EEC: its integration role in region, examples of law problems in financial-tariff aspect and meaning for Kazakhstan's economy in their context for today

Connection of Eurasian Economic Union is the newest integration project at large of Commonwealth of Independent States. Its foundation was determined by the fact, that previous integration alliances like CU and CIS were feeble in their economic function. The biggest part of experts estimate new format of EEU positively, because they think that it is going to be better than ex in aspect of economic cooperation. These statements are not unreasonable. However, on the assumption of political and law tendencies in this state block, EEU's legislation also has a set of unfounded preferences, which induce discussions about its foundation and following collisions. Many points of financial – tariff regulation are written in very indistinct manner, and also their law content is written in favour of other participants of integration agreement, or just it doesn't match with economic and political interests of Republic of Kazakhstan. Similar facts shouldn't be out of consideration, because Kazakhstan became a participant of all customs agreements in integration projects on the CIS territories voluntarily, and it has all rights to rely on profits from its membership in EEC. In consequence of these integration processes, problems, appearing on practice, must be marked for the next decision and such need was a task for this article.

Economic integration implies by itself unification of economic policy between different states through the partial or full cancellation of tariff and non – tariff limits in trade, what happens among them before their union [1]. This definition is more common in economical law literature.

History of economical integration development in countries of Europe, Asia and America is frequently conditioned by the necessity of long – term economic relations alignment. After all, creation of ECSC, ASEAN, NAFTA and other integration unions has primarily economical character, even in spite of explicit political overtone of Bangkok declaration about ASEAN creation (from 8th August of 1967) [2] and American expansion in neighbour countries. Certainly, it manifested itself on different developmental stages of these integrations: in postbellum Europe economic vector was the base of ECSC block becoming in 1957, in South – East Asia unification was an investigation of anticommunist hysteria of local elites, however, already in the end of 70th countries – participants fully estimated its economic benefits. Adoption of Vietnam in ASEAN in 1995 really brightly stresses the priority changing of this kind [3; 36].

Despite this fact, there are also many other integrations for today, which cover political purposes of some countries. League of Arab States is bright example for it, what was created, it would seem, for purposes of consolidation and support of the poorest participants only, it always prioritize political questions. For example, when Egypt and Jordan have signed an agreement with Israel about ceasefire, LAG «attacked» them with sharp criticism, suspending their membership. There is also an indicative nowadays example of Syrian boycott in LAG.

Integration of EEC block, what was appeared on the base of agreement «About creation of Eurasian economic union» from 29th May of 2014, also has ambiguous character. As it was shown by experience of CIS and EurAsEC, the biggest part of same unions on post — Soviet lands were created on necessity in political consolidation. That means that this vector was always in priority and wasn't hidden. Result of interaction also left much to be desired for efficiency of economic policy for its members in format of these integrations. «Does Eurasian economic union have a chance to be transformed in Eurasian Union as analogy of European Union in time, or it waits a destiny of other unsuccessful integration projects of CIS?» Professor of Russian Academy of Sciences, N. Ziyadullaev asks this question [4].

Despite the availability of a number of political and even economic benefits, we shouldn't forget about necessity for Russian Federation to take the own lead in decision of different foreground questions of this integration. This state, what has GDP in block's format more than 85 %, it is simultaneously and stimulus and barrier for deep integration, because its economy is really different in amount from trade partners. For example, potential countries for entering in the original format of European Union had approximately equable economic institutes by scale on the share of participants. In opinion of academician Ziyadullaev, even Russia, with emphasizing attention on this purpose and having giant economy, bears losses in different branches with a need of improvements for integration development.

Other republics are also not an exception. Adoption of the last members like Armenia and Kyrgyzstan in the union was a really negative repercussion for Kazakhstan. For the first one: adoption of Armenia in this union automatically prevents for adoption of Azerbaijan in this block. If these countries can relatively calm coexist in format of other regional unities, it is only for a reason of absence of conditions about opened borders. This factor hinders for establishing of closer relations of block with «Turkish world» and for Kazakhstan in particular. (A number of experts think that this economic union is de – facto «Christian block» or «block of derelict – countries» by its role). Certainly, these statements have extremely dubious argumentation, however, lack of alternatives for Kazakhstan, in view of close integration with potentially more attractive country from political and economic side of question became a very negative fact.

