The EAEU and the problems of development of integration (on the example of Kazakhstan and Belarus)

In the article the theoretical aspect of such concepts as integration, economic integration, international integration is discussed. The main economic indicators of interaction of the Republic of Kazakhstan and the Republic of Belarus in the framework of the integration are reviewed. The data on the export and import of the main types of goods to the Republic of Kazakhstan and the Republic of Belarus are studied in detail. The main groups of export-import goods for 2018 are singled out, and the dynamics in comparison with 2017 is analyzed. It is noted that the main import strategic goods from Republic of Kazakhstan are oil and oil products, and from the Republic of Belarus to the Republic of Kazakhstan — dairy products and milk products. The narrow sides of this cooperation are revealed. Ways of improvement of economic cooperation between the countries are offered that is almost significant element of a research.

Since the mid-twentieth century, and especially in recent decades, globalization and integration have been major trends in the internationalization of the world economy.

The study of the mechanisms of integration of the countries of the world into the world economy during the last two decades is one of the main directions of economic science. This is explained by the fact that the most important feature of our time is the growing interdependence of national economies, the intensive transition of civilized countries from closed economies to an open economy, facing the outside world [1].

Integration (from lat. integer-whole) means Association of economic entities, deepening of their interaction, development of relations between them. Economic integration takes place both at the level of national economies of whole countries and between enterprises, firms, companies and corporations. Economic integration is manifested in the expansion and deepening of production and technological ties, the joint use of resources, the unification of capital, the creation of favorable conditions for each other to carry out economic activities, the removal of mutual barriers.

Economic integration (from lat. integratio-recovery) — an interaction and mutual adaptation of national economies of different countries, leading to their gradual economic merger. At the interstate level, integration takes place through the formation of regional economic associations of states and the harmonization of their domestic and foreign economic policies. Interaction and mutual adaptation of national economies is manifested, first of all, in the gradual creation of a «common market» — in the liberalization of commodity exchange conditions and the movement of production resources (capital, labor, information) between countries.

The proposed approach to the definition of international economic integration as an economic category is perhaps not indisputable, especially since, as R.I. Khasbulatov notes, «... international economic integration as an economic category still has a rather abstract character, since nowhere in the world has full integration been achieved...», assuming the formation of a single economic complex. However, the need to define MEI (international economic integration) as an economic category is obvious. It makes it possible to identify and take into account new facets of such a complex, ambiguous phenomenon in the world economy, which has a huge impact on social, cultural, political and other relations within and between states and to reveal its economic essence [2].

On September 16, 1992, bilateral diplomatic relations between the Republic of Kazakhstan and the Republic of Belarus were approved. It should be noted that mutually beneficial cooperation and quality relations between the two countries are developing quite intensively, the positions of Kazakhstan and Belarus on most international political issues are identical. This is evidenced by the high dynamics of contacts at different levels of relations. Today, Kazakhstan and Belarus are strategic partners within the EAEU.

The Republic of Belarus provides national treatment in respect of goods of the Republic of Kazakhstan in accordance with the Agreement on free trade zone dated 18 October 2011 and the Agreement on the Eurasian economic Union of 29 May 2014, the volume of Belarusian exports, Kazakhstan is among the ten major partners of the Republic of Belarus, is the third among CIS countries (after Russia and Ukraine).

Table 1 Export and import of goods by the member states of the Eurasian economic union

 

January-October 2017, million dollars USA

January-October 2018, million dollars USA

January-October 2018, January-October 2017, %

Kazakhstan

     

turnover

555,7 ~

766,4 ~

137,9 ~

export

483,4

674,6

139,6

import

72,3

91,8

91,8

balance

411,1

582,8

 

Note. Compiled by the author.

In 2018, the trade turnover of the Republic of Belarus with the Republic of Kazakhstan amounted to 766.4 million dollars, which is 137 % more than in the previous period. At the same time, Belarusian exports of goods to Kazakhstan amounted to 674.6 million dollars, 139.6 % higher than the same period last year, imports from Kazakhstan – 91.8 million dollars increased by 91.8 %. The trade surplus 582.8 million dollars [3, 4].

The leading export positions to Kazakhstan in 2018 were: milk and dairy products; trucks, tractors; alcoholic beverages; furniture, sugar.

