Differences between the EU Association Agreement and “Russia-Belarus-Kazakhstan” Customs Union

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Publishing date: Friday, 14 February 2014
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Two parallel worlds: What are the Differences between the EU Association Agreement and “Russia-Belarus-Kazakhstan” Customs Union?

Currently, the Moldovan public space is dominated by some contradictions and confusions regarding the country’s external orientation.  More specifically, we are witnessing a erroneous understanding of the peculiarities of the EU Association Agreement and the “Russia-Belarus-Kazakhstan” Customs Union. Different interest groups demonize or idolize one or the other option, failing to understand the essence of both integration options. This short analysis makes a “cold” review of the nature and significance of each of the two geopolitical options, both of them being analyzed from three perspectives: political, economic and value-based (See the table).

Aspects

Association Agreement (AA) / European Union

Russia-Belarus-Kazakhstan Customs Union

 

Political Block

  • Provides an individual legal framework, which formalizes the relations between the EU and the Republic of Moldova.[1]

 

  • The document does not provide for EU accession, but rather the intensification of the political cooperation and economic integration.

 

  • It aims at advancing the bilateral relations with the EU. Once signed and ratified, AA will replace the basic agreement with the EU, in force since 1998.

 

  • AA provides for alignment of the national legislation to the European requirements with the view to facilitate the economic integration with EU and implementation of the necessary sector reforms. But this does not replace fully the national legislation, but only adjusts and enhances it.

 

  • The Association Council, established by representatives of EU and RM, will be responsible for the quality of Agreement implementation. Both parties will be represented on a parity basis, and the decisions will be binding. The Association Committee and Parliamentary Association Committee will operate under it. None of these institutions will have a supranational nature.

 

  • It is one of the main elements of the Eurasian Economic Union, to be launched in 2015.

 

  • Accession to R-B-K CU will mean automated accession to the Eurasian Union and, therefore, the economic sovereignty will be lost.

 

  • Requires concession of the tariff policy, and reduction of the autonomy in taking decision in other areas (including energy sector).

 

  • The CU legislation is based on the Russian tariff legislation, in proportion of about 90%.[2] Hence, there is a trend of extending the geographical scope of the Russian legislation (in the economic area) on Belarus and Kazakhstan.

 

  • The Eurasian Economic Commission (EEC) will become the supranational authority, to which a part of the country’s sovereignty will be delegated, in particular in relation to the tariff policy. The decisions approved by the Commission will be binding and will impact a series of public policies: tariff, macroeconomic, foreign currency, investment, energy, etc.   Moreover, according to some sources, about 80%[3] of the Commission officials are citizens of Russia.

Economic Block

  • The Association Council cannot adopt any decision that impacts the Republic of Moldova without the consent of Moldovan representatives.

 

  • AA with EU does not affect by any means the Free Exchange Agreement with CIS and is compatible with any other Free Trade Agreements.

 

 

  • The Association Agreement allows market access to over 500 million consumers from 28 EU Member States and Turkey. AA includes actions related to agriculture modernization and regional development of the country.

 

 

 

 

 

  • AA specifies that EU will provide financial aid, including via the agency of EBRD and EIB. The financial support will be conditioned, whenever required, on the reforms implemented and progresses made.
  • The Eurasian Economic Commission can adopt decisions that impact the Republic of Moldova without its consent.

 

  • Accession to R-B-K CU will annul immediately all trade facilities provided by EU.[4] In addition, it will be impossible to establish a free trade area between the Republic of Moldova and other countries.

 

  • Access to a market with 172 million consumers, including 3 CIS countries with which the Republic of Moldova has already concluded a Free Trade Agreement. In other words, accession to CU will not offer additional sales markets, but will limit the existing ones. This will impact negatively the domestic economic operators, who will lose the facilitated access to the huge EU market.

 

  • R-B-K CU does not envisage any permanent and institutionalized financial assistance during the accession process. Thus, such countries as Kyrgyzstan require openly the establishment of some funds to support the new members of the Union for at least a period of 5-10 years. [5]

 

Value-Based Block: Rule of Law, Democracy and Human Rights

  • Compliance with the democratic principles, human rights, good governance and market economy rules are crucial for AA implementation. Moreover, the Agreement contains provisions related to the promotion of sovereignty and territorial integrity of the Republic of Moldova.[6]

 

  • Perception of Corruption: The perception of corruption is manifested to the highest extents in Bulgaria and Greece (ranking the 77th and 80th, respectively[7]).

 

 

  • Political Rights and Civil Liberties: the EU countries belong to the category of free societies (Freedom House Index: open and competitive political systems, observance of human rights, functional civil society).

 

  • Media Freedom:

 

  • The former soviet countries were also invited to join the CU. Accession to CU is not conditioned on any criteria, such as strengthening the rule of law or observance of human rights.[8]

 

 

 

  • Perception of Corruption: According to Transparency International, the perception of corruption in the CU countries is relatively high: Russia - 127, Belarus – 124 and Kazakhstan – 140.

 

 

 

  • Political Rights and Civil Liberties: The three CU countries are not free.[9]

 

 

  • Media Freedom: According to the Press Freedom Index, developed by Reporters Without Borders, Russia, Belarus and Kazakhstan rank the 148th, 157th and 161st respectively of the 180 countries.[10]

 

As a conclusion, we underline that enforcement of the Association Agreement is different from accession to Russia-Belarus-Kazakhstan Customs Union. The first envisages progressive dialogue with the EU, but is separated from the EU enlargement agenda. Unlike the purpose of the Association Agreement, accession to the Customs Union will imply a higher level of integration, for which the Republic of Moldova is not ready. This implies dilution of the country’s sovereignty in various economic sectors, as well as irrevocable concession of the decision-making power with regards to the tariff policy and other aspects of the macroeconomic and macro-financial policies.



[2] Мухтар Тайжан: Кыргызстан должен отказаться от вступления в Таможенный союз, (Muhtar Taijan: Kyrgyzstan should Give Up on its Accession to the Customs Union),

http://www.vb.kg/doc/227745_myhtar_tayjan:_kyrgyzstan_doljen_otkazatsia_ot_vstypleniia_v_tamojennyy_souz.html

[3] Ibid

[5] Без финансовой поддержки Киргизия в ТС не хочет (Kyrgyzstan does not want to join the CU without financial support), http://xn--b1ae2adf4f.xn--p1ai/index.php?option=com_k2&view=item&id=9523:bez-finansovoy-poddepzhki-kipgiziya-v-ts-ne-hochet&Itemid=354

[7] Corruption Perception Index 2013, http://cpi.transparency.org/cpi2013/results/

[8] “Суверенитет не икона” (“Sovereignty is not an icon”), http://www.gazeta.ru/business/2013/10/24/5722545.shtml

[10] The World Press Freedom Index 2014, http://rsf.org/index2014/es-index2014.php

 
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