EAEU: from the Idea to the Anniversary Summit
On May 29, Nur-Sultan hosted the anniversary Summit of the Eurasian Economic Union (EAEU), timed to coincide with the 25th anniversary of the Eurasian integration idea and the fifth anniversary of the signing of the Treaty on the EAEU.
The meeting covered a number of important issues, including the implementation of the digital agenda, signing of the Trade Agreement with Serbia, the Agreement on Information Exchange on Goods and International Transportation Vehicles Moving across the Customs Borders of the EAEU and the People's Republic of China (PRC), the main aspects of the EAEU macroeconomic policy for 2019-2020, etc.
The most important message of the last summit was the call of First President of the Republic of Kazakhstan – Elbasy Nursultan Nazarbayev about the need to establish comprehensive economic cooperation between the EAEU and the European Union (EU), the Shanghai Cooperation Organisation (SCO) and the Association of Southeast Asian Nations (ASEAN), as well as to facilitate the implementation of big joint infrastructure projects within the Chinese One Belt, One Road Initiative, which should be perceived as an integral follow-up of the EAEU potential in terms of infrastructure and logistics.
Anniversary Summit of the Eurasian Economic Union.
May 29, 2019, Nur-Sultan (Kazakhstan)
During the meeting, a historic decision was made to award Nursultan Nazarbayev the title of Honorary Chairperson of the Supreme Eurasian Economic Council, which showed high appreciation of the role and personal contribution of Kazakhstan's leader to the EAEU creation, development and strengthening.
As it is known, it was Elbasy who for the first time came up with the idea of Eurasian integration during a lecture at the M. Lomonosov Moscow State University on March 29, 1994. The idea rested on a large-scale project for the integration of new sovereign states on a qualitatively new, pragmatic and mutually beneficial basis. Thus, the leader of Kazakhstan emphasised: “There is a need for a transition to a qualitatively new level of relations between our countries based on a new interstate association, formed on the principles of voluntariness and equality. The Eurasian Union could serve as such a union."
According to the plan of Elbasy, this form of integration was supposed to be a union of equal independent states, where the state interests of each member state would be fulfilled and the whole potential with a clear focus on economic cooperation would be used. Twenty years later, the idea of Eurasian integration paved the way for the creation of the EAEU.
On May 29, 2014, in Astana, the presidents of Belarus, Kazakhstan and Russia signed the Treaty on the EAEU. The same year, Armenia and Kyrgyzstan joined the Treaty. This is how the EAEU was created as it exists now; it removes barriers to the movement of goods, services, capital and labour force, opens up new investment opportunities and prospects for the implementation of big infrastructure projects and citizens of the EAEU get the right to work in any state of the Union on the same conditions as citizens of the state of employment.
By historical standards, quite a short period of time has passed since the establishment of the Union, but it can be already now stated that the idea of the First President has been implemented and continues to develop successfully. The EAEU has been established as an international organisation for regional economic integration. The organisation proved to be effective and viable against the background of the strongest global financial and economic crisis.
Since the EAEU establishment, member states have significantly improved their position in Doing Business 2019. Kazakhstan ranks 28th (+49); Russia, 31st (+31); Belarus, 37th (+20); Armenia, 41st (+4) and Kyrgyzstan, 70th (+32).
The EAEU today is a common market with a population of more than 180 million people who live largely according to the same transparent rules in certain economic spheres, including technical, customs and tariff regulation, with free movement of goods, services, capital and labour force.
The total size of the economy of the EAEU member states is about $2.2 trillion. The total industrial output of the EAEU countries is about $1.1 trillion. Economic indicators show positive development dynamics. Thus, in 2018, the growth of the EAEU's GDP was 1.8 percent. At the same time, this indicator was significantly higher in a number of member states. For example, in Armenia the growth was 6.2 percent; in Belarus, 3.7 percent and in Kazakhstan, 4.1 percent.
Compared to the same period in 2017, foreign trade increased by 20.5 percent, reaching $753 billion. At the same time, exports grew by 29.7 percent. Mutual trade between member states in 2018 reached $59.7 billion, an increase of 10.3 percent from the 2017 level. These results clearly demonstrate the positive effect of integration.
The EAEU is becoming increasingly attractive at the international level. Currently, more than 40 countries of the world have expressed a desire to develop trade and economic cooperation with the EAEU. Preferential trade agreements were signed with Iran and Vietnam and the Agreement on Trade and Economic Cooperation was signed with China. Negotiations on the creation of free trade zones with Israel, Serbia and Singapore are at the final stage and talks are underway with Egypt and India.
Eurasian economic integration clearly demonstrates a modernised type of relations that are based on trust, partnership and similar principles and criteria to economic interaction. The EAEU ensures the principle of sovereign equality, equal rights and consideration of the national interests of the members. The Treaty establishes a clear consensus mechanism for making strategic decisions at all levels, which excludes, along with other measures, any possibility of domination by any state.
The contractual and legal framework of the EAEU is being improved on a regular basis. Thus, on Jan. 1, 2018, the EAEU Customs Code entered into force, the provisions of which were aimed at reducing administrative barriers and ensuring electronic customs declaration. This will accelerate the customs procedures and simplify the life of entrepreneurs.
