EDB: Integration agreement between EU, EEU possible by mid-2020s

MINSK (BelTA) – It is essential to step up efforts to normalize and develop relations between the European Union (EU) and the Eurasian Economic Union (EEU) with the aim to reach a comprehensive integration agreement in the long run, reads the report “European Union and Eurasian Economic Union: Long-Term Dialogue and Prospects for Agreement” based on the results of the joint project “Challenges and Opportunities of Economic Integration within a wider European and Eurasian Space” by the Center for Integration Studies of Eurasian Development Bank (EDB) and the International Institute for Applied Systems Analysis (IIASA, Austria), BelTA learned from the EDB press center.

The conceptual framework of the common economic space “from Lisbon to Vladivostok” has two planning horizons - a short-term and a long-term one.

“In the short run, it is essential to take stock of the EU-Russia relations. However, to launch an official dialogue between the two unions, it is equally important to get the EU recognize the Eurasian Economic Union and the Eurasian Economic Commission,” reads the report.

Addressing basic political issues is vital to bringing the current conflict to an end. Such efforts though should be reinforced with conceptual analysis of developing the EU-EEU economic relations and searching for practical approaches to achieving that goal, the experts believe.

The underlying assumption of the report is that in the future, the EU-Russia relations will be channeled into constructive frameworks with prospects for lifting mutual sanctions. “The EU-EEU relations should be based on long-term visions and planning,” the report says. According to experts of the EDB Center for Integration Studies, an integration agreement between the two unions will become feasible by the mid-2020s. “To that end, steps are to be taken now to define the forward-looking agenda at the expert level and build an analytical foundation for future negotiations,” the report says with reference to Evgeny Vinokurov, Director of the EDB Center for Integration Studies.

The anticipated EU-EEU cooperation agreement should be comprehensive and take into account a wide range of issues to be covered, the magnitude and structure of relations, and the degree of connectivity between the two unions. Such an agreement can cover many areas of cooperation ranging from trade in goods and services to free capital flows, from the visa-free regime to cross-border and transit infrastructure development, from technical regulations to intellectual property right protection.

The report summarizes the results of the discussions focused on these potential areas of the EU-EEU cooperation and some preliminary proposals formulated in the framework of six high-level roundtables which brought together representatives of the European Commission, Eurasian Economic Commission, and government bodies, as well as leading experts from the EU and EEU member states.

In particular, regarding the trade regime, the experts believe that for the agreement to be beneficial for all the contracting parties, it should not be confined to creating a free-trade area as such (lifting or bringing down import duties). The logic is structured in the following way: a “classical” free-trade area is not favorable for either Russia or Kazakhstan as both countries export mainly primary commodities. Taking into account the structure of their trade flows, Russia and Kazakhstan are not interested in establishing a free-trade regime with the EU in its narrow sense—and the same applies to Armenia, Belarus, and Kyrgyzstan, although to a lesser extent. Concessions in the area of trade in goods should be balanced with counter concessions and progress in other areas. Special attention should be given to non-tariff barriers- the effects of lifting such barriers can significantly exceed those of reducing import duties.

Experts believe that the issue of energy security is fundamental for both the EU and the EEU. In the case of the EU, it is the matter of ensuring uninterrupted energy supply (reliable energy sources and transit infrastructure, fair and predictable prices), while in the case of Russia and Kazakhstan, it is the matter of stable demand (financial and economic security, fair and predictable prices), and in the case of transit countries, it is about stable incomes and deliveries. All the stakeholders are also interested in ensuring environment safety and energy system sustainability.

In the issues of transport and infrastructure the experts say that it is critical to modernize and facilitate further development of main Eurasian (automobile and railway) transport corridors by 2030. There is a wide range of technical solutions for integrating the 1520mm rail system with the 1435mm one. There is also a tremendous potential for developing common electricity markets and transcontinental fiber optic communication lines. In both cases, the key focus should be on regulations, safety, and investments.

Special attention is given to the mobility of people. “In the long run, the ultimate objective is to introduce a visa-free regime. In addition, there are real prospects for organizing large-scale academic exchange and addressing the issues of mobility of cross-border pension flows. However, it is premature to raise the issue of labor migration in the context of the EU-EEU relations at this stage,” the experts believe.

The report has been prepared following the first stage of the international project “Challenges and Opportunities of Economic Integration within a Wider European and Eurasian Space”. The second stage of the project is to be launched in 2017. It will be focused on a wide array of studies aimed at bringing the EU and EEU positions closer while taking into account the relations with China and other major Asian partners.