The Customs Union of Russia, Belarus, Kazakhstan
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The Customs Union of Russia, Belarus, Kazakhstan
I will consider the advantages and disadvantages of the Customs Union of Russia, Belarus, Kazakhstan in the table.
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The Customs Union of Russia, Belarus, Kazakhstan
The main feature of the current global economy is the creation of different regional economic formations. Since the early 1990s, Russia has initiated several integration projects in the region. The Customs Union is one of them. The Customs Union of Russia, Belarus, and Kazakhstan became reality on the 1st of January, 2010. A customs union is a form of economic integration involving two or more sovereign states that create a single market, common taxes and free trade between member-states and common external tariffs with non-member states. The aim is to increase economic efficiency. The member-states have agreed to eliminate customs tariffs within the Union, to form common free trade territory.
In its first two years of operation, the Customs Union has largely achieved its initial objectives of fostering economic growth and facilitating trade relationships among its three member countries (The Customs Union: Initial Results, 2013).
However, some problems appeared. The Customs Union offers some short-term benefits to its members (investments in industry, business between member-states), but create economical and political problems in the long-term. One of the problems is Russian dominance. Russia dominated in the customs union and Kazakhstan cannot defense its economic positions. Belarus, Kazakhstan considers it only as means of economic integration. It seems that Russia plans to implement own national interests. The President of Kazakhstan Nursultan Nazarbayev thinks that the Customs Union has led to the increasing disparity in the trade balance of the country. There are the same difficulties in the promotion of Kazakh food products on the Russian market; there is no free access to the Russian energy market (Surkov, 2013). Undoubtedly, the domination of Russian companies in certain industries and Russia’s dominance in international trade policies will influence the future of integration. It is difficult to forecast and to say will this influence promote success or not. Today, the main
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strategy is to launch a Eurasian Economic Union in 2015 and further expanding of the Customs Union in 2014-2015. The Eurasian Economic Commission began to work in February 2012. It became the regulatory authority of the Customs Union in a manner similar to the European Commission for the European Union (Tarr, 2012). Russia plans to make a powerful supranational formation, which will play a vital role of connections Europe with the dynamic Asia-Pacific region. The Eurasian Economic Union will have a common banking system and a common currency. It also will strengthen the borders and harmonize labor and migration law.
Some people think that the Customs Union is an attempt to return USSR's period. It makes the atmosphere tense. However, Zbigniew Brzezinski states that Russia cannot be empire again without Ukraine. Ukraine is strategically more important for Russia than Belarus and Kazakhstan. Integration with Ukraine implies big perspectives and benefits. Ukraine connects Russia with Europe, and it is a good plan for expanding influence through Ukraine's territory in another part of Europe. Russia can be empire without Ukraine but only as Asian state (Brzezinski, 1998). The current revolution in Ukraine showed European choice of Ukraine. Therefore, Russia has found other ways for expanding integration. The future member-state of the Customs Union will be Armenia. It is an important international transport hub that connects member-states of the Customs Union with Iran and South Asia. Karla Prajakti (n.d.) gives advice to use the potential of Kazakhstan as the entry point of Asian goods from China and India into Europe, while at the same time with Belarus as the territory leading those goods into the European Union.
The other problem which requires a solution is the system of technical regulations. It is a serious obstacle for many firms, because they have to agree with regulators when they want to change a product or manufacturing. As a result, such system caused impending delays,
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makes innovation and adaptation to the needs of the market expensive. The solution is transition to voluntary standards. Instead of democratic transformations there is a union of 3 dictators with oligarchic circles. It is the wrong way. People wait for freedom and respect for basic rights. It is necessary to make the liberalization of service sectors and improved market access within the union. In addition, reducing of the common external tariff will affect positively on import. It will become attractive to foreign firms that imported their goods to the Customs Union. Then reducing non-tariff barriers will be a significant step to the success of the Customs Union. There have been many trade disputes between Belarus and Russia on milk, meat, buses, pipes and beer due to non-tariff barriers (Petrovskaya, 2012). The Customs Union should reduce these barriers.
The Customs Union has the potential to form the basis for expanding trade in the region and can succeed, but the best variant is solving the current problems within the Union, then deepen the integration. Instead of that, Russia focuses on the integration of Armenia because it allows largely benefit from new markets in Persian the Gulf Arab States (Iran, for example). This integration can be realized, but step-by-step. However, it is better to strengthen the existing structures and effectively implement the integration agreements. Despite the imperfections of the Customs Union, it can still succeed in the future.
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References
Brzezinski Z. (1998). The grand chessboard: American primacy and its geostrategic imperatives. New York: Basic books.
Petrovskaya, G. (2012). Belarus, Russia, Ukraine. Doomed for trade conflicts. Deutsche Welle. Retrieved from http://www.dw.de/dw/article/0,,16023176,00.html.
Prajakti K. (n.d.). The Customs Union between Russia, Kazakhstan and Belarus First Steps towards the Revival of the Silk Road. Cambridge Central Asia Forum. Retrieved from http://www.academia.edu/481499/The_Customs_Union_between_Russia_Kazakhstan_and_Belarus_First_Steps_towards_the_Revival_of_the_Silk_Road
Surkov N. (2013). Russia beyond the Headlines. Retrieved from http://m.rbth.ru/international/2013/10/28/eurasian_economic_union_to_replace_customs_union_31237.html.
Tarr D.G. (2012) The Eurasian Customs Union among Russia, Belarus and Kazakhstan: Can It Succeed Where Its Predecessor Failed? Forum for Research on Eastern Europe and Emerging Economies. Retrieved from http://freepolicybriefs.org/2012/11/05/the-eurasian-customs-union-among-russia-belarus-and-kazakhstan-can-it-succeed-where-its-predecessor-failed/
The Customs Union: Initial Results (2013). Retrieved from http://pbn-hkstrategies.com/en/Insights/The-Customs-Union--Initial-Results
