The EEC Chairman: We need to create powerful modern clusters in the EAEU countries
In August 2016, Kyrgyzstan celebrated the first anniversary of accession to the Eurasian Economic Union. The Alliance, new for Eurasia, aims to unite the economies of the member countries, to increase the economic potential of the region. Business Eurasia talks with the Chairman of the Eurasian Economic Commission Tigran Sargsyan on the development of the Union and Kyrgyzstan in it.
Chairman: We need to create powerful modern clusters in the EAEU countries
In August 2016, Kyrgyzstan celebrated the first anniversary of accession
to the Eurasian Economic Union. The Alliance, new for Eurasia, aims to unite
the economies of the member countries, to increase the economic potential of
the region. Business Eurasia talks with the Chairman of the Eurasian Economic
Commission Tigran Sargsyan on the development of the Union and Kyrgyzstan in
- Mr. Sargsyan,
thank you for this opportunity to talk with you. In February, you took the post
of the Chairman of the Eurasian Economic Commission. The Eurasian Economic
Union has been in existence for a year and a half. The term is small, but the
first results can be summarized. In your opinion, what are the most important
- First of all I would like to say that during this time the Eurasian
Economic Commission, together with the countries of the Eurasian Economic Union
(EAEU), has done everything possible to achieve the main objective - ensuring
the stable development of the economies of the Member States of the Union in
order to improve the living standards of the population.
In 2015, together with the formation of the Eurasian Economic Union, the
common market of services was launched. Now it includes 43 sectors that in
total make up more than 25 per cent of the GDP of each Member State. We are
working on liberalization of other 21 sectors. Within the framework of the
common market of services, their providers are granted the maximum level of
Last year, the common labour market started its operation in the EAEU.
Thanks to it, the residents of the Member States of the Union have equal rights
in employment in any of the countries and pay income tax at the same rate as
residents. People were given the right for social insurance and health care in
any country of the Union. The common laws provide for mutual recognition of
diplomas in the absolute majority of specialties. This significantly increases
the mobility of highly qualified specialists.
This year, the countries have also come close to adopting a common
pension legislation. After signing the Pension Agreement, citizens of the EAEU
countries will be able to receive pensions for the period of their employment
from the State of the Union where they worked.
We have developed dozens of modern, internationally compliant
regulations that are necessary to launch the common markets of medicines and
medical products. We hope that in the full format they will start operating at
the end of this year. In addition, the work is under way on establishment of
the common electric power and energy market, oil, oil products and gas markets.
- In 2016, the
post-Soviet space is commemorating 25-anniversary of establishment of the great
association - the Commonwealth of Independent States. Of course, it's more political
rather than an economic formation. Political analysts note that the
Commonwealth has failed as an institution. And the main reason is the
multi-directional political systems of the CIS countries. Can, in your opinion,
the EAEU have the same fate?
- I wouldn't give such estimates of the CIS. It is in the first place.
Secondly, the Eurasian Union is primarily an economic formation created on the
basis of mutual economic interest of the Member States of the Union. Therefore,
the subject of discussion for us is first and foremost the issues underlying
the plane of the economy. And here we all have roughly the same the interests -
a decent standard of living and a healthy economy. We should further understand
that in order to solve purely economic issues political solutions are also
required. But we must not mix up economics and politics. Ultimately, I do not
see any prerequisites to the failure of the Eurasian Union.
- This year,
Kyrgyzstan has commemorated the first anniversary of its accession to the Eurasian
Economic Union. At the Summit of the Heads of the States in Sochi, the results
of our country’s development were called high. Can you explain, why?
- This is due primarily to the fact that we see that the work we have
done really gives real results. To name just a few examples. Firstly, opening
of customs borders significantly reduced the time needed for delivery of goods
to the markets of the other Union countries. This allowed manufacturers to
significantly increase product exports. Additional benefit is the fact that the
EAEU successfully implements a simplified procedure for customs declaration for
vehicles registered in the EAEU Member States.
The EAEU creates favourable conditions for the development of trade
industries and agroindustrial complex of Kyrgyzstan. According to the EEC, the
agricultural production in the Kyrgyz Republic increased by 2.9% in January
through June 2016 as compared to the same period of 2015.
The majority of the population is likely to feel these results later.
And now only economists, Eurasian leaders and entrepreneurs see them. I don't
quite agree with your assertion that the ordinary citizens of Kyrgyzstan do not
feel the positive effects of the integration in the EAEU.
New conditions have essentially changed the legal status of labour
migrants from Kyrgystan. Now, the citizens of the Republic have equal rights
with residents of the other Member States for employment; there is no quota
agreement with employers. There is no need to obtain additional permits. For
example, in Russia, the citizens of the Republic do not have to pass exams in
Russian language, History and Legal Basics of the Russian Federation.
Also important is the fact that the citizens of Kyrgyzstan coming to
other countries of the Union for employment, are exempt from the obligation to
register with public authorities within 30 days from the date of entry. In the
future, they will only need to register for the duration of the employment
contract. Thus, there is no need any more to periodically leave the employment
country and then re-enter again to prolong the stay.
Today, workers from Kyrgyzstan in Russia pay income tax from the first
day of work at the same rate as residents: 13 percent, instead of 30. Their
children have the right to attend pre-school institutions and obtain education
in accordance with the Russian laws.