Table 2 Data on export of main types of goods to the Republic of Kazakhstan

Goods

January-October 2018

January-October 2018

January-October 2017, %

quantity

cost, million dollars USA

quantity

by cost

1 ~~

2

3

4

5

Trucks, pieces

108

42 310,5

122,7

124,1

Special purpose vehicles, pieces

24

4 552,7

77,4

147,9

Tractors and truck tractors, units

2 135

34 957,0

94,3

89,6

Agricultural machinery, pieces

1 486

18 569,4

131,2

94,9

Parts and accessories for cars and tractors, tons

1 195

7 145,7

82,1

99,4

Machines and devices for lifting, moving, loading or unloading, pieces

575

5 814,0

75,3

78,8

Tires, thousand, pcs.

167,6

10 846,6

68,7 ~

83,5

Plastic containers, tons

1 123

4 070,5

53,2

56,2

Ceramic tiles, thousand m2

1 780,1

7 382,1

100,2

98,7

Insulated wires, cables, tons

1 509

6 206,1

65,7

71,6

Wallpapers and similar wall coverings, tons

5 122

15 692,3

х 233,4

х 243,7

Oilproducts, tons

23 461

15 836,3

103,4

121,3

Joiner's products construction, tons

4 052

8 255,2

124,0

121,6

Refrigerators, freezers and refrigeration equipment, thousand pcs.

42,8

7 797,0

128,4

116,6

Furniture, including medical, thousand tons

18,4

33 941,7

113,2 ~

113,9

Medicines packaged for retail sale, tons

589,4

13 311,6

95,8

99,9

Spirits, thousand liters of 100 % alcohol

1 224,9

5 654,6

224,1

189,9

Meat and meat by-products, tons

11 074

22 797,9

94,8

96,6

Condensed and dry milk and cream, tons

42 787

72 467,3

248,0

201,4

Butter, tons

22 445

92 900,4

х 12

х 10

Cheese and cottage cheese, tons

3 481

14 970,6

204,5

187,8

Sausages and similar meat products, tons

3 074

9 549,5

116,8

128,3

Sugar, thousand tons

66,5

27 331,3

207,8

173,5

Note. Compiled by the author.

The main import items from Kazakhstan to Belarus in 2018: crude oil and gas condensate, coal, raw aluminum [5, 6].

Table 3 Data on import of main types of goods from the Republic of Kazakhstan

Goods

January-October 2018

January-October 2018

January-October 2017, %

Oilproducts, thousand tons

76,9

35 948,1

166,5

243,0

Coal, thousand tons

336,5

18 341,5

160,3

168,1

Liquefied gas, thousand tons

14,5

6 564,7

-

-

Ferrous metals, tons

7 505

5 433,8

126,9

118,0

Rails, tons

2 427

2 353,7

х 22

х 34

Ferrous metal pipes, tons

2 029

1 967,0

101,5

109,8

Untreated aluminum, tons

2 677

6 142,6

222,4

239,5

Communication equipment and parts to it, pieces

9 695

1 332,5

220,5

212,5

Cotton non-combed fiber, tons

1 008

1 899,5

54,4

57,5

Note. Compiled by the author.

The implementation of joint ventures in the field of mechanical engineering was carried out within the framework of the «Road map» for the development of bilateral cooperation between the Government of the Republic of Kazakhstan and the Government of the Republic of Belarus for 2017-2018. During the study period, 6 projects were launched for the production of agricultural machinery, automotive and quarry equipment, Elevator equipment. 29 Mar 2018 LLP «Aktobe rail and beam plant» the invitation of «Belarusian Railways» for participation in the tender for the procurement of rails R65 category DT350 in the volume — 30 000 tons. «ARBZ» LLP took part in the competition, which was held on April 18, 2018 in Minsk [7].

A contract for the supply of 5000 tons of rail R65 to October 2018. At the moment, 550 tons of rails have been delivered.

There are 39 enterprises with Kazakh capital in Belarus, including 15 joint ventures and 28 foreign ones, and 256 companies with Belarusian participation in Kazakhstan.

The fundamental document in the field of trade and economic cooperation is the Agreement between the Republic of Belarus and the Republic of Kazakhstan on socio-economic cooperation until 2026. With the program of socio-economic cooperation of the Republic of Belarus with the Republic of Kazakhstan until 2026 and the «Road map» for the development of bilateral cooperation between the Government of the Republic of Kazakhstan and the Government of the Republic of Belarus for 2017-2018.

