules and regulations of the EurAsEC that meet the goals and objectives of the Union to ensure freedom of movement of goods, services, capital and labour. Provisions of the contractual and legal framework of the CU and the CES were brought into conformity with the WTO rules and regulations.

The Treaty contributes to free movement of goods, services, capital and labour, a coordinated, agreed or common policy in the economic sectors stipulated in the Treaty and international agreements within the Union.

The Eurasian Economic Union was founded on the principles of international law which, among others, include a principle of sovereign equality of the member states, respect to the specifics of the political set-up of the members to the association, ensuring the mutual benefit in the cooperation, observing the market economy principles and its functioning (as a rule) without exemptions and restrictions.

The Union is an international organisation of regional economic integration and has international legal personality. Previously, the Customs Union and the Common Economic Space functioned within the institutional framework of the Eurasian Economic Community (EurAsEC) only. Thus, the Eurasian Economic Union is becoming a significant element of the global economic architecture. The Treaty stipulates that the Union has the right to perform, within its jurisdiction, international activities aimed at addressing the challenges faced by the Union. The Union can cooperate with states, international organisations and international integration associations. Jointly with the Member States, the Union can also conclude international treaties with the above organisations on any matters within its jurisdiction.

Rules on the correlation of the Treaty on the EAEU with other international agreements of the Member States, on its registration in the UN Secretariat, provisions on the accession to the Treaty and withdrawal from it, as well as provisions on observers at the Union were adopted.

From the point of increasing the level of transparency, balance and quality of the supranational regulation and developing the institutional measures to improve the business climate, it is extremely important for the new internal procedure of assessing the regulatory impact of draft decisions by the Eurasian Economic Commission that might affect the environment of entrepreneurial activity to be fixed in the Treaty on the EAEU.

The Principle of four “freedoms” as a fundamental principle of the Union’s operation enshrined the refusal to apply safeguard measures for domestic market in mutual trade. Completion of the formation of the single goods, services, capital and labour market is the purpose of the Eurasian integration at this stage, which is characterized by a deeper integration as compared to the Customs Union and the Common Economic Space.

The Union countries defined the directions of deepening the integration. For example, under the provisions of the Treaty on the EAEU, 81 obstacles have been eliminated from January 1, 2015. Continuing its work in this direction, the Commission published in March 2017 the White Paper, a report that reflects the results of the EEC work aimed at removing barriers, exceptions and restrictions for the implementation of the four “freedoms” in the internal market of the Union. Methodological approaches to the classification of obstacles are indicated, specific examples of their elimination are described, and priorities for further activities in this direction are outlined.

The Treaty on the EAEU defines the legal basis of a single market of services. A common market condition predisposes a non-application of restrictions measures and a national regime to services, as well as preferential treatment towards enterpreneurs from the other member states. There is also automatic recognition of authorization documents and cualification requirements of entities’stuff. In addition to it, services are provided within the territory of the Union without an additional establishement of legal entity.

The leaders of the Union countries agreed to conduct a coordinated policy in the field of energy and to establish common markets for electric power, gas, oil and oil products. The Treaty on the EAEU provides for this task to be implemented in several stages and finally performed by 2025: establishment of a common energy market of the Union and ensuring access to services of natural monopoly entities in the electricity sector is expected to be completed by 2019, common gas, oil and oil product markets – by 2025.

The Treaty established general provisions for conducting technical regulation in the EAEU. Thus, one of its main principles is the establishment of unified binding requirements for products and related processes (from design and production to disposal). Such requirements are established in the technical regulations of the Union. By July 2017, the list of adopted technical regulations of the Eurasian Economic Union included 44 documents, 35 of which entered into force. The number of standards contained in the lists to the technical regulations of the EAEU exceeded 11,000.

The Treaty defined development of common markets of medicines and medical products in the EAEU space. The documents necessary for launching their operation were completed in 2016. They are based on a set of important principles, including harmonization and unification of the requirements of national legislation, ensuring the unity of mandatory quality requirements, efficiency and safety of medicines and medical products, adoption of common rules for their circulation, etc. The main mechanisms of the common markets were launched in May 2017, which became a socially significant event and allowed eliminating unnecessary administrative

barriers to free movement of quality and affordable medicines and medical products in the Union. Common markets operate on the basis of the decisions of the Commission that establish, among other things, common rules for registration, research, and other rules and requirements governing individual stages of circulation of medicines and medical products. In May 2017, the Commission Council approved a list of the “third level” regulations on the common markets of medicines and medical products within the Union, which provides for approval by the Commission of another 25 documents in 2017–2019.

