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New Integration Project for Eurasia - A Future That Is Being Born Today

New Integration Project for Eurasia - A Future That Is Being Born Today
October 7, 2011
Vladimir PUTIN, Prime-Minister of the Russian Federation

On 1 January 2012 a most important integration project -- the Single Economic Area of Russia, Belarus, and Kazakhstan -- is launched. A project that is, without exaggeration, a historic landmark, not only for our three countries, but also for all the states in the post-Soviet area.

The road to this frontier was difficult, and at times, tortuous. It began 20 years ago, when, following the collapse of the Soviet Union, the Commonwealth of Independent States was formed. To a large extent, the model was found that helped to preserve the myriads of civilizational and spiritual threads uniting our peoples. To preserve the production, economic, and other ties without which it is impossible to imagine our lives.

It is possible to assess the efficacy of the CIS in various ways, and to argue about its internal problems and unrealized expectations endlessly. But it is difficult to dispute the fact that the Commonwealth remains an irreplaceable mechanism enabling positions to be brought closer together and a single point of view on the key problems facing our region to be elaborated, and that it brings visible, concrete benefit to all its members.

Moreover, it is precisely the experience of the CIS that has allowed us to launch integration on multiple levels and at various speeds in the post-Soviet area, and to create such much-needed formats as the Union State of Russia and Belarus, the Collective Security Treaty Organization, the Eurasian Economic Community, the Customs Union, and, finally, the Single Economic Area.

It is characteristic that in the period of the worldwide financial crisis, which has forced states to seek new resources for economic growth, integrative processes have received an additional impetus. We have approached objectively the task of seriously modernizing the principles of our partnership -- both in the CIS, and in other regional associations. And we have concentrated our attention above all on the development of trade and production ties.

Essentially, it is a question of transforming integration into a stable and long-term project that is intelligible and attractive to citizens and to business, and that does not depend on mood swings in the current political or any other climate.

I will remark that it is precisely this task that was posed during the formation of the Eurasian Economic Community in 2000. And in the final analysis, it was precisely the logic of close, mutually advantageous cooperation and the understanding of the communality of strategic national interests that led Russia, Belarus, and Kazakhstan to form the Customs Union.

On 1 July 2011, controls over the movement of goods was removed on the internal borders of our three countries, which completed the formation of a full-fledged, single customs territory with clear prospects for the realization of the most ambitious business initiatives. Now we are making the step from the Customs Union to the Single Economic Area. We are creating a colossal market with more than 165 million consumers, standardized legislation, and the free movement of capital, services, and labor.

It is fundamentally important that the Single Economic Area will be based on harmonized actions in the key institutional spheres -- in macroeconomics, the safeguarding of competition rules, the sphere of technical regulations and agricultural subsidies, transport, and the tariffs of natural monopolies. And later, on a single visa and migration policy also, which will allow us to remove border controls on internal borders. That is to say, to make creative use of the experience of the Schengen agreements, which were good not only for the Europeans themselves, but also for all those who go to work, to study, or on vacation in the EU countries.

I will add that the technical equipment of the 7,000 km Russian-Kazakhstani border will now not be required. Moreover, qualitatively new conditions are being created to increase cross-border cooperation.

For citizens, the removal of migrational, border, and other barriers and the lifting of the so-called "labor quotas" will mean the possibility of choosing without any restrictions, where to live, where to obtain education, and where to work. Incidentally, such a freedom never existed in the USSR, with its institution of residence permits.

In addition, we are significantly increasing the volume of goods for personal consumption that can be imported duty free, thereby ridding people of the humiliating checks at customs posts.

Extensive opportunities are also opening up for business. I am speaking of the new dynamic markets, where unified standards and requirements on goods and services will operate -- moreover, in the majority of cases, they have been standardized with the European norms. This is important because we are currently moving toward contemporary technical regulations, and a harmonized policy will enable us to avoid technological breakdowns and the banal incompatibility of products. Moreover, every one of our countries' companies will effectively enjoy in all member states of the Single Economic Area all the advantages of the home producer, including access to state orders and contracts.

Naturally, in order to consolidate itself in such an open market, business will have to work on its efficiency, reduce costs, and invest resources in modernization. Consumers will only benefit from this.

At the same time, we can also talk of a genuine "competition of jurisdictions" and of a battle for the entrepreneur. After all, every Russian, Kazakhstani, and Belarusian businessman receives the right to choose in which of the three countries to register his firm, where to conduct business, and where to carry out the customs clearance of goods. This is a major incentive for national bureaucracies to work on improving market institutions and administrative procedures and on improving the business and investment climate. In short, to remove those "bottlenecks" and lacunae that up to now have remained untouched, and to improve legislation in accordance with the best worldwide and European practice.

