Removing obstacles in the EAEU’s domestic market (2016-2019)

_ Jurij C. Kofner, non-residential research fellow, Skolkovo Institute for Emerging Markets Studies; editor-in-chief, analytical media “Eurasian Studies”. First published on: Vienna Institute for Security Policy. Munich, 24 December 2019.*

Ensuring the single domestic space for the free movement of goods, services, enterprises, capital and labor is the most basic and simultaneously the most important objective of Eurasian economic integration. The necessary condition for this is the painstaking and systematic effort of removing the obstacles to the Union’s internal market(s), the implementation of which has to be supported with a solid theoretical and methodological base, as well as with the necessary administrative and organizational tools. Despite a growing number of obstacles and limited competencies, the Eurasian Economic Commission is trying to do just that.

To this end, in 2016 the Commission established a separate unit “for domestic markets, informatization, information and communication technologies” under the guidance of a new member of the EEC Board (minister) Karine Minasyan, matched with an intergovernmental “Advisory Committee on the functioning of domestic markets of the EAEU”. Since then, this structural unit established the terminology for categorizing obstacles in the common domestic market, which it has been determining and listing in its “White Book” (Box 1, Table 1). In 2018 the “White Paper” was transformed and made public as an open online register of obstacles in the domestic market of the Union. It is accessible under https://barriers.eaeunion.org. With its help, everyone can get acquainted with the list of barriers, exemptions and restrictions in the EAEU, as well as with the progress in eliminating them.

Box 1.  Defining obstacles

In its “White Book” the Eurasian Economic Commission subdivided obstacles to the proper functioning of the EAEU single economic space into three categories:·

      Barriers are obstacles to free movement of goods, services, capital and labor contrary to union law.

·      Exemptions are exceptions (derogations) from the general rules of the Union’s internal market allowed by union law.

·      Restrictions represent issues that have arisen as a result of gaps in union law.

According to the e-portal, as of September 2019 there were 71 obstacles in the EAEU in total, over the half of which (53.5%) were restrictions due to gaps in union law, 26.8% were barriers contrary to the EAEU Treaty and 19.7% were permitted exemptions (Table 1).

Despite the widespread perception that most of the obstacles are created by the Russian Federation, they were actually distributed between the member states more or less evenly and ranged between 46 to 55. Restrictions prevailed in all countries, accounting for about 2/3 of all obstacles, including in Russia. Most of the same restrictions are found in all of the five member countries at once, since, as already mentioned, they arise due to a lack of union law.

Russia indeed had the highest share of barriers (21.8%) within the structure of its obstacles, which, however, was still lower than the share of its restrictions (61.8%) and not much higher than the average share of barriers in the other member states (17.3%) (Chart 1, Table 1). Most obstacles are found in the following four sectors: technical regulation – 24.3%; energy policy – 18.6%; transport policy – 8.6%; public procurement – 7.1% (Chart 2, Table 1).

Chart 1. Obstacle structure by EAEU member state (2019)

Source: Table 1.

Chart 2. Obstacle structure in the EAEU by sector affected (September 2019)

Source: Table 1.

Bi-annually the Eurasian Intergovernmental Council issues and reviews a Commission report on the registration of new and the elimination of existing obstacles to the functioning of the Union’s domestic market. For almost two years of the e-portal’s existence, 121 appeals about obstacles have been submitted by the business community and individuals. Since May 2018, by decision of the Supreme Eurasian Economic Council, the Commission Council has to monthly review, as a matter of priority, the most sensitive obstacles in the domestic market and discuss measures to address them; after discussion by Advisory Committee on the functioning of domestic markets of the EAEU.

Despite all these efforts, the overall number of registered obstacles increased from 60 to 71 between 2016 and 2018: restrictions increased by 11.8%, barriers by 77.7%, and exemptions by 123.5% (Chart 3, Table 2). This is due to the fact that more new obstacles were identified than existing ones could be removed. For example, in 2018, 15 new barriers were registered, while only 10 could be eliminated. Unfortunately, the effectiveness of this ongoing effort is held back by a reluctant implementation by the member states of the Commission’s acts aimed at eliminating obstacles.

Chart 3. Obstacles to the EAEU’s domestic market (2016-2018)

Source: Table 19.

The Commission also cooperates with the EAEU Court. For example, at the EEC’s request the Grand Collegium of the EAEU Court in October 2017 gave its advisory opinion on the determination of cases in which it is possible for member states to introduce constraints on mutual trade in goods. Three of the court’s judges expressed dissenting opinions, which contained conclusions different from those set out in the advisory opinion of the EAEU Court. This indicates the uncertainty of the provisions of the EAEU Treaty regarding the application of constraints on mutual trade in goods, as well as the need to improve union law in order to prevent obstacles in the common domestic market.

Conclusion

Despite a systematic mechanism put in place to remove existing reported obstacles (barriers, exemptions and restrictions) in the common domestic market of the Eurasian Economic Union, the EEC is struggling with an increasing number of emerging obstacles (from almost 61 in 2016 to 71 in III 2019) paired with a limitation of both supranational competencies and political will by the national governments to open their markets and to grant each other equal treatment. Progress in this respect could be ensured by implementing the following actions over the next five years: 1. by strengthening the Commission’s competencies, funding and manpower; 2. by supporting and accelerating intergovernmental consultations between the relevant national authorities; 3. by enhancing the role of the EAEU Court and giving it more powers; 4. by a generally greater effort of the member states towards ensuring liberalization and market competition.

Annex:

Table 1. Obstacle structure in the EAEU (September 2019)

Obstacle structure by form of obstacle
Obstacles in total 

thereof →

Barriers (B) Exemptions (derogations) (E) Restrictions (R)
71 19 (26.8%) 14 (19.7%) 38 (53.3%)
Obstacle structure by member state
Armenia Belarus Kazakhstan Kyrgyzstan Russia
46 47 51 46 55
B E R B E R B E R B E R B E R
15.2% 13.0% 71.7% 17.0% 12.8% 70.2% 19.6% 15.7% 64.7% 17.4% 10.9% 71.7% 21.8% 16.4% 61.8%
Obstacle structure by sector affected
Sector Number of obstacles Share (%)
Agro-industrial policy 2 2.9%
Domestic market 1 1.4%
Public procurement 5 7.1%
Competition policy 2 2.9%
Tax policy 5 7.1%
Non-tariff regulation 1 1.4%
Industrial policy 3 4.3%
Sanitary, veterinary and quarantine phytosanitary measures 3 4.3%
Customs regulation 2 2.9%
Technical regulation 17 24.3%
Trade in services 3 4.3%
Transport policy 6 8.6%
Labor migration 4 5.7%
Financial markets 3 4.3%
Energy policy 13 18.6%

Source: Official EEC Obstacles Registry. // https://barriers.eaeunion.org/en-us/Pages/obstacles.aspx

Table 2. Obstacles to the EAEU’s domestic market (2016-2018)

2016 2017 2018
Barriers 9 11 16
Exemptions (derogations) 17 37 38
Restrictions 34 37 38
Obstacles in total 60 65 71

Source: Ministry of Economy of the Republic of Belarus.

* The views expressed in the article are solely that of the author and may not represent that of the organizations mentioned.

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