History of the creation and development of the EAEU: from the EurAsEC through the CU and the Common Economic Space

The Customs Union of Belarus, Kazakhstan and Russia is a form of trade and economic integration of Belarus, Kazakhstan and Russia, providing for a single customs territory within which customs duties and restrictions of an economic nature are not applied in mutual trade in goods, with the exception of special protective, anti-dumping and countervailing measures.
At the same time, member countries of the Customs Union apply uniform customs tariffs and other regulatory measures when trading with third countries. In official documents of the EurAsEC, the name “Customs Union within the Eurasian Economic Community” or, more often, simply “Customs Union” is used. Unofficial names such as “Customs Union of Russia, Belarus and Kazakhstan” are common in the press.

The single customs territory of the Customs Union consists of the territories of Belarus, Kazakhstan and Russia, as well as artificial islands, installations, structures and other objects located outside the territories of the member states of the Customs Union, over which the member states of the Customs Union have exclusive jurisdiction.

As Sergei Glazyev, executive secretary of the Customs Union Commission, stated in October 2011, “after a decade of collapse and degradation, the emergence of a regional Customs Union in the post-Soviet space is a major geopolitical achievement that provides concrete benefits to the economies of states.” According to him, the undeniable benefits of creating a single customs territory are evidenced by statistics on foreign and mutual trade. Thus, the total trade turnover of Belarus, Russia and Kazakhstan in the first half of 2011 increased by more than a third compared to the same period in 2010. There was an explosive growth in mutual trade within the Customs Union, especially in border areas (by more than 40 percent). Revenues from import duties in Belarus and Russia increased by approximately a third, and in Kazakhstan they more than tripled.

Compound

Participants: Full members of the association:

• Kazakhstan (since July 1, 2010)
• Russia (since July 1, 2010)
• Belarus (since July 6, 2010)

Candidates:

• Kyrgyzstan A decision was made to begin the procedure for the republic to join the Customs Union and the Common Economic Space - April 11, 2011
• Application for membership - submitted on May 29, 2013
• Memorandum on deepening interaction with the Eurasian Economic Commission - signed on May 31, 2013

TR CU or TR EAEU?

Separately, it is worth clarifying the issue with the name of technical regulations, because the confusion between “TR CU” and “TR EAEU” is one of the most common “reservations” in the field of technical regulation.

At the moment, there are two types of technical regulations in force in the EAEU: technical regulations of the Customs Union (TR CU) and technical regulations of the Eurasian Economic Union (TR EAEU).

These are absolutely identical documents that have equal legal force and scope. The difference between them is solely in the name.

If you pay attention, until 2014 inclusive, the technical regulations of the Customs Union were published (the latest was the technical regulations for tobacco products), and after 2015, when the EAEU already officially existed, the technical regulations of the Eurasian Economic Union began to be published. And in the future, only EAEU TR will now appear, but the CU TR will continue to operate without renaming.

Creation of the Customs Union

In 1995, the leaders of Kazakhstan, Russia, Belarus, and a little later of Kyrgyzstan, Uzbekistan and Tajikistan, signed the first agreement on the creation of the Customs Union, which later transformed into the EurAsEC.

On October 6, 2007, in Dushanbe, Belarus, Kazakhstan and Russia signed an Agreement on the creation of a single customs territory and the formation of the Customs Union.

Russia, Moscow Sheremetyevo-E airport, arrival hall. Exit for passengers arriving from Kazakhstan - now without customs inspection, due to the introduction of the Customs Union of Belarus, Kazakhstan and Russia

In 2009, about 40 international treaties were adopted and ratified at the level of heads of state and government, forming the basis of the Customs Union.

On November 28, 2009, a meeting was held in Minsk by D. A. Medvedev, A. G. Lukashenko and N. A. Nazarbayev on the creation of a single customs space on the territory of Russia, Belarus and Kazakhstan from January 1, 2010.

In the spring of 2010, disagreements began between the leaderships of the participating countries, and on May 28, the Chairman of the Russian Government, V.V. Putin, announced that the union would begin to operate without the participation of Belarus.

In June 2010, Belarus confirmed that the Customs Union would be launched in a trilateral format with the entry into force of the Customs Code of the Customs Union.

On July 1, 2010, the Customs Code began to be applied in Russia and Kazakhstan.

On July 6, 2010, the Customs Code came into force throughout the Customs Union.