It should be noted that the dynamics of trade and economic relations gains steam every year, which indicates the potential of development of relations between the republics. However, there are certain imbalances that require study and special attention, as it contradicts the objectives of the EAEU.

The creation of the EAEU was made possible, thanks to the increased interest of a number of postSoviet countries in deepening cooperation on a multilateral basis, which was preceded by a number of integration projects. At the same time, the creation of the Customs Union and then the EAEU faced a number of problems [8].

Firstly, significant differences remained in the national legislations of the parties. This made it difficult to form common principles of tax and customs administration.

Secondly, the countries participating in integration projects sought to defend first of all their own national interests, paying little attention to the interests of their partners.

Thirdly, quite a strong influence on the post-Soviet countries had an external factor.

Belarus sought to maintain economic relations within the framework of the Union state with Russia and at the same time advocated the expansion of cooperation with the European Union. Kazakhstan was interested in expanding economic relations with the countries of the former Soviet Union, and in the political sphere actively advocated the expansion of relations with the EU, the USA and China.

The presidents of Belarus, Kazakhstan and Russia have been discussing the nature and principles of the new Association for several years. The parties offered their vision of the integration Union based solely on their national interests. Belarus and Kazakhstan were not satisfied with the political elements of integration. As a result, Astana insisted on the purely economic nature of the Eurasian integration project.

The creation of the EAEU took place against the background of negative processes in the economies of the participating countries. In 2014, the economies of the countries of the Customs Union / Common economic space experienced a slowdown in economic growth, uncertainty and instability. Despite this, Russia, Belarus and Kazakhstan did not abandon the integration project.

The main risk factors for Eurasian integration in Kazakhstan and Belarus include the unequal readiness of the Eurasian States due to differences in the level of economic development and economic openness. Astana and Minsk pay attention to the lack of support and inconsistency of macroeconomic policies of the countries, as well as income inequality, poor product quality, the need to modernize production, the need for investment and new technologies.

Each of the countries considers the EAEU through the prism of its geopolitical and economic interests, hoping to solve its own problems. In particular, the problems faced by the economies of Belarus and Kazakhstan increase their interest in the EAEU. They consider participation in the EAEU as an opportunity to industrialize and overcome current economic problems.

The most important tasks of Kazakhstan and Belarus within the EAEU include the expansion of trade and economic cooperation. Kazakhstan and Belarus expect to increase trade turnover between the two countries. This strategic objective is in the interest of all states parties, as it is expected to have a positive impact on their economic development. Kazakhstan, through access to the Russian capital market and markets, expects to reduce the economy's dependence on the oil and gas sector and overcome the raw material orientation of the economy.

Creation of stable trade and economic relations with partners in Eurasian integration would allow to count on expansion of sales markets for the goods produced in the country. Belarus intended to get additional opportunities to enter the Russian market and ensure the receipt of the most important resources at domestic prices. In turn, Russia seeks to increase the level of cooperation with Belarus and Kazakhstan within the framework of the EAEU, relations with which have been developing dynamically over the past 20 years. First of all, this applies to cooperation in the fuel and energy, space, shipbuilding, mechanical engineering, agriculture.

Cooperation within the framework of the EAEU should open up additional opportunities for the member states, primarily through the unification of legislation and coordinated macroeconomic policy, technical regulation system, tariffs of natural monopolies, etc.

Participation of Kazakhstan and Belarus in the Eurasian integration is determined by the desire for an optimal combination of capabilities of all countries and assessments of regional development problems. In addition, Kazakhstan and Belarus consider participation in the EAEU as a means to gain access to the Russian market for their national producers and attract additional financial resources to the economy. Armenia and Kyrgyzstan view Eurasian integration through the prism of their economic problems and geopolitical interests.

The interest of Russia, Belarus and Kazakhstan in regional cooperation was also influenced by increased pressure from the EU, the USA and China. It encouraged some post-Soviet countries to seek alternative forms of cooperation aimed at creating a counterbalance to the ambitions of external forces. Kazakhstan and Kyrgyzstan's participation in Eurasian economic integration contradicts China's plans to increase its influence in Central Asia. The customs Union can change the economic conditions for China in Central Asia. First of all, it may be that companies of the Customs Union countries will gain competitive advantages, and Chinese enterprises will face tougher competition in regional investments.