Kyrgyzstan will also receive new positive economic effects from
integration projects, which will be launched soon. In particular, this year it
is planned to adopt the EAEU Customs Code. Entrepreneurs will have the common
set of rules. This document envisages a number of innovations which will
considerably save resources of businesses - customs formalities will be
simplified, customs procedures will become less time-consuming, which equals
the minimized communication with officials and, therefore, an improved business
according to the integration partners, has met their expectations. However, our
country still has a lot of problems. Skeptics suggest that they were associated
with accession to the EAEU. This is transit of agricultural products, outflow
of labour force from the garment industry, dominance of products of the EAEU
Member States. How long, in your opinion, could such period continue?
- In general, dispute with skeptics is usually a fruitless task. All the
countries of the Eurasian Economic Union have their share of problems. Just
like any country in the world. It is connected with the processes and trends in
the world economy. In the first half of 2016, the EAEU Member States
demonstrated positive dynamics of individual macroeconomic indicators. For
example, agricultural production for the first half increased by 2.7 percent,
turnover rose by 1.2 per cent.
At the end of the last year, the labour market was characterized by a
decline in the unemployment rate for the Union up to 5.7%, which is better than
the EU (9.4%) and similar to the United States (5.3%). In fact, this means that
the integration helped defusing the economic crisis in the countries of the Eurasian
Economic Union, mitigated unfavourable external environment and external shocks
in the world economy.
- The President of
the Kyrgyz Republic and his team have done a lot for the development of
Kyrgyzstan within the Eurasian integration, and for our country's contribution
to the development of the EAEU itself. In the EEC, Kyrgyzstan is represented by
two Ministers - in charge of customs cooperation, energy and infrastructure.
Are these positions reserved for the Ministers from Kyrgyzstan due to some features
of the national economy of our country?
- Appointments to key positions in the Eurasian Economic Commission are
agreed between the countries in the light of the proposals of the Governments.
The Ministers that represent Kyrgyzstan in the Commission hold key positions:
Adamkul Zhunusov supervises the energy and infrastructure sector, Mukai
Kadyrkulov - customs cooperation.
- During the
accession of Kyrgyzstan to the EAEU, specialization of the EAEU countries on
production was discussed. Experts noted that not the unification of the
economy, but its narrow focus would prove beneficial. For example, Kyrgyzstan
was recommended to focus on garment production and tourism. How realistic do
you think is such arrangement of future markets, as the EAEU countries have
different levels of economic development?
- The economies are really uneven, but this does not prevent each
country from developing any of industries especially successfully. A certain
specialization in the EAEU is inevitable, at least on the basis of geography
and resources available. No country, even the largest and most well-developed,
can be competitive at a high level in all areas. Moreover, unification is not
fruitful. How can we increase volumes of mutual trade, if all the Union
countries produce the same products? Note that we do not talk here, for
example, of basic foodstuffs - each country of the Union thinks about its own
food security. The EAEU Member States first and foremost should not compete
among themselves in the development of the most advanced innovative industries,
digital technologies, which require huge financial and material costs. That's
where combining efforts would be the most reasonable solution. In my opinion,
it is better to create powerful modern clusters, industries and businesses, in
each country with the help of other members of the Union, that will be able to
compete with the goods and services of third countries and take their niche in
the global market.
Surenovich, the Eurasian integration is often seen as an attempt to revive the
Soviet Union. Over 25 years of independent history each Member State of the
Union has gone its own way and formed its own pattern. However, could the
economic integration be followed by the political one, which will lead to the
unification of the countries into a single state?
- It is important to understand that the Eurasian Economic Union is not
a neo-imperialist project. Obviously due to the fact that it would be
apparently farfetched. The notion that each country of the Union in the
post-Soviet space has gone its own way is not questioned. Each of them will
continue their own political way. Being a Member of the Eurasian Economic
Union. We are talking about economic integration, nothing more.
- Some scientists
at one time wrote about creating an integral Eurasian state. In this
connection, I would like to ask, how do you see the future of the Eurasian
integration and the role of Kyrgyzstan in it?
- Key integration issues between the countries of the Eurasian Economic
Union are governed from January 2015 by the Treaty on the EAEU. This document
outlines the three main objectives of the Union: creating conditions for stable
development of the economies of the Member States in order to improve the
living standards of the population; formation and development of a common
market for goods, services, capital and labour; overall modernization,
cooperation and enhancing the competitiveness of national economies.
By 2019, in accordance with the Treaty on the EAEU, a common electric
power market will be launched, by 2025 - the common gas, oil and oil products
market. By 2025, the common financial market will also be established in the
Eurasian space. Integration in the Union is strengthened in all areas. And the
role of Kyrgyzstan in it can definitely be regarded as high. It is a role of an
equal and respected partner.
- And the last
question. In honour of the 25 anniversary of independence, which is celebrated
by both Armenia and Kyrgyzstan in 2016, what would you wish the peoples of
these two Eurasian States?
- 25 years ago independence was gained not only by Armenia and
Kyrgyzstan, but the other States of the Eurasian Economic Union - Belarus,
Kazakhstan. And Russia also became in
substance a new country with a radically changed state priorities and
objectives. For each of our countries, a quarter of a century of independence
is a great holiday. I sincerely would like to wish prosperity for our
wonderful, hard-working, talented peoples!