On April 1, 2011, transport control was abolished on the border of Russia and Belarus. It was moved to the outer contour of the borders of the Customs Union.

On July 1, 2011, customs control was abolished at the borders of Russia, Kazakhstan and Belarus. It was moved to the outer contour of the borders of the Customs Union.

On October 19, 2011 in St. Petersburg, at a meeting of the heads of the EurAsEC, it was announced that Kyrgyzstan would join the Customs Union.

In order to ensure the functioning and development of the Customs Union and the Common Economic Space, the Eurasian Economic Commission (EEC) was created. It became the successor to the Customs Union Commission, whose activities, according to Article 39 of the Treaty on the Eurasian Economic Commission of November 18, 2011, were terminated on July 1, 2012.

Practice of application of customs agreements

The actions taken in 2007 to sign a new CU agreement were more successful. Certain contradictions between the parties to the agreement still remained, and complete economic integration did not occur, but the application of customs agreements this time turned out to be beneficial for their participants.

Within the Customs Union, bureaucratic procedures for moving goods across borders have been significantly simplified, and due to competition, their quality has improved. By simplifying and regulating customs procedures, all countries managed to significantly increase trade turnover. Moreover, they increased the volume of foreign trade (for example, Belarus - by almost a quarter).

General information

Sign of circulation of products on the market of the Customs Union

Export

• When exporting goods, a zero VAT rate and (or) exemption from payment (reimbursement of the amount paid) of excise taxes are applied, subject to documentary confirmation of the fact of export.

Import

• When importing goods into the territory of the Russian Federation from the territory of the Republic of Belarus or the Republic of Kazakhstan, VAT and excise taxes are levied by the Russian tax authorities.

When providing work and services on the territory of the Russian Federation, the tax base, rates, collection procedures and tax benefits (exemption from taxation) are determined in accordance with the legislation of the Russian Federation.

In accordance with international obligations within the framework of the Customs Union and the Common Economic Space, 87.95% of the amounts of import customs duties are transferred to the budget of Russia, 4.7% of Belarus, and the rest to the budget of Kazakhstan.

EAEU member countries

By the beginning of 2021, 5 states are full members of the EAEU:

Governing bodies of the Customs Union

Supreme Eurasian Economic Council

The main body of the Customs Union of Belarus, Kazakhstan and Russia is the Supreme Eurasian Economic Council at the level of heads of state of the participating countries of the Customs Union and the Common Economic Space. The council includes heads of state and government of the Customs Union. The Supreme Council meets at the level of heads of state at least once a year, at the level of heads of government - at least twice a year. Decisions are made by consensus. The decisions taken become binding in all participating states. The Council determines the composition and powers of other regulatory structures of the Customs Union.

Eurasian Economic Commission

The Eurasian Economic Commission (EEC) is a permanent supranational regulatory body of the Customs Union and the Common Economic Space. The main task of the EEC is to ensure the conditions for the functioning and development of the Customs Union and the Common Economic Space, to develop proposals in the field of integration within the framework of these associations, to ensure the necessary macroeconomic and foreign economic conditions for the creation of the Eurasian Economic Union by 2015. The Eurasian Economic Commission, operating since January 1, 2012, inherited the powers of the Customs Union Commission in the areas of customs tariff regulation, customs administration and technical regulation. The EEC has two levels of management: the EEC Council and the EEC Board.

The Council of the Commission exercises general management of the activities of the Commission. The Commission Council includes one representative from each country, who is the deputy head of government. The chairmanship is carried out alternately for one year in order of the Russian alphabet by country name. The Commission Council makes decisions by consensus.

The Board of the Commission is the executive body of the Commission. The Board of the Commission consists of 9 members (3 members from each participating country), one of whom is appointed by the decision of the Supreme Council as the Chairman of the Board.

The EEC operates on the basis of the Agreement “On the Eurasian Economic Commission” and the decision of the Supreme Council “On the regulations of the work of the Eurasian Economic Commission” dated November 18, 2011.

Freight transport Asia - Europe

The prospects for the development of the EAEU are, first of all, determined by its geographical location on land routes for the delivery of goods from China and other Asian countries to Europe. The global Chinese project “One Belt and One Road” promises lucrative contracts for transit road transport, and in the future - railway.

In total, about 50 countries in Asia, Europe, Africa and Latin America today show interest in participating in the EAEU and a desire to cooperate with the Eurasian Economic Union in various areas of foreign economic activity.