Membership of Kyrgyzstan also provides a number of economic inconveniences in keeping of regions for sales of agricultural products, as for domestic market, as for foreign one. For example, livestock products of Kyrgyzstan is more developed and oriented on foreign market, than Kazakhstani products.

Removal of customs borders won't let for Kazakhstan to create artificial barriers for export from this state. In this way, republic risks not only to full a segment of domestic consumption by foreign products, but also to do a part of their own perspective manufactures unprofitable. After all, besides livestock sphere, there are also well developed agricultures in Kyrgyzstan. In their comparison, south regions of Kazakhstan are also weak and have no ability for market competition.

Creation of covered barriers in question of quality is also ineffective, as it was shown on practice with Belarusian milk products. Kazakhstan will have to make concessions for Kyrgyz partners, and membership in WTO does it to encouraging free trade.

In opinion of professor Ziyadullaev, the biggest profits from union's creation had Belarus, by export rearranging of their own products in countries – participants, Russia became a «sponsor of this project», Kazakhstan, with a very wide range of unsolved market problems, extracted from this union the smallest benefit. In despite of presence of many tax privileges, which Kazakhstan provides to foreign investors, there is no significant inflow of capital in republic, when much more conservative Belarus had from Russia about 70 billion dollars of subsidies and preferences, including some for reorganization of potential exporting manufactories [4].

Despite of such uneven encouragement for keeping of Customs Union in the newest format, Kazakhstan and Belarus expressed their support and loyalty to Russia in connection with economic sanctions, and indirectly divided their negative macroeconomic effect with it. But Russian Federation declares to partners some statements about profits about potential of import substitution policy, caused by contra - sanctions of Moscow.

But import substitution in this interpretation seems unlikely. It entails with itself a cardinal reconstruction of economy for the newest vector of development, with condition of availability of free and in the same time competitive production capacities. In Kazakhstan and in Belarus the availability of such funds is unlikely, and their realization in conditions of crisis will be extremely difficult.

By these reasons, EEC is not very perspective variation for Kazakhstan in the context of integration institute for the nearest years.

In financial – tariff aspect all also is not so uniquely. Decision of The Council of Eurasian economic commission from 16.07.2012 №54 (red. from 05.04.2016) «About affirmation of united Trade nomenclature of foreign economic activity of Eurasian economic union and United customs tariff of Eurasian economic union» has converted the previous set of tariffs for Customs Union (from 16.07.2012) [5]. These measures were really important for coming reunification and now, thanks to these amendments, states – participants reached a simplified ubiquitous system of tariff stakes. That was one of the purposes of the modernization for this aspect in EEC format.

Despite that fact, that according with the new amendments, Kazakhstan receives the largest part of profit from customs tariff after Russia (7,5 %), what is a fully acceptable mark in comparison with other participants, there are many stayed unsolved problems of tariff regulation.

As narked The President of Republic of Kazakhstan N.A. Nazarbayev in the course of the XVI regular Congress of party «Nur Otan»: «there is a need to simplify a tariff policy in EEC». «Our customs procedures take a lot of time for now, tariff policy is really difficult and intricate. Tariff barriers go against world practice. We need in large – scale work to reform it by simplification of these tariffs in Eurasian economic union» [6].

For example, European Economic Commission recently revealed a number of shortcomings in parity of tariff policy of CIS and EEC, and according them even simplifications are not always legal in the law practice, where principles of the newest customs regulations really poorly work. «Commission intends to consider the application of internal tariffs in railway transit with antimonopoly authorities of EEC countries, reported the member of the board (minister) for competition and antimonopoly regulation of European Economic Commission, Nurlan Aldabergenov». «Every our subject, moving around the territory of state (-member of EEC), pays by internal tariffs. But we envisages this measure for sea ports. When we move on the territory of other state, these tariffs increase to 40 % at once», - marked N. Aldabergenov on the conference «Advocacy of competition in sphere of manufacturing on transboundary markets of Eurasian economic union» in Astana.