In May of that year, the Treaty on International Agreements of the EAEU with third countries, international organisations or international integration associations was signed. The Treaty defines the procedure for the conclusion, termination and suspension of international agreements with non-EAEU countries. Targeted activities are underway to implement the work plan for the development of acts to develop the basic Treaty.
The Declaration on strengthening integration processes within the EAEU, signed by the leaders of the EAEU member states on Dec. 6, 2018 in St. Petersburg, served as an important document defining the strategic areas for the development of the EAEU. The document provides for developing integration in the areas established by the EAEU Treaty and further improving and unlocking the EAEU integration potential, as well as expanding cooperation in new economic areas, including ensuring maximum efficiency of the EAEU common market and delivering on business and consumer opportunities; building a territory of innovation and facilitating scientific, industrial and technological breakthroughs; unlocking the potential of integration for people; enhancing citizens' wellbeing and quality of life in the EAEU member states and making the EAEU one of the most important centres of the modern world, which is open to mutually beneficial and equal cooperation with external partners and building a new format of interaction.
The EAEU makes efforts to eliminate barriers in the domestic market. It is clear that you cannot eliminate all the barriers to the free movement of goods at once. Nevertheless, we are working in this area. Road maps serve as an important mechanism for removing barriers in the EAEU domestic market. On Oct. 25, 2017, the meeting of the Eurasian Intergovernmental Council approved the road map for 2018-2019. So far, we have already implemented eight measures out of the 35 provided for by the roadmap and aimed at addressing 17 obstacles. They cover labour migration, taxation, technical and customs regulation, agribusiness and state procurement.
In accordance with the Treaty, ambitious goals have been set before the EAEU. By 2025, there are plans to eliminate barriers in mutual trade and ensure free movement of goods, services, capital and labour force without exemptions. In 2019, a common electricity market will be built. By 2025, there are plans to create common oil and gas markets, as well as a common financial market. There are expectations to establish a supranational financial market regulatory agency headquartered in Kazakhstan.
Given the rapid pace of globalisation, new areas of cooperation appear on the agendas of all countries of the world that require special attention. The EAEU is no exception.
In the digital age, the countries of the Union need a qualitative adaptation to world change. In 2017, the heads of member states approved the EAEU 2025 Digital Agenda aimed at further development of economic integration. In a short time, a legal and regulatory framework has been formed in this area, a special website dedicated to digital transformation has been created, channels for communication with the expert community have been built and creation of a network of competence centres and expert platforms is being worked out. The Kazakh side proposed arranging the activities of the digital initiatives management office based on the International Technology Park for IT Startups in Astana. On the initiative of Nursultan Nazarbayev, Kazakhstan held a Digital Forum in 2018 and 2019 in Almaty aimed at developing digital innovation ecosystems and IT entrepreneurship in the EAEU countries and supporting startups in the digital sphere.
As for the prospects for further EAEU development, it should be noted that external factors and global challenges may become a catalyst for further progress. Among them are the development and application of new revolutionary technologies, a change in the world economic architecture, shift away from globalisation and growth of protectionism. In this connection, the inclusive growth factor is relevant. In the future, an economic model will be built and integration will be beneficial for all member states.
In 2019, the Republic of Armenia is chairing the EAEU. On Jan. 25, Prime Minister Nikol Pashinyan announced the priorities of chairpersonship in the EAEU, including the development of the energy industry, improvement of the transport and logistics infrastructure to stimulate the mutual and external trade of the member states, further implementation of the EAEU digital agenda and cooperation in IT and compliance with the rights of migrant workers and pensioners, as well as creation of an electronic labour exchange. The Republic of Kazakhstan supports the priorities of the Armenian chairpersonship and is making efforts to implement them.
Development of joint cooperation projects is an important area of interaction. Currently, more than 120 innovative projects are being considered in the EAEU in such areas as metallurgy, light industry, agriculture, space and geo-information technologies, etc.
Deepening industrial cooperation expands ties between enterprises of industrial sectors of the EAEU member states, involves a large number of small and medium enterprises in the integration process, creates new production chains and provides an opportunity to pursue a common mutually beneficial marketing strategy in third-country markets.
The implementation of big infrastructure projects is important. At the Supreme Council meeting in Sochi in May 2018, Elbasy Nursultan Nazarbayev proposed organising high-speed rail and road traffic from China to Europe through the EAEU and creating a channel connecting the Black and Caspian Seas. Such bright projects could become symbols of Eurasian integration like Airbus, which became a symbol of European integration.
In general, the EAEU is a young international organisation with enormous potential. In the future, the EAEU may become a self-sufficient pole of attraction and an important partner in regional mega-projects. For this, there is a need to develop close, mutually beneficial relations with the EU, China and other countries in order to achieve the idea of Elbasy about building a large and economically strong Eurasia.
ABOUT THE AUTHOR. Marat Syzdykov – Deputy Minister of Foreign Affairs of the Republic of Kazakhstan.
Statesperson and diplomat. He began his professional career as a teacher at the S. Seifullin Tselinograd State Pedagogical Institute.
He held different government positions, including the Head of Sector of the Analytical Centre of the Security Council of the Presidential Administration, Deputy Head of the Foreign Policy Centre of the Presidential Administration and Minister Counselor of the Embassy of Kazakhstan in Russia.
He has a diplomatic rank of Counselor, Class I.
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