Find more detailed information about the Eurasian Economic Union on the official website of the EAEU: www.eaeunion.org

Possible expansion of the Customs Union

Existing customs unions

Officials of the member states of the Customs Union have repeatedly stated that they consider this organization as open to the entry of other countries, primarily those belonging to the EurAsEC and the CIS. On February 5, 2013, the Syrian Minister of Economy and Foreign Trade announced that the Syrian government intends to apply to join the Customs Union in the near future.

EurAsEC member countries that have not yet joined the CU

• Tajikistan

In July 2010, President Rahmon stated: “As for Tajikistan’s entry into the Customs Union, we are working on this very seriously.” However, as of July 2012, negotiations on Tajikistan’s accession to the CU have not begun. “We are studying how this affiliation could be beneficial for us. If Kyrgyzstan joins, we will be more confident in the validity of joining the union,” said Tajik Foreign Minister Hamrokhon Zarifi on May 18, 2012. In the EEC's plans, Kyrgyzstan's accession to the CU is not expected until at least December 1, 2013.

• Kyrgyzstan

The Government of the Kyrgyz Republic, at a meeting on April 11, 2011, decided to begin the procedure for the republic’s accession to the Customs Union. By decision of the EurAsEC Interstate Council on October 19, 2011, a working group was created on the issue of participation of the Kyrgyz Republic in the Customs Union. It is planned that by December 1, 2013, the working group will complete an analysis of legislation, foreign trade obligations and the state of the customs infrastructure of Kyrgyzstan, and will also assess the economic effect and consequences of the Republic’s accession to the EurAsEC CU. Based on the results of this analysis, the EEC will send an action plan to the government of Kyrgyzstan with a list of activities necessary for the country to join the CU.

By the end of 2013, Kyrgyzstan will be ready to join the Customs Union of Kazakhstan, Russia and Belarus. Russian Ambassador to Kyrgyzstan Andrey Krutko stated this on February 20, 2013, at the round table “Kyrgyz-Russian relations: positive realities and prospects for cooperation.”

EurAsEC observer countries

• Armenia

In April 2012, Prime Minister of Armenia Tigran Sargsyan expressed the opinion that the country’s accession to the Customs Union “in an economic sense... is inappropriate” and Armenia is looking for “forms of cooperation without the Customs Union.”

On September 3, 2013, President of Armenia Serzh Sargsyan announced the republic’s decision to join the Customs Union.

On November 6, 2013, Armenia signed a Memorandum, which marked the beginning of the process of Armenia’s accession to the CU.

• Moldova

The ruling alliance of the parliamentary majority “For European Integration” and President Nikolai Timofti oppose joining the CU. The accession is supported by the largest opposition Party of Communists of the Republic of Moldova and the extra-parliamentary Social Democratic Party. The latter attempted to initiate a national referendum on Moldova’s accession to the CU. However, the Central Election Commission and the President of the Republic rejected the proposal to organize a referendum. On September 7, 2012, the initiators of the referendum announced their intention to challenge the CEC’s refusal in court. Despite the decision of the Central Election Commission, the opposition party of communists demanded to hold an extraordinary session of parliament on the issue of organizing a referendum on Moldova’s accession to the EurAsEC and the Customs Union. A number of predominantly communist-controlled local councils adopted appeals to the republic's parliament in support of the communist party's position on the referendum. Representatives of the ruling Alliance for European Integration coalition warned that they would reject the communist initiative and blocked it twice, citing parliamentary rules that do not allow convening an extraordinary session during a regular one.

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Liberalization of trade of the Customs Union with third countries

The Eurasian Economic Commission and the CU countries are conducting consultations or negotiations with a number of countries and trade organizations on issues related to the possibility of concluding free trade agreements.

• Türkiye

Russia will be happy if Türkiye wants to join the Customs Union. Dmitry Sergeevich Peskov stated this in an interview with the Voice of Russia radio station. According to Russian economist Mikhail Khazin, Türkiye, by joining, will significantly strengthen the Customs Union. At the moment, Türkiye has no plans to join the CU.

Since 1996, Türkiye has been a member of the European Union customs union. The country is also a member of the Euro-Mediterranean Partnership, including the Euro-Mediterranean Free Trade Area. Since 2005, it has been conducting official negotiations on joining the European Union, which are currently temporarily blocked by Germany due to the actions of the Turkish authorities during mass demonstrations in 2013.

On October 24, 2013, information appeared that Turkey was showing interest in joining the Customs Union. Nursultan Nazarbayev announced this.