By calculation of European Economic Commission, if we have transit from Russian ports, Kazakhstani consignors must overpay for transportation of ferroalloys in containers in 1,7 times, for coal - in 2,3 times, for aluminium – in 2,1 times, as here applied boost coefficient TP (of trade policy) CIS. In particular, in the transit of Kazakhstani products through the Russia to Riga: we have a boost coefficient for ferroalloys in containers 1,40 TP of CIS; for coal in gondola cars - 0,70 TP of CIS; for aluminium in boxcar – 0,77 TP of CIS.

According to the words of N. Aldabergenov, saving from tariff alignment will offer for Belarus to have additional savings in money about 14 million in dollars, for Kazakhstan – 329 million in dollars, for Russian Federation – 246 million in dollars. «As a matter of fact, we always hear when they say for us, that we are in one united Eurasian economic union and we need to have the same conditions respectively. It is equal in union and in CIS for us today. I think that we and our national antimonopoly authorities will carry out necessary work and will present our own suggestions to the national governments of our states immediately» – he added [7].

This is far from being the only example of discrepancy of declared norms in well – established customs practice of Eurasian states. However, besides problems of state scale, there is also more covered problematic. It is reflected in conformity of the real state of affairs to EEC conception about that fact, when this integration is in the interests of «citizen's economy».

But how citizens satisfied by the tariff policy of EEC? For example, for today we have a question about ubiquitous licensing for auto - dealers in Kazakhstan. Licensing will offer to equalize prises for auto in EEC. The Head of Association of Kazakhstani Auto – Business (AKAB), Andrey Lavrentyev, talks about this.

«When we talk about licensing of dealers, we got a talk more about secondhand dealers, who select the cheapest autos and deliver them here. There can be such cars, which were staying on stocks, were keeping in abnormal conditions etc. Finally, consumer receives a «pig in a poke». Licensing provides not only for simple limit, but monitoring and control of companies, which participate in process of realization of new and used automobiles in Republic of Kazakhstan. This is a control for prices on auto and for their quality. This mechanism will be contributed for alignment of auto prices with Russia and in whole EEC. There will be precise and clear system of pricing».

He marked, that innovation, what has no clear terms of inculcation, won't touch individuals. Kazakhstani citizens can easily bring own automobile from abroad. As for the methods for price levelling on the market of used auto, for it can be used program Trade In and cheap auto – credits for the newest domestic produced cars, said Lavrentyev. These mechanisms are aimed on the need to have cheaper prices for auto in Kazakhstan.

But by the fact, local distributors in any way will be investing in marketing and salary, and that's why risk of rise in prise for cars is high as never been. Besides that, we shouldn't forget that officials of Kazakhstan can have indirect influence on dealers with prediction for them large profits from licensing, and «push- ing» citizens to by automobiles of domestic assembly by this way, which are cheaper at production cost and do not provide tariff pay. Not by chance previous expert marked that local automobiles will be noticeably cheaper, than imported from abroad [8].

Consumer, who waited facilitation in price policy from customs after accession to the WTO, receives artificial barriers of new format in fact, which were done in interests of local business and state import substitution (we should mark that this situation is typical not only for auto building).

We also shouldn't forget about tastes of consumers here: for example, if the same barriers stimulate local auto manufacturing in Turkey, it is rentable only by its productive diversity. In Kazakhstan auto manufacturing is presented by some car assembly plants, which cooperate with East – European or with Korean companies. By consumer stereotypes, quality of their automobiles is very doubtful in comparison with West – European, Japanese and American. And that means, potential consumer, who was deprived of the part ofhis consumer choice, will continue to «hold on» the «checked, well proved», but used autos of their brands, and no customs or price type privileges for automobiles of the newest assembly won't force him to buy production of local manufactures. Segment of consumers, who support such buying policy is very big in Kazakhstan, it can be proved by current state of cars on the roads of our country.

This practice undermines ecological conception of automotive industry in state, because there are not many people, who is agree to buy newest cars, when they are not applicable for accepted purchasing representations, especially in period of crisis in national economy.

After considering of all these examples, we can see, that EEC is not such uniquely perspective on practice, how politicians and propagandistic economists coerce us to think. However, this article is not an exhortation for cardinal review of Kazakhstani membership in this block.

Unification and integration achievements of EEC for the last years were mostly approximated to practical understanding of economy, than all previous variations of united blocks. There was done a colossal work, for integration of economies of countries – participants, as in format of Customs Union, as in nowadays now. Kazakhstan became one of the most important subjects – participants, what was repeatedly proved in nowadays integration realities.

