The Eurasian Economic Union: integration without liberalisation?

ABSTRACT

The Eurasian Economic Union (EaEU) came into being in 2015 with the ostensible goal of increasing integration among its member states. An implicit assumption behind this goal was to further trade liberalisation, at least within the bloc, as a means to promote additional trade. This paper assesses the development of the EaEU against this promise. Going beyond an analysis of the dynamics of mutual trade, the main focus of this paper is to understand the EaEU’s institutional processes, examining if the commitments and framework put in place by the EaEU could actually contribute to trade liberalisation. Focusing on the trade policies at the level of the EaEU and the political economy of protectionism, our assessment is not favourable. In particular, the charge that the EaEU remains a geopolitical rather than economic project rings true, as trade liberalisation has been halting in individual member states and across the bloc as a whole. This reality is further illustrated in the external trade policies of the Union, most prominently in trade agreements concluded with Vietnam, Iran, Singapore and Serbia, and relations with other major trade partners. The paper argues that, in line with often overlooked theoretical predictions, the institutional framework of the EaEU is not robust enough to ensure that integration processes actually deliver on their stated objectives.

KEYWORDS:

• Trade liberalisation
• Eurasian Union
• regional integration
• non-tariff barriers

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. As Te Velde (2011, p. 2) notes, ‘not all regions are formed for economic reasons, yet politicians in all regions are interested in growth effects.’

2. Data taken from the World Bank Services Trade Restrictiveness Index, https://tcdata360.worldbank.org/indicators/trade.stri.stri?country=RUS&indicator=3129&product=0&viz=line_chart&years=2014,2016.

3. The situation was somewhat relieved by granting Kazakhstan a large number of exemptions (Kassenova, 2013), thus operating only a partial customs union from the start.

4. E.g. Interview with Karine Minasian, Minister of the Eurasian Economic Commission, 29 September 2016, http://www.eurasiancommission.org/ru/nae/news/Pages/29-09-2016-1.aspx; ‘Tigran Sarkisian na PMEF-2019,’ 7 June 2019, https://xn—-8sbeibfw3aojl2n.xn–p1ai/eaes/tigran-sarkisyan-v-vosplamenyayushchemsya-mire-%D0%B5ek-ne-hvataet-polnomochij/.

5. See the Data-basis on the functioning of the internal markets, maintained by the Eurasian Economic Commission, whereby of the currently registered 70 obstacles: 38 represent ‘restrictions,’ i.e. situations arising out of gaps in the legal regulation at the EaEU level, 14 represent ‘derogations,’ whereby member states are allowed to depart from the common regime, and 18 represent ‘barriers,’ that is situations resulting from infringements of Union law, https://barriers.eaeunion.org/ru-ru/Pages/obstacles.aspx.

6. ‘Kazakhstan losing $11 million monthly due to Russia’s restrictions on coal transit to Ukraine,’ Astana Times, 11 November 2019.

7. See, Decision of the Eurasian Intergovernmental Council Nr 4 of 30 April 2019, followed by Decision of the Collegium of the Eurasian Economic Commission Nr 104 of 18 June 2019.

8. E.g. Decision of the Collegium of the Eurasian Economic Commission Nr 11 of 22 January 2019.

9. A 2013 assessment of the prospective benefits of an FTA with Vietnam, for example, pointed to a range of disadvantageous effects on Belarus.

10. Vietnamese rice, for example, is subject to a 10,000-ton quota, which is less than 5% of total imports from third countries and applies to long-grain rice, which is not grown within the EaEU.

11. ‘Nikishina: zona svobodnoi torgovli Irana I EAES – novyi shag k sotrudnichestvu.’ Sputnik, 17 May 2018, http://sputnik.by/economy/20180517/1035467217/zona-svobodnoj-torgovli-irana-i-eaehs.html.

12. ‘Armenia shelves Iranian railway project as Azerbaijan steams ahead,’ Eurasianet, 27 July 2018, https://eurasianet.org/armenia-shelves-iranian-railway-project-as-azerbaijan-steams-ahead.