In 2017, as part of its international research project “Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space” (#InEurasia), IIASA conducted three studies that produced policy recommendations on three key sectors determining the potential for the EU – EAEU cooperation: mutual foreign direct investment; transcontinental transport corridors & logistics; and harmonizing technical barriers to trade and sanitary-phytosanitary measures.
On 6 June, 2018 IIASA’s resulting three working papers were presented in Moscow at the high-level conference “Prospects for a deeper EU – EAEU economic cooperation and perspectives for business”. The event was co-organized by IIASA, the Eurasian Economic Commission (EEC), Russian Union for Entrepreneurs and Industrialists (RSPP) and the Association for European Businesses in Russia (AEB).
Leading policy makers, top-level business executives and renowned researchers from the EU and EAEU discussed both the opportunities and the threats that EU-EAEU integration might bring to the business community in both regions in the next years, as well as the challenges that have to be overcome in order to move forward the Lisbon-to-Vladivostok agenda.
The participants of the conference discussed the following questions:
- Existing challenges and problems in the development of economic integration within the European and Eurasian space;
- Opportunities and potential for engagement in overcoming mutual restrictions and reducing risks and costs for cooperation related to third-country sanctions;
- Potential business opportunities from increased integration of EU and EAEU integration: implementation challenges;
- Development of cooperation between the EU and the EAEU in priority areas (transport, non-tariff barriers, foreign direct investment).
Frank Schauff, Director General, Association of European Businesses; Pavel Kabat, Director General and CEO, International Institute for Applied Systems Analysis (IIASA); Matthias Schepp, Chairman, Russian-German Chamber of Commerce; Michael Emerson, Senior Research Fellow, Centre for European Policy Studies (CEPS); Ambassador, Delegation of the European Union to Russia (1991 – 1995).
Vladimir Salamatov, Director-general, Research Centre “International Trade and Integration”; Alexander Murytchev executive vice-president, RSPP; Chairman of the CIS and CEE International Bank Council; Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs (RSPP), Chairman of the Presidium of the EAEU Business Council in 2018; H.E. Tatiana Valovaya, Member of the Board (Minister) for Integration and Macroeconomics, Eurasian Economic Commission (EEC).
Philippe Pegorier, President, Alstom Russia; Luis Portero, Head of the Trade Section of the Representative Office of the European Union in the Russian Federation; Frank Schauff, Director General, Association of European Businesses; Pavel Kabat, Director General and CEO, International Institute for Applied Systems Analysis (IIASA).
IIASA scientists presented the results of the research undertaken in 2017, and gave policy recommendations on the three key areas of potential further EU – EAEU cooperation: harmonizing technical barriers to trade in the context a hypothetical free trade agreement; foreign direct investment; transcontinental transport corridors & logistics.
The research on technical regulations and standards highlights that the EAEU is already implementing many EU standards as the basis for reforming and modernizing its former GOST regulations and standards. In addition the EAEU is adopting many standards of the international standards organizations (ISO, IEC, ITU), which work very closely in partnership with the European standards organizations (CEN, CENELEC, ETSI), such that international and European standards are to a large degree identical. This means that the legal and technical infrastructure for non-tariff barriers of the two parties is already converging. This makes non-tariff barriers a potentially fertile field for cooperation between the EU and EAEU, which in turn could mean easier access to markets and increased mutual trade. In this case, the potential format and extent of cooperation could extend to include a Mutual Recognition Agreement (MRA) on Conformity Assessment, through to the most ambitious formula (in EU practice) of the Agreement on Conformity Assessment and Acceptance of Industrial Products (ACAA). Such arrangements would in principle ideally form part of a free trade agreement. Such scenarios can be technically specified, but of course they would have to rely on demanding political conditions which today are not satisfied.
Jurij Kofner, research assistant, IIASA, analyst HSE-OECD Centre is one of the co-authors of the resarch report on technical regulations and standards, and participated in the organization of the high-level EU-EAEU event in Moscow. The resarch was assisted by Aleksey Toma and Dzmitry Karmazin, NGO “Eurasian Partnership” (Belarus).
The research on foreign direct investments highlights that investment flows between the EU and Russia, as well as other EAEU member countries, used to be among the most important areas of East-West economic relations. However, in the recent years, the Ukrainian crisis, mutual sanctions, currency fluctuations, and a slow regional growth in the post-Soviet space, along with the fall in trade of goods and services, have led to a steep decline in the FDI flows, particularly in case of Russia. Having analyzed investment flows between Europe and the EAEU member countries, as well as the political and economic factors that affect them, the IIASA research team has come up with both short- and long-term policy recommendations on how to stabilize existing foreign capital investment and ensure its growth in the future. These include, among others, the adherence to already accepted international commitments and disciplines, streamlining and simplifying administrative procedures, a gradual opening of government procurement for foreign-owned companies, and, of course, more transparency.
The research on transport highlights that the ambitious “Belt and Road Initiative” (BRI) is expected to change the nature of connectivity across the Eurasian continent and to bring the traditional and rising markets of Europe and Asia closer together. Over the last four years, cargo flows from China to Europe along the railroad routes through the EAEU, and vice versa, have increased twofold every year. That makes 147,000 containers in 2016. IIASA’s study forecasts further growth of the EU–China cargo turnover carried by railway transport through EAEU countries and sheds some light on the bottlenecks, both in the soft and hard infrastructure, that will need to be overcome to link the EU to China’s and the EAEU’s cooperation on the Silk Road Economic Belt. Among them are differences in gauges, the discrepancy of the requirements established by regulatory enactments (e.g. length of trains), insufficient level of procedural harmonization, and the low development of the Polish railway infrastructure and cross-border points between Belarus and Poland.
Moderator: Vladimir Salamatov, Director-general, Research Centre “International Trade and Integration”, Deputy Minister for Industry and Trade of the Russian Federation (2008-2012).