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Abstract
This article analyzes the development prospects and problems for the Eurasian Economic Union (EAEU). It examines issues of integration within the EAEU, as well as interactions with other countries, both CIS (Commonwealth of Independent States) and non-CIS. The main problem of integration within the EAEU is the dominance of redistributive motives over productive ones. This article assesses the extent of Russian oil and gas transfers to EAEU partners and the impact of tax maneuvers on their size. It shows that the creation of mechanisms for redistributing profits within the EAEU will allow a positive economic effect to materialize from free trade agreements with non-CIS countries. The article assesses the risks for the EAEU related to Russia’s introduction of a unilateral ban on food imports from countries on the sanctions list and to the possible establishment of tariffs on trade with Ukraine.
Notes
2. According to the Treaty on Armenia’s Accession to the EAEU (www.consultant.ru/document/cons_doc_LAW_169854/), some commodities are subject to a transitional period, during which the country begins to raise its customs tariff to the level of the Common Customs Tariff (CCT). The transitional period varies depending on the commodity group: from two years for some electric wires and cables (commodity group 8544) to six years for automobiles (group 8703, where the duties increase from 10 to 25 percent) and eight years for meat products (groups 0202–0207, with an increase in duties from 10 to 15, and up to 65, percent) and rice (group 1006, increase in duties from 0 to 11.7 percent).
3. Some integration decisions that are nonoptimal from a purely economic point of view are discussed in Libman (Citation2005).
4. According to Rosstat, Russia’s oil production in 2014 came to 526.8 million tons, of which 223.4 million were sent out as exports, and 303.4 million reserved for domestic consumption. The average annual price of Urals oil in 2014 was $690/ton, with an average annual export duty of $329/ton. Considering that, in practice, export duties are around 90 percent of the maximum possible level due to various exemptions, the annual size of the domestic subsidy can be estimated thus: 0.9 × $329/t × 303.4 mill. t ≈ $90 billion (-5 percent of GDP).
5. If one EAEC country sells energy goods to another without export duties, the latter is underpaying for each unit of goods at an amount equal to the current export duty in the former, obtaining it at a price lower than global prices by roughly the level of the export duty. There is no global price on gas, but freeing Gazprom from export duties when selling gas to Belarus or Armenia lowers the price of its supplies by the level of those duties.
6. See www.belstat.gov.by/olitsialnaya-statistika/otrasli-statistiki/torgovlya/vneshnyaya-torgov lya_2/.
7. See http://stat.customs.ru/.
9. See 366-F3 of October 24, 2013; http://publication.pravo.gov.ru/Document/View/0001201411250011.
10. Much contemporary research shows that nontariff barriers substantially limit trade, and when customs tariffs in mutual trade are zero, it is the decline of these barriers that becomes the main source of growth in domestic turnover of commodities (see Fugazza and Maur Citation2008; Liu and Yue Citation2009; Berden et al. Citation2009).
11. See also McDonald and Sonmez (Citation2004) and McDonald, Thierfelder, and Robinson (Citation2007).
12. For a detailed description of the results of analyzing the effects of possible trade agreements between the EU and countries in the CU, see Knobel’ and Chokaev (Citation2014). For a discussion of issues related to Russia’s integration into a single European economic space, see Mau and Novikov (Citation2002) and Mau et al. (Citation2004). For an assessment of the impact of tariff changes on the flow of goods, see Idrisov (Citation2010) and Knobel’ (Citation2011).
13. The TPP participants are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
20. We might note the following detail: if the EAEU treaty contains 118 articles that, with appendices, cover 361 pages, the Ukraine-EU Association Agreement contains 486 articles that, with appendices, cover more than 2,200 pages.
21. For an assessment of the agreement’s economic consequences for Ukraine, see Movchan and Giucci (Citation2011).
22. What prevented Ukraine from applying European norms, including at the legislative level and without signing any kind of agreement, lies in the plane of political economy. Because of imperfections in the political process, each individual initiative will face opposition from special-interest groups, the decision-making process will be delayed, and there is the possibility, given high levels of corruption, that most of the necessary reforms will be blocked. At the same time, a look at the requirements that have been adopted can effectively prove the impossibility of satisfying the demands of the interested parties. For example, Russia’s similar accession to the WTO and membership in the EAEU help to counteract aggressive lobbying from industry without enabling it to move beyond the requirements adopted (Ornelas Citation2005).
23. See http://www.consultant.ru/document/cons_doc_LAW_121497/?frame=12 [The English version used in this translation is available at http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Commonwealth%20of%20Independent%20States%20FTA%20_Moscow_Russian%20Federation_4–5-2012.pdf].