• Iran

“The geopolitical position of Iran, its great potential in the field of energy production and transit, its network of railway and road communications, the key and role of Iran at the intersection of the main roads of the region, including the Great Silk Road, the Trans-Asian Railway, TRACECA and North-South transport corridors , a safe and short route for delivering energy to world markets, its efforts and experience in the fight against drug smuggling and terrorism - all this can serve the development and expansion of Eurasian cooperation. We are fully prepared to enhance the potential for cooperation in all areas and are confident that the implementation, growth and institutionalization of Eurasian cooperation is a necessary step and a reliable path to achieving sustainable regional progress, principled and decisive combating challenges and crises in the region and, ultimately, promoting international peace, stability and prosperity." Ali Akbar Salehi said at the forum “Islamic Republic of Iran and Regional Cooperation in Eurasia” held in February 2013.

• India

The Indian leadership intends to discuss with Russia the possibility of signing an agreement on comprehensive economic cooperation with the Customs Union of Russia, Belarus and Kazakhstan, head of the Eurasian Department of the Indian Foreign Ministry Ajay Bisaria said on Thursday. Announced intention to begin negotiations on a free trade area on October 22, 2013

• Vietnam

In a joint statement on September 10, 2012, Vietnam and the EEC announced the positive outcome of preliminary consultations on the feasibility of concluding a free trade agreement between Vietnam and the Customs Union. The parties intend to begin negotiations in the first quarter of 2013.

• European Free Trade Association (EFTA)

On January 14, 2011, negotiations between the countries of the Customs Union and EFTA began in Geneva, which unites four countries that are not members of the European Union - Iceland, Liechtenstein, Norway and Switzerland. The last, fifth, round of negotiations took place on April 16-19, 2012. At the end of 2011, the Customs Union was the sixth in terms of export volume and fourth in terms of import trading partner for the EFTA countries. The free trade agreement is planned to be signed no later than mid-2014. The share of finished EFTA products will become predominant in Russian exports, and the total gain of the Customs Union from the export of such products could reach $9-10 billion per year, including the Russian share in this indicator will be at least 70 percent ($7 billion).

• New Zealand

Prerequisites

The need to create some kind of integration economic association in the post-Soviet space arose immediately as soon as this space became post-Soviet. During the existence of the USSR, the economies of the union republics were highly interdependent. In many production cycles, it was absolutely normal for part A to be made in one union republic, part B to be made in another, and their final assembly was carried out in a third.

Naturally, during the Soviet era there were no problems with the movement of goods and people across the borders of the republics. But after the collapse of the Union, it became obvious that political sovereignty and strict customs control at the border are, of course, good, but they are not very conducive to the development of foreign trade and, as a consequence, economic growth.

Moreover, an extremely clear illustration of these thoughts was the formation of the European Union in the second half of the twentieth century. That is, independent European states have long realized the need for economic integration and have been systematically moving towards it for many years.

Therefore, despite the popular trend of political independence in the early 90s, on the contrary, integration sentiments reigned in the economy. For the first time, Nursultan Nazarbayev voiced the idea that was in the air and used the term “Eurasian Union” during his first official visit to the Russian Federation in 1994:

There is an urgent need to move to a qualitatively new level of relations between our countries on the basis of a new interstate association formed on the principles of voluntariness and equality. The Eurasian Union could become such an association. It should be built on principles other than the CIS, because the basis of the new association should be supranational bodies designed to solve two key tasks: the formation of a common economic space and ensuring a joint defense policy.

Also one of the important factors is the creation of the World Trade Organization (WTO) in 1995. This event set the information agenda for discussions on Eurasian integration for the next few years, identifying accession to the WTO as a Big Goal towards which every self-respecting national economy should move.

In this sense, regional economic integration with its closest neighbors was considered as an intermediate stage towards accession to the WTO. The fact is that a country candidate for accession to the WTO was required to have a certain legislative framework and developed instruments of customs and economic control. The same was necessary for regional integration. Accordingly, one of the goals of Eurasian economic integration was the development of national laws and the above-mentioned instruments, bringing them to the level required for accession to the WTO.

