Dear Mikhail Vladimirovich, to what extent has the EAEU economy managed to handle the pandemic situation? What decisions, taken with the participation of the EEC, have helped to minimize losses caused by infection-related restrictive measures?
The package of measures implemented by the Commission during the pandemic period allowed us to overcome the crisis with confidence, as well as to lay a solid foundation for further integration, which demonstrates the effectiveness of the EEC, celebrating its tenth anniversary in 2022.
We had to deal with challenges that we had not encountered before. Decisions on efficient management of resources, medicines and medical products were being promptly elaborated and taken. Specialists of member states in the field of sanitary and epidemiological safety were putting heads together.
Despite the unfavorable context, the Commission has managed to maintain the momentum and even set the performance patterns for further development of integration processes by focusing on strategic tasks. On the whole, it is safe to say that the Union has overcome the pandemic crisis and demonstrated its sustainability, as evidenced by the positive recovery indicators of the EAEU economies.
How could you assess the EAEU economy growth rate? Which industries has demonstrated development growth? In which sectors the results may be considered as below the level expected?
The coherent and efficient work of the Commission, coupled with the actions and measures of the national economies of the Union, made it possible to achieve positive growth trends of the EAEU economies.
As a result, GDP of the EAEU grew by 4.4 percent in January – September 2021, compared to the same period last year, and amounted to USD 1425 billion. The recovery of the Union's foreign markets and mutual trade is well underway. In January – September 2021, mutual trade increased by 31.2 percent (more than USD 58 billion, the share of total trade – 14.6 percent), foreign trade with countries outside the EAEU increased by 33.5 percent and reached USD 672 billion.
However, we believe that this is not enough. The volume of EAEU foreign trade is still about two percent of global trade. In this regard, the Commission finds it necessary to create conditions for more active joint entry of Eurasian businesses into foreign markets. Large-scale commercial projects should play a major role in the development of the EAEU economy.
In this regard, the EEC proposes to elaborate new motivation tools for the creation of joint ventures – Eurasian transnational companies, including the Commission's participation in the financing of cooperation projects by the Eurasian Development Bank, access to the resources of the Eurasian Fund for Stabilization and Development, as well as the interstate programs and projects.
As a whole, we observe growth trends in a number of integration activities. As an example, I would refer to the dynamic development of the EAEU industrial pillar, where production indicators for the nine months of 2021 rose by almost 5 percent compared to the same period in 2020, amounting to USD 1.1 trillion.
I have to say that, in this context, the Commission has a well-defined development program for the coming years, featuring the promotion of the main areas of industrial cooperation. We have developed and adopted a new strategic document in the industrial domain for the next medium-term period up to 2025, i.e. the Industrial Cooperation Guidelines, which provides for a number of new mechanisms and instruments. These include the set-up of Eurasian centers of competence in the current areas of technological development, measures to reduce the share of illicit trafficking in industrial goods on the EAEU market, and building a technology foresight system. Most provisions of the document are aligned with the Strategic Directions for Developing the Eurasian Economic Integration until 2025.
One of the key objectives of the Guidelines is the development of industrial cooperation in the EAEU. An effective way is the creation of a network of cooperation, subcontracting and technology transfer, within which we create conditions for the rapid digital transformation of the EAEU industrial sector, which will allow for a closer business cooperation.
In the metallurgy sector we've analyzed the current situation on the general market of scrap ferrous and nonferrous metals. As a result, procurement and consumption balance for scrap ferrous metals has been formed. At present, the EEC is working out an action plan for the development of the waste and scrap metal management industry.
In the agricultural machinery sector a memorandum was signed between the leading enterprises of Russia and Belarus (St. Petersburg Tractor Plant, Minsk Tractor Works and Gomselmash) with the support of the Commission. This is a practical result of the Commission's activities aimed at the implementation of cooperation projects in the production of agricultural machinery and equipment. Such kind of cooperation is expected to minimize the cost of new and projected products, expand the investment potential and gain access to the latest technologies, which will increase the level of engineering products competitiveness of the EAEU countries.
In addition, the Commission and the countries of the Union are expanding cooperation in the field of aircraft construction and the establishment of the EAEU Commission on import substitution of high-tech products.