In the past, it took the Europeans 40 years to travel the road from the European Coal and Steel Community to the full-fledged European Union. The formation of the Customs Union and the Single Economic Area is proceeding far more dynamically, because it takes into account the experience of the EU and other regional associations. We can see their strong and weak aspects. And in this lies our obvious advantage, allowing us to avoid their mistakes and to prevent the reproduction of various kinds of bureaucratic overkill.

We are also in constant contact with the leading business associations of the three countries. We are discussing contentious issues and taking account of constructive criticism. In particular, the discussion at the Customs Union's Business Forum held in Moscow in July this year was extremely useful.

I will repeat: For us it is very important that the public of our countries and entrepreneurs should see the integrative project not as bureaucratic games among the ruling elite, but as an absolutely living organism and a good opportunity to realize initiatives and to achieve success.

Thus, in the interests of business, the decision has already been adopted to begin the codification of the legal base of the Customs Union and the Single Economic Area so that participants in economic life do not have to wade through a "forest" of numerous paragraphs, articles, and reference norms. They will need only two basic documents to work -- the Customs Code and the Codified Treaty on Issues Pertaining to the Customs Union and the Single Economic Area.

From 1 January 2012 the Eurasian Economic Community Court will also begin to operate in full format. Not only states, but also participants in e conomic life will be able to appeal to the court on all incidents connected with discrimination and with the breach of the rules of competition and equal conditions for conducting business.

The fundamental distinguishing feature of the Customs Union and the Single Economic Area is the presence of supranational structures. Also fully within their compass is a basic requirement like the minimization of bureaucratic procedures and a focus on citizens' real interests.

In our view, the role of the Customs Union Commission, which already now possesses significant powers, should be increased. As of today, it possesses around 40 powers, but in the future -- in the framework of the Single Economic Area -- there will be over 100. They include powers to adopt a number of decisions on competitive policy, technical regulations, and subsidies. It is possible to achieve such complex tasks only by creating a full-fledged, permanently operating structure -- one that is compact, professional, and efficient. This is why Russia has put forward a proposal to create a Customs Union Commission Collegium with the participation of representatives of the "troika" of states, who will work as independent, international functionaries.

The construction of the Customs Union and the Single Economic Area lay the foundations for the formation, in the long term, of a Eurasian Economic Union. The gradual expansion of the club of members of the Customs Union and the Single Economic Area via the full-fledged inclusion of Kyrgyzstan and Tajikistan in the work will proceed at the same time.

We are not stopping at this, and set ourselves an ambitious task: to reach the next, higher, level of integration -- a Eurasian Union.

How do we see the prospects and outlines of this project?

First, it is not a question of recreating the USSR in one form or another. It would be naive to attempt to restore or to copy something that now remains in the past; but close integration on a new axiological, political, and economic basis is the imperative of the era.

We propose the model of a powerful supranational association capable of becoming one of the poles of the contemporary world, and, at the same time, of playing the role of an effective "link" between Europe and a dynamic Asia-Pacific region. This means, inter alia, that it is necessary to move, on the basis of the Customs Union and the Single Economic Area, toward the closer coordination of economic and currency policies, and to create a full-fledged economic union.

The combination of natural resources, capital, and strong human potential will allow the Eurasian Union to be competitive in the industrial and technological race and in the competition for investors and the creation of new jobs and advanced production operations. And along with other key players and regional structures -- such as the EU, the United States, China, and APEC -- to ensure the stability of global development.

Second, the Eurasian Union will serve as a sort of center for further integrative processes. That is to say, it will be formed by means of the gradual merger of existing structures -- the Customs Union and the Single Economic Area.

Third, it would be a mistake to compare the Eurasian Union and the Commonwealth of Independent States. Each of these structures has its own place and its own role in the post-Soviet area. Russia intends, together with its partners, to actively work on improving the institutions of the Commonwealth and on infusing it with a practical agenda.

In particular, this means launching specific, intelligible, and attractive initiatives and joint programs within the CIS. For example, in the sphere of power engineering, transport, high technologies, and social development. There are great prospects for humanitarian cooperation in science, culture, and education and for collaboration in the sphere of the regulation of the labor markets and the creation of a civilized environment for labor migration. We have received a mighty inheritance fro m the Soviet Union -- it includes infrastructure, the existing production specialization, and a common linguistic and scientific and cultural area. It is in our common interests to use this resource for development together.