Customs Union and WTO

The creation of the Customs Union and its fairly rapid registration initially caused a negative reaction from the WTO, and concerns were also expressed that the rules of the Customs Union would not be able to comply with the rules of the WTO, and therefore, negotiations on a single Customs Union would have to start anew. However, Russia managed to defend its interests by rejecting Finland’s claims regarding duties on timber and wood products, as well as the claims of European countries regarding duties on cars and components. Russia retained the rights to fairly slowly reduce duties and relatively large subsidies in many sectors of the economy over the course of 5-7 years.

Belarus and Kazakhstan are negotiating accession to the WTO independently. According to the head of the Russian delegation, Maxim Medvedkov, “Kazakhstan, soon after Russia joins the WTO, will also become a member of this organization.” At the same time, negotiations between Belarus are proceeding very slowly and may not end soon enough.

In October 2011, the CU Commission brought all the norms of the Customs Union into full compliance with WTO norms. In addition, it was decided that if it joins the WTO, the rules of this organization will have greater force than the rules of the Customs Union.

On August 22, 2012, Russia became a full member of the WTO. The consequence of this was almost complete compliance of the Customs Union norms with the conditions for Russia's accession to the WTO.

Prospects for membership in the CU

At the time of creating a customs union, it is almost always about achieving socio-economic progress. In the long term, this may lead to an increase in trade turnover. The same applies to the services market. An increase in the number of sales in the first stages of cooperation should be observed within the customs union due to the following conditions:

• Implementation of safety standards and introduction of uniform requirements;
• Exclusion from customs procedures of complex processes that cause loss of time, as well as the abolition of duties. It is due to this that the products produced by the participating countries should become more attractive to partners;
• Increase in trade turnover due to simplification of customs control at checkpoints.

Public opinion polls

7In 2012, the Center for Integration Studies of the Eurasian Development Bank conducted a sociological survey in 10 CIS countries and Georgia (from 950 to 2000 respondents in each country). To the question “How do you feel about the fact that the economies of Belarus, Kazakhstan and Russia have united in the Customs Union (which freed trade between the three countries from duties)?” the proportions of answers “positive”, “indifferent”, “negative” were:

• in Kazakhstan - 80%, 10%, 4%;
• in Tajikistan - 76%, 17%, 2%;
• in Russia - 72%, 17%, 4%;
• in Uzbekistan - 67%, 14%, 2%;
• in Kyrgyzstan - 67%, 15%, 8%;
• in Moldova - 65%, 20%, 7%;
• in Armenia - 61%, 26%, 6%;
• in Belarus - 60%, 28%, 6%;
• in Azerbaijan - 38%, 46%, 11%;
• in Georgia - 30%, 39%, 6%.

Mechanism for distribution of customs duties

Among the main criteria for the activities of the Union, one can highlight the program for the centralized distribution of customs duties, which are paid when crossing the borders of the EAEU when importing/exporting goods. During distribution, a single equity participation mechanism is used:

• The Russian Federation receives 85.33% of all revenues;
• Kazakhstan – 7.11%;
• Belarus – 4.55%;
• Kyrgyzstan accounts for 1.9%;
• Armenia's share is 1.11%.

Taking into account the information presented, it can be noted that the current Customs Union is a fundamental tool for the economic unification of the states that are members of the EAEU.

Criticism

Most of the critical comments about the Customs Union boil down to poor development of the terms of trade and certification of goods, Russia’s imposition of WTO conditions on Belarus and Kazakhstan without the latter joining the organization, as well as the “unfair”, according to some experts, distribution of income and receipts between participants. At the same time, there are no objective studies proving that the Customs Union is an unprofitable project for its current participants and potential members, and a number of studies consistently indicate that the Customs Union is in one way or another beneficial to its members due to existing connections, territorial, linguistic and cultural proximity of the countries that were part of the USSR.

“EAEU Customs Code”

Iskoskova M.V. – Head of the Customs Legislation Department of the EEC;

Ovchinnikov A.V. — Deputy Head of the Department of GUOTO and TC FCS of Russia; Kovrigina N.G. – Head of the department of GUOTO and TC FCS of Russia;

Chizhova I.A. — Advisor to the Main Directorate of Federal Customs Revenue and Tariff Regulation of the Federal Customs Service of Russia The most pressing issues related to the entry into force of the New Customs Code of the EAEU will be considered.

You will also have the opportunity to consult with specialists - developers of regulatory documentation. To participate in the seminar you must register by phone. 8-(495) 675-32-74, 8(495) 221-03-85. E-mail Registration form will be sent upon your request. The price includes: curriculum, express consultation within the seminar, teaching materials, participant certificate, coffee breaks.