The Eurasian Economic Union: how it works, what it does and why it’s important

The history of the Eurasian Economic Union

The official date marking the formation of the Customs Union can be considered as 1995 when the Agreement on the Union was signed between the Russian Federation, the Republic of Kazakhstan, and the Republic of Belarus. The aim of this Agreement was to establish economic cooperation among the parties, ensure free trade, and foster fair competition.

On February 26, 1999, the Treaty on the Customs Union and the Single Economic Space was signed. The participants of the Treaty were Russia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, and starting from 2006, Uzbekistan. Until the early 2000s, the member countries actively worked on enhancing cooperation in various areas of activity, including socio-cultural and scientific spheres.

In 2000, the decision was made to establish the Eurasian Economic Community (EurAsEC). The members of the community were the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.

In 2003, the Agreement on the Formation of the Single Economic Space (SES) was signed. The work began on preparing the legal framework of the SES, which later became the foundation for the Union’s functioning. The most significant events in the formation process of the Customs Union were two informal summits of the heads of states of the EurAsEC.

At the informal summit on August 16, 2006, the heads of the EurAsEC member states made a decision to form the Customs Union within the framework of the EurAsEC. Kazakhstan, Belarus, and Russia were tasked with preparing the contractual and legal framework. A year later, on October 6, 2007, at the EurAsEC summit, a package of documents was approved and signed, marking the beginning of the formation of the legal basis of the Customs Union. These included treaties on the establishment of a Single Customs Territory and the formation of the Customs Union, the Customs Union Commission, protocols amending the Treaty on the Establishment of the EurAsEC, procedures for the entry into force of international treaties aimed at forming the contractual and legal framework of the customs union, withdrawal from them, and accession to them. Additionally, an Action Plan for the formation of the customs union within the EurAsEC was approved.

Officially, starting from January 1, 2010, the Customs Union of the Republic of Belarus, the Republic of Kazakhstan, and the Russian Federation began its operation. The unified customs tariff and non-tariff regulation measures were applied in external trade with third countries, and tariff preferences and preferences for goods from third countries were streamlined. The Customs Code of the Customs Union came into effect. Gradually, customs clearance and control were abolished at the internal borders of the Customs Union member states, and notification points were eliminated.

In 2012, international treaties came into force, forming the legal basis of the Single Economic Space of the Republic of Belarus, the Republic of Kazakhstan, and the Russian Federation, laying the groundwork for the free movement not only of goods but also of services, capital, and labor.

With the signing of the Treaty on the Eurasian Economic Union on May 29, 2014, the member countries of the Customs Union and the Single Economic Space laid the foundation for closer cooperation. On October 10, 2014, the Republic of Armenia acceded to the EAEU Treaty. On December 23, 2014, the Treaty on the Accession of the Kyrgyz Republic to the EAEU was signed.

The goals of the EAEU include the economic development of member countries, modernization, and enhancement of their competitiveness in the global market. According to the document, the parties committed to coordinating economic policies and ensuring the free movement of goods, services, capital, and labor, as well as implementing coordinated policies in key economic sectors (energy, industry, agriculture, transport). Within the framework of the EAEU:

1. An internal market for goods operates.
2. The Unified Customs Tariff of the EAEU and other unified measures for regulating external trade with third parties are applied.
3. A single regime for trade in goods with third countries is in effect.
4. Unified customs regulation is implemented.
5. Free movement of goods between the territories of member states is ensured without customs declaration and state control (transport, sanitary, veterinary-sanitary, quarantine phytosanitary). Unified non-tariff regulation measures are applied to third countries by the EAEU:

• Prohibition of import and (or) export of goods;
• Quantitative restrictions on import and (or) export of goods;
• Exclusive right to export and (or) import goods;
• Automatic licensing (monitoring) of export and (or) import of goods;
• Permit procedure for import and (or) export of goods.

International Activities

The Union addresses the foreign economic challenges facing its members. Within its competence, cooperation is established with government structures, associations, and other entities in various industry sectors.

International work and the conclusion of agreements are based on decisions of the Supreme Eurasian Economic Council. Negotiations and agreements are conducted and signed on this basis, taking into account the fulfillment of domestic procedures.

The general cooperation processes are reflected in international acts. Competencies include:

• Economic and financial sphere;
• Trade and customs interaction;
• Electronic document flow and technical regulation;
• Development of industry and agriculture;
• Energy cooperation.

Structure and Governance

The highest body of the Eurasian Economic Union is the Supreme Eurasian Economic Council, which includes the presidents of the member states of the Union. Its meetings are held no less than once a year. The first meeting since the start of the EAEU took place on May 8, 2015, in the Kremlin.

The heads of governments of the participating states are part of the Eurasian Intergovernmental Council. It ensures the implementation and monitoring of the decisions of the Supreme Council at the level of presidents, issues directives to the Eurasian Economic Commission, and exercises other powers. Meetings are held no less than twice a year. The first meeting took place on February 6, 2015, in Gorki, at the suburban residence of the Russian Prime Minister.