The EAEU Customs Code is a unified set of rules for execution of foreign economic activity in the Union, a progressive document promoting simplification of customs formalities and, as a consequence, improvement of the business climate.

In 2016, a large-scale work on the draft Customs Code of the EAEU was completed, which was conducted by the Commission and public authorities together with the business community of the Union countries. The EAEU CC is one of the key documents constituting the regulatory legal framework of the Union. The Treaty on the Union stipulates that the association should have unified customs regulation under the EAEU CC and international treaties covering the scope of the customs regulation.

The new Customs Code is focused on paperless workflow and the use of modern software and hardware at all stages – from filing a declaration to the release of goods. This will significantly save the resources of the business community, accelerate the process of customs clearance and minimize the contact of foreign trade operators with officials.

The Treaty on the Customs Code of the EAEU was signed on April 11, 2017, and currently internal procedures are being implemented in the countries of the Union. The Code should come into force on January 1, 2018.

The Treaty on the EAEU defines main priorities and tasks of coordinated (agreed) transport policy of the Memeber States of the EAEU to maintain economic integration, stepwise formation of the common market for transportation services and the single transport space on the principles of competition, transparency, safety, reliability, accessability and ecology.

In December 2016, the Heads of the Union States approved a strategical document – the Main directions and steps of the coordinated (agreed) transport policy. Its implementation will help to cancel limits for any transportaton in the EAEU until 2025.

An agreement was reached on formation and implementation by the Member States under the coordination of the EEC of an agreed agroindustrial policy. Forecasting in the agroindustrial complex, state support for agriculture, regulation of the common agricultural market, uniform requirements for product manufacture and circulation, development of agricultural products and food exports, scientific and innovative development of the agroindustrial complex, as well as integrated information support for agroindustrial complex are main directions of the agreed agroindustrial policy.

It is important that the implementation of policies in other areas of integration cooperation, including sanitary, phytosanitary and veterinary and sanitary measures in respect of agricultural products, be carried out taking into account the objectives, tasks and directions of the agreed agroindustrial policy. It is aimed at ensuring the development of the agroindustrial complex and rural areas in the interests of citizens of each Member State and the Union as a whole, as well as economic integration within the EAEU.

In accordance with the Treaty on the EAEU, this activity involves development of measures and mechanisms of interstate cooperation to deepen integration processes and the sustainable development of agroindustrial complex.

With regard to industrial policy, the Treaty substantially expands the contractual and legal framework of the CU and the CES, which earlier only regulated issues of providing industrial subsidies. Goals, objectives, principles and mechanisms of industrial cooperation in the Union have been defined. It is also provided that when developing and implementing policies in trade, customs and tariff regulation, competition, technical regulation, business development, transportation and infrastructure, in state procurement and other areas, the interests of industrial development of the Member States shall be taken into account.

n accordance with the Main Directions of Industrial Cooperation within the EAEU adopted by the Heads of Governments, the industrial policy implemented in the Union is focused on joint development by the Member States of new types of export-oriented products, including by deepening cooperation, increasing localization of production and promoting import substitution; creation of new production chains and innovative industrial sectors; production modernization in traditional industries; building-up jointly manufactured high-tech products export. For these purposes, the Treaty provides for and has already implemented tools and mechanisms, such as the Eurasian technology platforms, the Eurasian Subcontracting Network and the Eurasian Technology Transfer Network.

To maintain regulation and development of the common financial market of the Union, it has been planned a creation of supranational instrument in 2025. The Member States shall determine its powers and functions after the termination of the gradual harmonization of legislation.

The effective functioning of the EAEU is impossible to imagine without conducting the coordinated macroeconomic policy, which provides for the development and implementation of joint actions of the EAEU Member States in order to achieve balanced economic development. The Treaty on the EAEU stipulates that the main directions of the coordinated macroeconomic policy include formation of the common principles of functioning of the economy of the Member States, providing their effective cooperation, development of common principles and guidelines for the prediction of socio-economic development of the parties.

The Treaty enshrines the principles for formation and communication of official statistical information of the Union. In addition, the Treaty provides for vesting the Commission with the powers, such as development and approval of the methodology for compiling official statistical information of the Union on the basis of the official data from the Member States, as well as elaboration in cooperation with their authorised authorities and adoption of the integration development program in statistics sector.

The Treaty brings the countries of the Union to a qualitatively new level of cooperation in the field of labour migration. In order to expand the possibilities for employment, citizens of the Member States have an opportunity to work not only under an employment contract, but also under a civil law contract. In addition, no restrictions established by the legislation of the Member States in order to protect the national labour market are applied.