However, if we want to see integration like European, we will hardly reach it in the nearest future: there is too heterogeneous composition of block members in the context of development of national economics.

That's why for saving of last year achievements, EEC really needs in work for continuous law unification and interrelation of its results with objective economical practice. If these norms go contrary with citizens preferences, we need to abolish them completely, or try to achieve of «smoothing» on certain, more problematic integration - legal aspects.

After all, without high – grade economy, what is directly oriented on needs of citizens, what is the base of every economic integration, this block can be in «economical fiasco», as all previous alliances, it would be looking unprofitable under the strike of new economic crises and by many other reasons.

Confidence of countries citizens for this format, what is proved by objective practice, will be a catalyst for saving of this union. And problematic aspects for its building, which seem to be «temporary trivia» , must be decided immediately, with support of business and official governments.

 

References

  1. Portal po tematike «mirovaia ekonomika» EREPORT, teoreticheskii razdel, «Ekonomicheskaia intehratsiia» [Portal on thematic of «world economy» EREPORT, theoretical section, «Economic integration»]. ereport.ru. Retrieved from http://ereport.ru/articles/mirecon/ecint.htm [in Russian].
  2. Carolyn, L., Gates, Mya Than. (2001). ASEAN Enlargement: impacts and implications. Institute of Southeast Asian Studies. bookshop.iseas. Retrieved from https://bookshop.iseas.edu.sg/publication/1301.
  3. Fyong, H.D. (1996). ASEAN i Vetnam: puti sblizheniia [ASEAN and Vietnam: the ways of convergence]. Candidate's thesis. Moscow [in Russian].
  4. Ziyadullaev, N.S. (2014). Evraziiskii ekonomicheskii soiuz: istoriia uspekha ili mylnyi puzyr [Eurasian economic union: history of success or a soap bubble]. «Nezavisimaia hazeta», 09.15.2014. ng.ru. Retrieved from http://www.ng.ru/courier/2014-09- 15/11_soyuz.html [in Russian].
  5. Reshenie Soveta Evraziiskoi ekonomicheskoi komissii ot 16 iiulia 2012 hoda № 54 «Ob utverzhdenii edinoi Tovarnoi no- menklatury vneshneekonomicheskoi deiatelnosti Evrasiiskoho ekonomicheskoho Soiuza i Edinoho tamozhennoho tarifa Evraziiskoho ekonomicheskoho Soiuza [Decision of the Council of Eurasian Economic Commission from 16th of July 2012 №54 «About statement of unified Commodity nomenclature of foreign economic activity of Eurasian economic union and United customs tariff of Eurasian economic union»]. adilet.zan.kz. Retrieved from http://adilet.zan.kz/rus/docs/H12EV000054 [in Russian].
  6. Bondareva, V. (2015). «V EAES neobkhodimo uprostit tarifnuiu politiku», – N. Nazarbyaev [«There is a need to simplify tariff policy in EEC», – N. Nazarbayev]. «BNEWS» analiticheski portal – Analytical portal «BNEWS», Astana5. Retrieved from http://bnews.kz/ru/news/obshchestvo/v_eaes_neobhodimo_uprostit_tarifnuu_politiku__nnazarbaev-2015_03_11-1131903 [in Russian].
  7. EEK predlahaet primeniat vnutrennie tarify pri tranzite cherez strany EAES (2015) [EEC suggests to use internal tariffs in transit throw the states of EEC]. zakon.kz. Retrieved from http://www.zakon.kz/4750992-ejek-predlagaet-primenjat-vnutrennie.html [in Russian].
  8. Prokopenko, B. (2015). Litsenzirovanie avtodilerov v RK pozvolit uravniat tseny na avto v EAES [Licensing of auto dealers in RK will offer to equalize prices for autos in EEC]. Informatsionniy portal «TengriNews» – Informational portal «TengriNews». tengrinews.kz. Retrieved from https://tengrinews.kz/kazakhstan_news/litsenzirovanie-avtodilerov-rk-pozvolit-uravnyat-tsenyi-avto- 272751/ [in Russian].
Year: 2018
City: Karaganda
Category: Law