Concerning the support for industrial enterprises, the Commission has worked out possibilities for preferential project financing: changing the format of the Eurasian Development Bank operations, financing through the Eurasian Fund for Stabilization and Development or from the EEC budget (interest rate subsidies to the Eurasian Development Bank). In September 2021, the Council of the Eurasian Economic Commission instructed the member states, together with the EDB, to prepare feasible tools for preferential cooperation financing within the Union.
One of the most important priorities of the EAEU is the formation of common markets of the Union: energy, agro-industrial, pharmaceutical, labor... What stage are they at today? Which markets can be called as already established, and which ones need a boost?
The EAEU has a common market for goods with a unified customs territory and a Customs Code. Under the Code, the time for putting goods into free circulation has been cut sixfold, and the time for customs declaration registration has been decreased by half.
A common labor market has been operating for almost 10 years. The citizens of the five countries can work without restrictions in the territories of the Union members and enjoy equal rights.
Considerable effort is being put into the formation of a common market for pharmaceuticals. The Commission has adopted more than 70 documents that create the necessary framework of the regulatory system for all stages of the pharmaceutical lifecycle: production, registration, state control (pharmacovigilance), as well as safety and effectiveness monitoring.
The Commission is actively working on the launch of other common markets (financial, transport services, energy) within the framework of the Strategy-2025. The concept and program for the formation of common markets of oil and petroleum products in the EAEU, as well as a common gas market, have already been approved. The next important step will be the international agreements acceptance.
On August 20, 2021, at the Session of the Eurasian Intergovernmental Council, the EAEU heads of government approved a road map for the formation of a common market for organic agricultural products. According to this document, a draft agreement on a single organic market in the EAEU should be developed by the end of 2022.
The creation of such a market by the Union countries will make organic products more accessible to the citizens of the EAEU. Based on research results, if the world market for organics keeps its current growth rate of 10–12 percent per year, it will have reached about USD 300 billion by 2030. In this regard, we should become independent players in the international market, rather than serve as a sales destination for foreign products.
The task of the Commission is to ensure barrier-free circulation of organic products between the EAEU countries. A key provision of the agreement will be the unification of requirements for the production and labeling of such products, which will serve as the basis for mutual recognition of certification systems within the Union.
The intention is also to consider the formation and unification of statistical records of production, import and circulation of organic agricultural products.
We expect that after the adoption and gradual implementation of the road map, the pace of organic sector development in the EAEU will significantly increase.
Another important priority issue is the EAEU digital agenda. How is it being implemented? Are there any difficulties and how are they being managed?
It is difficult to imagine the modern economy without the digital component. Transformation affects all spheres of human life and all types of economic activity. The digital agenda is one of the global development drivers, and each of the EAEU member countries has its own strategic plans in this area, taking into account the individual attributes and needs of their national economies.
But at the same time, digitalization has a huge potential for building synergies through cross-border processes, and merging the efforts of public authorities, scientific and business communities, and the initiatives of the citizens of our five countries. As a result, the competitiveness of our common market on the global arena will be largely determined by our overall achievements in this area.
A certain range of challenges set before the member states can, in fact, only be addressed at the supranational level. But to build a system that effectively manages the existing problematic issues and, at the same time, takes into account the interests of each national economy is a very hard and time-consuming job.
Today our work is based on a strategy covering the period up to 2025. During this time, the Union's digital priorities must be finalized, the mechanisms and tools for implementing the EAEU digital agenda must be fine-tuned, competence centers and a project management system must be formed.
The strategy stipulates the implementation of a number of practical projects related to the most important areas of cooperation of the EAEU states.
One of them is the Work Without Borders unified search system launched on July 1, 2021. It is an international search system, which provides access to vacancies and job applicants, contained in the member states' information systems on job placement and employment. Work without Borders is quite a popular job search interface.
Another project is the Digital Technical Regulation. The decision on the implementation of the project was adopted in July 2021. The project is aimed at the digital transformation of technical regulation, including re-engineering and digitalization of technical regulation processes to ensure the interaction of all market participants: manufacturers, exporters, importers, suppliers, consumers, conformity assessment bodies, public authorities of the Union member states on technical regulation, standardization, accreditation and others.