The issues of direct recognition of education and qualification certificates without any additional procedures and the procedure for recognition of academic degrees and ranks have been formalized.

Currently the Commission in cooperation with the competent authorities of the Member States is actively working on a Contract on Pension Provision of Workers of the Member States. After its signing, the Union citizens will be able to receive pensions for the period of their employment from the Member State, where they worked. All the pension rights acquired in the Union Member States shall be considered in assigning and paying the pension.

The rule for provision of full scope of social insurance for employees and their family members that are implemented under the same conditions and in the same manner as for the citizens of the state of employment is of great importance. In addition, employees and their family members have the right to receive free emergency medical care and rescue emergency care in their territories in accordance with the same procedure and under the same conditions as to the nationals of the state of employment.

In respect of taxes and taxation, it is provided that the Member States of the Union define areas of cooperation in the tax policy for harmonization and improvement of tax legislation, including the mechanism for collection of indirect taxes in performance of works, rendering services, convergence of rates on the most sensitive excisable goods. The principle of non-discrimination lies at the heart of the arrangements. It will make it possible to prevent unfair price competition in mutual trade in goods and services.

As regards the government (municipal) procurement, the Treaty, maintaining the provisions of the contractual and legal framework of the CU and the CES on equal national treatment, clearly establishes that this treatment is available to the Member States. At the same time, the Union will expand the number of methods of procurement. In particular, the request for proposals will be introduced. It gives the possibility to select the best proposal not only by price, but also by other criteria: for example, the time period of work execution, quality of works (qualification of bidders).

For the first time, the parties started to pursue an agreed policy in the Union in respect of consumer protection. Previously, the contractual and legal framework of the CU and the CES did not include such provisions. The Treaty on the EAEU stipulated that this policy is aimed at creating equal conditions for citizens of the Member States to protect their interests against unfair activity of business entities of the Union. It was determined that citizens of the Member States and other people who live there enjoyed the same legal protection in all EAEU countries.

Apart from the content of industry, in the development of the Treaty on the EAEU the tasks of creating the institutional framework of the Eurasian Economic Union were present. The Treaty lays down the structure of permanent bodies of the Union. The Union management bodies system is based on a collective form of decision-making. The main body of the Union is the Supreme Eurasian Economic Council (SEEC), which is composed of the Heads of the Member States. SEEC sessions are held at least once a year. The Supreme Council determines the strategy, directions and prospects for the formation and development of the Union and makes decisions aimed at implementing its objectives. At least twice a year the Eurasian Intergovernmental Council (EIC) at the level of Heads of Government is summoned. At the proposal of the EEC Council, the Council considers any issues for which no consensus was reached during decision-making in the Council session.

The permanent supranational regulatory body of the Eurasian Economic Union is the Eurasian Economic Commission. It is a kind of a supra-national government, with its headquarters in Moscow, where national authorities have transferred some of their powers. The Commission acts in the interests of no particular state, but combines and coordinates the interests of all the Member States of the Union, as the European Commission in Brussels. However, the basic principle of operation is different from the European one – the EEC provides for the principle of equality of the Member States, irrespective of economic power, territory and population.

The Commission includes the Council and the Board. The Council consists of one Vice Prime Minister of each party, decisions are taken by consensus. In the Board, each state is represented by two members, decisions are taken by a qualified majority or by consensus.

The Commission’s decisions have a direct effect on the territories of the Member States of the Union. They do not require additional approval at the national level.

The Commission has broad powers necessary for the implementation of the Treaty on the Union.

The judicial branch is represented by the Court of the Union. Before creation of an independent judicial authority, issues of dispute resolution in the framework of the Customs Union were settled in the EurAsEC Court. The purpose of the Court of the EAEU is to ensure the uniform application by the Member States of international treaties in the framework of agreements concluded with third parties, and decisions taken by the Union bodies. The headquarters of the EAEU Court is located in Minsk.

In 2015, the Republic of Armenia and the Kyrgyz Republic, which led the preparatory work since 2012, accessed to the Treaty on the Union. In terms of the content and the degree of integration the Eurasian Economic Union is the second example of an economic union in the world practice after the European Union.

Thus, on January 1, 2015 a new stage of development of the Eurasian economic integration has begun. Launching the fully functioning Eurasian Economic Union represents not only fixation of a de facto deeper level of economic integration within the Eurasian space in comparison with the stages of the Customs Union and the Common Economic Space, but also assertion of legitimate strategy for the further integration development.

Source: Eurasian Economic Union. Facts and Figures. M.: EEC. 2017. – 80 p.

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