The agreement on establishing the Eurasian Economic Union will be fully implemented in ten years

4 june 2014 | Rossiyskaya Gazeta

The common market of medicines and medical devices will start functioning within the framework of the Eurasian Economic Union in a year and a half. It will happen, despite the strict and yet very different regulatory measures in Russia, Belarus and Kazakhstan. But the creation of other common markets will require more time.

Gleb Pokatovich
Gleb Pokatovich
Deputy Head

“The agreement will be fully implemented in ten years, - said Deputy Director General of the Analytical Center Gleb Pokatovich to “Rossiyskaya Gazeta”. – An immediate change will not happen. The exception was the establishment of the Customs Union, where the labor market will benefit from the removal of last restrictions on the free movement of labor in the territory of the Eurasian Union, since 2015”.

Mr. Pokatovich considers that creation of common markets in the future, including the energy, financial, pharmaceutical, transportation and construction, will be the most important achievements of this agreement. The larger the market, the more opportunities exist for its players to utilize their potential. But this requires harmonized rules (access to infrastructure, government support etc.) for all member countries of the Union along with the willingness of the industry sectors to function by common rules. Hence, longer transition periods. In order to start the common markets, participants in the Union must sign a number of special agreements during the next ten years. For this purpose, an agreement - the starting point for the cooperation in the years ahead, was concluded in Astana at the end of May. “The pioneer in this case, will be the common market for medicines and medical devices, - mentioned Mr. Pokatovich. – It will start functioning at the beginning of 2016. As for the oil and gas market, the situation is much more complicated. For example, export duties on oil in Russia are five times higher than in Kazakhstan. In addition, the problem of how to ensure equal access to the "pipe" is not easy to solve. That is why only the concept of the formation of each of the three markets: oil, oil products and gas, will be approved in 2016.  In 2018 programs to promote these markets will be elaborated, and only in 2024, these programs should be implemented”.

The electric power sector should undergo a faster transition. The common market has been preparing since last year and will start working in 2019. But prospects for a common financial market are not yet too colorful, considers Mr. Pokatovich. The countries that are part of the Union have different economic potential and different involvement in the global economy. It will be difficult to adjust their financial legislations. The agreement implies the formation of uniform requirements for financial markets activity and the creation of an Eurasian supranational financial regulatory body by 2025. The parties must yet decide in regard to its competences.

The same reason of the existing difference in overall potential, will probably not allow the formation of a truly common macroeconomic policy within the EAEU. The agreement was written in a very general and well chosen language in regard to this issue, pointed out the expert. The expressions used speak for themselves: countries will implement the common macroeconomic policy by taking into account the main directions and reference points of the economic development of the Union. Only the boundaries of macroeconomic indicators were strictly defined: the consolidated budget deficit must be no more than 3% of GDP, public debt should not exceed 50% of GDP, and inflation will be calculated by the minimum level for the participating countries plus 5 percentage points. Presently, the EAEU members fully comply with these requirements. Serious reservations exist regarding competition policy. Strengthening the role of supranational bodies in certain positions is not well defined as it was originally planned. But in general, the integration will certainly increase, assured Gleb Pokatovich.