It is a large-scale project to convert more than ten thousand documents to the digital format.
We are working in cooperation with member states to create an ecosystem of EAEU digital transport corridors to meet the demand of the entire national economy for transportation and related services and integrate national producers of goods and services into the global economic framework. This will make it possible to increase exports of services provided by national transport and logistics facilities and to make full use of the Union countries transit capacity.
Favorable conditions are being created for the development of industrial cooperation and the implementation of joint projects in the real sector, e.g. the project called the Eurasian Network of Industrial Cooperation, Subcontracting and Technology Transfer. The project is aimed at involving small and medium-sized enterprises in the production chains of large manufacturers, stimulating innovation processes through technology transfer, as well as creating opportunities to promote the products of business entities of EAEU countries using international digital ecosystems.
The EAEU has lots of economic partners from among other integration associations. With which of them do you have the closest and most fruitful ties? What are the practical cooperation results?
Indeed, we have developed contacts with a number of countries and regional associations. We maintain cooperation with the ASEAN, SCO, CIS and other partners in the Greater Eurasia region, as well as with a range of countries of the continent. The EAEU has signed free trade agreements with Vietnam, Singapore, Serbia, and an interim agreement with Iran.
Significant groundwork has been carried out with Israeli partners. As well, we see good prospects with Indonesia and Mongolia. To expand the Union's opportunities in the African region it is necessary to intensify negotiations on the FTA with Egypt.
There are some cooperation insights with India, and we hope to begin substantive negotiations on multidirectional economic cooperation in the near future. One of the most promising interaction beacons between the EAEU and India could be the potential of the North-South transport corridor to increase transport connectivity in the region, significantly reduce logistics costs, increase freight volume and provide broader access to target markets.
The EAEU has the Agreement on Trade and Economic Cooperation signed with China. I would like to note that China is an important partner for us, accounting for over 20 percent of the Union's foreign trade.
One of the priorities of the Commission is a project to link the EAEU with the China's "One Belt, One Road" initiative.
Moreover, as part of the idea of the Greater Eurasian Partnership, on September 17, 2017 the Memorandum of Understanding was signed with the SCO, which accounts for more than 30 percent of global GDP and more than 16 percent of global trade. The document provides for economic cooperation in such areas as finance, trade and customs policy and trade facilitation issues, transport, digitalization and ICT, sanitary, quarantine and phytosanitary measures, energy, industrial and agro-industrial cooperation, and others.
In general, it can be noted that the Eurasian Economic Union has real prospects of becoming the core of the formation of the Greater Eurasian Partnership as emphasized in the Strategy-2025.
The priorities and goals have been defined. And we will keep working.
What priorities for the EAEU would you outline for the next three, five, ten years?
In the future, we see the EAEU as a competitive, proactive, and dynamic integration association, resistant to the impact of negative internal and external conditions. In order to ensure further development of integration potential and create conditions for the formation of such a Union in the medium term, the Strategy-2025 defines specific tools for achieving the targets of economic cooperation.
The new focus areas include economic aspects in healthcare, sports, tourism, education and science. The strategic directions are consistent with national economic interests and the goals of sustainable and inclusive economic development of each EAEU member state.
In the current economic context green energy with the development of green technologies and renewable energy sources seems to be a promising area of focus. In this regard, the Commission, together with the EAEU countries, has begun to develop joint policies on climate agenda. I am confident that the consistent and coordinated efforts towards a green economy within the EAEU will open up new development prospects for our countries in many economic sectors and the social sphere.
The Commission believes that food security is of particular importance. We consider it relevant to establish a Union stabilization food fund with the set-up of the necessary food reserves of various agricultural products to provide for the internal EAEU market and commodity interventions.
The creation of the EAEU research community is also important for the development of integration process. I believe that scientific and technical cooperation, advanced scientific research results and projects will become a catalyst of economic development and improvement of the quality of life, a driver of technical modernization of our economies, innovation activity increase, and a basis for an effective transition from trade cooperation to investment activity in the Union.
In conclusion, I would like to point out that the full potential of the Eurasian Economic Union is still to be achieved. We need to work more actively on new projects, expanding the Union's environment and institutions, shaping it as one of the most significant development centers of the modern world.
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