The permanent regulatory body of the Union is the Eurasian Economic Commission. Among its tasks are ensuring the conditions for the functioning and development of the Union, as well as developing proposals on economic cooperation issues. The governing bodies of the EAEU are:

• Supreme Eurasian Economic Council (supreme governing body);
• Eurasian Intergovernmental Council;
• Eurasian Economic Commission (permanent working body);
• Court of the Eurasian Economic Union.

The directions of the Eurasian Economic Commission’s activities include:

• Allocation and distribution of import customs duties;
• Establishment of trade regimes with third countries;
• External and mutual trade statistics;
• Industrial and agricultural subsidies;
• Energy policy;
• Natural monopolies;
• Mutual trade in services and investments;
• Transport and transportation;
• Currency policy;
• Protection of intellectual property rights and means of individualization of goods, works, and services;
• Customs tariff and non-tariff regulation;
• Customs administration.

Business Council

On May 22, 2015, during the VIII Astana Economic Forum, an agreement was signed to establish the Business Council of the Eurasian Economic Union. The founders of the council were the National Chamber of Entrepreneurs of Kazakhstan “Atameken”, the Russian Union of Industrialists and Entrepreneurs, the Confederation of Industrialists and Employers (Employers) of Belarus, the Union of Industrialists and Entrepreneurs (Employers) of Armenia, and the Kyrgyz Union of Industrialists and Entrepreneurs. The work of the Council will facilitate dialogue between business circles of the EAEU member countries, as well as ensure their coordinated interaction with the Eurasian Economic Commission (EEC) and the leadership of the member states.

Establishment of Free Trade Zones

On May 29, 2015, in Kazakhstan, after a meeting of the Eurasian Intergovernmental Council, an agreement on a free trade zone (FTZ) between the EAEU and Vietnam was signed, which became the first international document on FTZ between the EAEU and a third party. The agreement includes, among other things, conditions for tariff liberalization of trade in goods between the Union states and Vietnam by reducing or eliminating import duties on a significant group of goods.

By 2024, the EAEU has concluded agreements on free trade zones with Vietnam, Serbia, China, Singapore, and Iran. Work is underway to conclude agreements with Egypt, Israel, Indonesia, India, and the United Arab Emirates. The feasibility of developing an agreement between the EAEU and Mongolia is being studied.

Eurasian Economic Commission

The Eurasian Economic Commission (EEC) is the regulatory body of the Eurasian Economic Union (EAEU), operating on a permanent basis. The EEC began its work in February 2012 and is currently headquartered in Moscow.

The Eurasian Economic Commission has supranational status, meaning it is not subordinate to any of the governments of the EAEU member states. Its main function is to create and maintain the conditions for the functioning of the EAEU and to develop strategies for further integration.

The EEC consists of the Council and the Collegium.

The Council of the EEC provides overall guidance, with one representative from each country (typically a deputy head of government), and decisions are made by consensus.

The Collegium of the EEC is the executive body.

The Eurasian Economic Commission creates three types of documents:

• Decisions, which form the regulatory framework of the EAEU and are mandatory for implementation in all member countries;
• Directives, which have an organizational character;
• Recommendations, which are not mandatory for implementation.

The Structure of the Unified Customs Legislation

Due to the formation of the normative legal framework of the Eurasian Economic Union, the customs legislation of the member states is undergoing changes. In addition to the existing national legislation, two more levels of regulation have appeared: international agreements between the member states of the Customs Union and the Decisions of the Customs Union Commission (currently the Eurasian Economic Commission). Currently, the customs legislation of the EAEU consists of a four-level system:

The Customs Code of the Eurasian Economic Union.

International agreements between the member states of the EAEU regulating customs relations.

Decisions of the Eurasian Economic Commission.

National customs legislation of the member countries.

Customs Code of the Eurasian Economic Union

The transition to a higher level of integration required significant changes in the normative legal framework of the Union. The work on creating a new Customs Code took several years, and the process involved numerous consultations to coordinate amendments with the member states of the Union. On December 26, 2016, the Customs Code of the Eurasian Economic Union was adopted, replacing the Customs Code of the Customs Union adopted in 2009. The new Customs Code of the EAEU entered into force on January 1, 2018. The document consolidates many international treaties and agreements of the Customs Union (for example, the Agreement on the Determination of the Customs Value of Goods Moved Across the Customs Border of the Customs Union), which will be completely or partially repealed.

The Customs Code of the EAEU contains a number of new provisions, not only regarding the structure of the Code itself (the new Customs Code of the EAEU contains 4 annexes, which were not present in the Customs Code of the CU), but also concerning customs regulation rules within the Union. For instance, the conceptual framework has been updated in the draft of the Customs Code of the EAEU, the principle of a “single window” has been introduced, priority has been given to electronic declaration, some changes have been made to customs procedures, the institution of an authorized economic operator has been reformed, and so on.

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