China is looking for various ways to slow down the implementation of the Eurasian economic Union. The Chinese side is persistently promoting the project of creating a free trade zone (FTZ) within the framework of the Shanghai cooperation organization (SCO), which includes a number of Central Asian States. However, the creation of the FTZ, which implies the abolition of customs duties and quantitative restrictions in mutual trade between the SCO members, does not meet the interests of Russia, as it will primarily contribute to the expansion of sales of cheap Chinese products to the detriment of Russian producers.

China persistently promotes the idea of cooperation between the EAEU and the project of the revival of the great Silk Road. It is believed that the Eurasian Economic Union, along with the initiative of the land «economic belt of the great silk road» should play an important role in the formation of a new Russian- Chinese partnership. However, such proposals can create conditions for strengthening China's positions and have a negative impact on cooperation within the EAEU.

Prospects for the development of the EAEU will be determined by the level of development of trade and economic relations between its participants, as well as the dynamics of relations with the main foreigneconomic and foreign policy partners. In this context, there are three scenarios for further development of integration processes within the EAEU.

The first scenario involves the successful development of integration within the EAEU. To this end, the participating countries must overcome internal differences, strengthen coordination of foreign economic activity and move to the implementation of joint steps in foreign policy. The script comes from the fact that the countries belonging to the EAEC will be able to withstand pressure from the USA, EU and China. At the same time, the development of the situation in accordance with this scenario will lead to a sharp strengthening of Russia's foreign policy positions.

Within the EAEU, Kazakhstan and Kyrgyzstan have an opportunity to intensify mutual relations and resolve existing contradictions. First of all, it concerns the problems related to the use of water and energy resources of Transboundary Rivers, as well as the implementation of regional transport projects [9].

The second scenario can be called moderately optimistic. The current development of the EAEU is taking place in the context of sanctions imposed on Russia, the fall in oil prices, which affects the filling of the budgets of Russia and Kazakhstan, as well as the sharp activation of China in Central Asia. The preservation of these trends allows us to expect the lack of qualitative improvement in relations between the EAEU member States and, accordingly, the Eurasian integration risks becoming a sluggish process.

The third, negative scenario comes from the fact that the EAEU member states will not be able to cope with the existing contradictions between them and find effective mechanisms to counter external pressure. Under these conditions, the EAEU can comprehend the fate of other integration projects that the post-Soviet countries have been trying to implement for 25 years.

The implementation of the third scenario will mean enormous foreign policy losses (primarily for the Russian Federation): further reduction of influence in the post — Soviet space, as well as economic losses associated with the strengthening of the positions of third countries in the post-Soviet states. Thus, China's influence will increase in Central Asia. The positive dynamics of China's trade with Kyrgyzstan and Kazakhstan, as well as the existence of a long-term strategy for the region, supported by financial resources, will create difficulties for the Russian policy aimed at the reintegration of part of the post-Soviet space.

The EAEU is at the beginning of its formation, which inevitably generates conflicts between its participants due to the collision of interests of individual countries. After all, initially unification projects were conceived as political or geopolitical, and the economic consequences were not fully calculated.

The prospects of Eurasian integration are related to the internal political development of the member States of the Eurasian economic Union, as well as their ability to coordinate national interests. The creation of the EAEU opens up opportunities for stabilizing the economic situation in the countries participating in the Eurasian integration, and in the future – for modernization and reindustrialization. Although it is obvious that the benefits of integration processes can not be obtained instantly.

 

References

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  2. Sotrudnichestvo Respubliki Kazakhstan s Respublikoi Belarus [Cooperation of the Republic of Kazakhstan with the Republic of Belarus]. Ministerstvo inostrannykh del Respubliki Kazakhstan - Ministry of foreign Affairs of the Republic of Kazakhstan- Retrieved from http://mfa.gov.kz/index.php/ru/vneshnyaya-politika/ sotrudnichestvo-kazakhstana/sotrudnichestvo-so-stranami-sng/12- material-orys/426-sotrudnichest vo-respubliki-kazakhstan-s-respublikoj-belarus/ [in Russian].
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Year: 2019
City: Karaganda
Category: Economy