Negotiations between Russia, Kazakhstan and Belarus are advancing over the creation of a Eurasian Union, which would abolish customs duties and unify economic policies amongst participating countries.

In February a Eurasian Economic Commission (EEC) was established, with the fully ratified economic union expected to enter into force by 2015. The lengthy process of legal codification and harmonisation is under way.

The Russian Permanent Mission to the EU held an informal presentation Thursday (5 July) aimed at clarifying the details of the union and reassuring EU businesses, concerned that it could become a ‘Soviet empire through the backdoor’.

Representatives from the economic commission did not respond to questions over whether the Eurasian union could be used by the EU to put political pressure on its members, especially Belarus, considered to be the 'last dictatorship in Europe'.

Natalia Yacheistova, EEC deputy director for trade policy, said the union would promote growth amongst its member states, which was already good, she said, and had risen 4% over the last year.

The common economic space will see EU-style reforms, such as subsidies and state support for agriculture and handling of monopolies.

The EEC replaces the Commission of the Customs Union (CCU) and will be represent the union's permanent regulatory body.

‘Good for business’

A lack of information has seen Brussels worried the union could affect trade and economic cooperation between the EU and the Eurasian countries.

Yacheistova tried to dispel these concerns, saying she hoped the union could eventually lead to a “breaking down of trade barriers between the EU” and that the union would create a “new environment to promote the successful continued work of business”.

Russian President Vladimir Putin has said he would not advance negotiations on a new basic treaty with the EU unless it formalised relations with the Customs Union (CU), which should go ahead after Russia’s accession to the World Trade Organisation (WTO).

“The idea of the Eurasian Economic Union, if based on the WTO rules, could lead to positive contributions to trade prosperity and cooperation,” he said.

Yacheistova said businesses and industrial associations were involved in drafting a common set of regulations, adding that the Eurasian commission hoped to achieve “harmonisation with Europe” in low voltage electric products, for example.

Pascal Kerneis, a senior advisor for international relations at BusinessEurope, told EURACTIV that his organisation “welcomed” the formation of a Eurasian Economic Union.

He said the business group appreciated the “clarity on the union” offered by the Brussels meeting, and wished to further cooperation with Russia after its WTO accession.

Chip off the old bloc

Yacheistova said the union project would be “taking into account European Union experience” in integration and trade negotiations.

“We want to exchange experience with the EU in a way that is mutually beneficial. We emphasise our interest in a collaborative network between the EU and the CU,” she said.

Yacheistova claimed this was just the beginning of cooperation between the EU and the economic commission but that in some areas it already exchanges competences, such as in defence.

The Russian ambassador to the EU, Vladimir Chizov, said the Eurasian commission would be setting up a “working modus operandi to exchange best practices”, adding that he hoped the two sides “will be more successful than the EU and [South American trade group] Mercosur.”

Following its failure to complete negotiations with other trade blocs – including the Association of Southeast Asian Nations (ASEAN), the Andean nations, and Mercosur – the EU has reverted to a policy of bilateral dealings with single nations.

While Russia represents a big growth market for European business, Kazakhstan and Belarus appear to offer little promise in the near future.

“We see more potential in Indonesia in some sectors,” Kerneis told EURACTIV.

Enlargement

At the start, the Eurasian Union will only include the three countries mentioned but Yacheistova said it was “open for access”.

Negotiations over a roadmap for Kyrgyzstan’s accession had already begun, she said, with other countries likely to follow suit.

Vasiliy Boitsov, EEC director for technical regulation, said any country wishing to join the Eurasian Union would have to meet the common requirements, including safety and sanitary standards, for example.

Newcomers would also be required to adopt the EEC's entire legislation and ensure that national laws do not conflict with those those of the union.

The Eurasian Union has the potential to become a sensitive issue for the EU, with some commentators foreseeing a political and economic ‘tug-of-war’ over Ukraine.

The EU is seeking an increasingly close relationship with Ukraine, going beyond bilateral cooperation towards economic integration and deeper political cooperation.

Belarussian President Alexander Lukashenko, known as “Europe’s last dictator”, was quoted on the Kremlin's website, claiming that the Customs Union was appealing to Ukraine.

“For the time being, they [the Ukrainian leadership] still have some hesitations, but […] there is movement in this direction,” he said.