In addition, I am convinced that the economic basis of the Commonwealth should be maximally liberalized trade regulations. On the initiative of Russia -- in the framework of its chairmanship of the CIS in 2010 -- the draft of a new Free Trade Zone Treaty was drawn up, on the basis, incidentally, of the principles of the World Trade Organization, and aimed at the full-scale removal of various kinds of barriers. We expect serious progress in the harmonization of positions on the Treaty during the next session of the Council of CIS Heads of Government, which will take place very soon -- in October 2011.

Fourth, the Eurasian Union is an open project. We welcome other partners, especially the Commonwealth countries, who wish to join. At the same time, we do not intend to rush or to push anyone. This must be a state's sovereign decision, dictated by its own long-term national interests.

Here, I would like to touch on one, in my view, extremely important topic. Certain neighbors of ours explain their unwillingness to participate in advanced integrative projects in the post-Soviet area by claiming that this contradicts their European choice.

I believe that this is a false dichotomy. We do not intend to fence ourselves off from anyone or to oppose anyone. The Eurasian Union will be founded on universal integrative principles as an inalienable part of Greater Europe, united by integrated values of freedom, democracy, and market laws.

As far back as in 2003, Russia and the EU agreed on the formation of a common economic area and on the coordination of the rules of economic activity, without the creation of supranational structures. As an extension of this idea, we have invited the Europeans to think together about the creation of a harmonious commonwealth of economies from Lisbon to Vladivostok, and about a free trade zone and even more advanced forms of integration. About the formation of an agreed policy in the sphere of industry, technologies, power engineering, education, and science. And finally, about the removal of visa barriers. These proposals have not been left hanging -- they are being discussed in detail by our European colleagues.

The Customs Union, and later, the Eurasian Union, will now become a participant in the dialog with the EU. In this way, membership of the Eurasian Union, apart from the direct economic benefits, will allow each of its members to integrate more quickly, and from stronger positions, into Europe.

In addition, an economically logical and well-balanced system of partnership between the Eurasian Union and the EU is capable of creating the real conditions for changing the geopolitical and geo-economic configuration of the entire continent, and would have an undoubted positive global impact.

Today it is obvious that the world crisis that erupted in 2008 bore a structural character. Even now we are seeing severe relapses of this crisis. The root of the problems lies in the accumulated global imbalances. At the same time, the process of elaborating post-crisis models of global development is proceeding with great difficulty. For example, the Doha round of talks has virtually come to a standstill, there are objective difficulties within the WTO also, and the very principle of free trade and the openness of markets is experiencing a serious crisis.

In our view, the solution could be the elaboration of common approaches "at the grassroots level," as the saying goes. At first, within the existing regional structures -- the EU, NAFTA, APEC, ASEAN, and others -- and then, by means of dialog between them. It is precisely from such integrative "bricks" that a world economy of a more stable character could be formed.

For example, the two biggest associations on our continent -- the European Union and the Eurasia n Union now being formed --, basing their collaboration on the rules of free trade and the compatibility of systems of regulation, are objectively capable, including through relations with third countries and regional structures, of extending these principles to the entire area -- from the Atlantic to the Pacific. To an area that will be harmonious in its economic nature, but polycentric from the point of view of specific mechanisms and executive decisions. It will then be logical to begin a constructive dialog on the principles of collaboration with the states of the Asia-Pacific Region, North America, and other regions.

In this connection, I will note that the Customs Union of Russia, Belarus, and Kazakhstan has already begun talks on the creation of a free trade zone with the European Free Trade Association. The topics of liberalizing trade and removing barriers in the way of economic cooperation will find an important place on the agenda of the APEC forum that will take place in a year's time in Vladivostok. Moreover, Russia will promote the common, agreed position of all members of the Customs Union and the Single Economic Area.

Thus our integration project is reaching a qualitatively new level, is opening up broad prospects for economic development, and is creating additional competitive advantages. This pooling of efforts will allow us not just to blend in with the global economy and system of trade, but also to genuinely participate in the process of elaborating decisions setting the rules of the game and defining the contours of the future.

I am convinced that the creation of the Eurasian Union and effective integration is the path that will allow its members to occupy a worthy place in the complex world of the 21st century. Only together are our countries capable of joining the leaders in global growth and civilizational progress, and of achieving success and prosperity.


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