Re-integration processes involving Russia and its neighboring countries began soon after the break-up of the Soviet Union. In the 90’s, a huge number of treaties, often contradicting each other, were entered into in order to establish different forms of economic and political integration in the post-Soviet area. It was the time when the Commonwealth of Independent States (CIS), the Free-Trade Area, the Union State of Russia and Belorussia were formed. Although many of those treaties are still in force, their real legal effect is limited and no serious integration has been achieved on their basis in practice.
A new era in the post-Soviet economic integration was opened on 10 October 2000 when the Treaty on the Establishment of the Eurasian Economic Community (EurAsEC) was signed by five CIS countries: Russia, Belorussia, Kazakhstan, Kyrgyzstan and Tajikistan (Uzbekistan joined the Community in 2006 but suspended its membership in 2008). The EurAsEC Treaty was followed by the Treaty on the Establishment of the Common Customs Territory and Formation of the Customs Union (the CU) of 6 October 2007 (in force since 10 October 2008) with only Russia, Belorussia and Kazakhstan as the contracting parties. The same three countries signed the Treaty on Eurasian Economic Commission on 18 November 2011. These acts (the Treaties) outlined the legal skeleton of so called Eurasian integration which became the key factor in the member states’ economic and political development.
Totally, almost 100 treaties, agreements and protocols have entered into force or have been applied provisionally within the CU and EurAsEC frameworks. At present, EurAsEC covers the area of more than 20 m sq. km with a population of approximately 182 m people, and represents about 4% of the world GDP.
The term EurAsEC law was first defined in 2012 in the Rules of Procedure of the EurAsEC Court of Justice. It comprises: generally recognised principles and rules of international law; international treaties; resolutions of the EurAsEC and the CU institutions; and case law of the EurAsEC Court of Justice.
The period of 2012-2013 can without doubt be acclaimed as the breakthrough in the Eurasian law. The main development areas in the EurAsEC legal framework were: (i) institutions; (ii) tariff and non-tariff regulation of the external trade; (iii) technical regulation; (iv) competition; (v) external competence; and (vi) case law.
Institutions: Closer to the EU Model
The EurAsEC institutional structure includes: (i) the Interstate Council, the supreme body formed of the heads of states and governments of the member states; (ii) the Integration Committee, the standing body composed of deputy heads of the governments; (iii) the Inter-Parliamentary Assembly comprised of the delegates from the national parliaments; and (iv) the Court of Justice.
However, the role of the leading integration authority in the EurAsEC has been assigned to the Eurasian Economic Commission (the Commission) which replaced the Customs Union Commission since January 2012; the latter had been established in 2010 on the basis of the CU Treaty. The Commission has been granted the status of a supranational body which is not subordinated to the governments of the member states. Its resolutions are mandatory for the member states and apply directly on their territories. The Commission consists of the Council responsible for the general coordination of the integration process (with three members representing each government) and the Collegium being the executive body (comprises nine ministers including the Chairman, three from each member state).
The EurAsEC Court of Justice (the Court) was established by the EurAsEC Treaty; and its Statute was adopted by the Interstate Council in 2003. However, the Court remained inactive until 2012 when its Rules of Procedure were finally inured. The first case heard by the Court was South Kuzbass Coal Company (a Russian joint stock company) v. Commission; the petition was filed to the Court on 11 May 2012 and the first hearing took place on 26 June of the same year. On 5 September the petition was satisfied by the Panel and on 29 November by the Board of Appeal. The supranational court of justice became a reality in the EurAsEC!
The Court’s purpose is to build up the EurAsEC law by securing uniform application of the EurAsEC and CU treaties, acts of their institutions and by resolving disputes within its competence. Cases are heard by the Plenum, the Grand Panel, the Panel and the Board of Appeal. The judges are selected by the member states (two persons of each) out of the judges/arbitrators of their highest arbitration (commercial, economic) courts or other highly skilled legal professionals, and then appointed by the Inter-Parliamentary Assembly for a six year term. The Court is located in Minsk, the capital city of Belorussia.
Delegating Regulatory Functions for External Trade to the Community
Since 6 July 2010, the single Customs Code of the CU has been directly applied in the three countries. The Single Customs Tariff took effect on 1 July 2011. The Commission regularly amends the CU customs nomenclature and the Single Customs Tariff. The other notable tariff measures taken by the Commission recently include the list of the CU tariff quotas for 2013 and new procedures for their allocation by the member states; new detailed common rules on application of particular customs valuation methods; new rules for customs declaration and formalities.
As regards non-tariff barriers, a number of trade defense measures were recently implemented by the EurAsEC institutions, such as: a new single list of goods restricted for importation to or exportation from the Customs Union; certain quantitative restrictions (e.g. import quotas for stainless tubes); provisional and definitive antidumping measures (enameled iron baths from China, graphite electrodes from India, light commercial vehicles from Germany, Italy and Turkey, etc.) and safeguards (combine harvesters, porcelain kitchenware).
Moving Technical Barriers from National to Common Borders
The EurAsEC institutions have adopted a single list of 66 products to which mandatory technical requirements of the CU apply. Over 20 technical regulations have entered into force since the beginning of 2012 up to date (food safety, grain, textiles, perfumes, toys, machinery, etc.), and more of them are to take effect within the next year (including those for alcohol, tobacco, vehicles, building safety).
In December 2012 the Commission elaborated the rules on importation of products to which the CU technical regulations apply and the single forms for certificates and declarations of conformity. At the same time an agreement on removal of technical barriers to trade with the CIS countries that are not members of the CU was entered into.
Competition Law as a New Trend
Formation of the single market within the EurAsEC does not limit itself to the traditional measures such as customs union and technical regulation. Also, protection of competition has been recognised as a vitally important instrument. For this purpose the Agreement on unified principles and rules of competition took effect in December 2012 together with the Rules on procedures for investigation and examination of cases regarding violation of competition and the Rules for calculation and imposition of penalties for violation of the EurAsEC competition rules. Hence, the Commission has become the supranational regulating authority in the field of competition and merger control. For this purpose in May 2013, the Commission formed a Department for antitrust regulation which is now responsible for carrying out antimonopoly investigations.
Further, the Commission has launched the process to elaborate a member states’ Model Law on Competition. It was planned to be adopted already in the summer of 2013 but is still under discussion. At the same time, the Commission has formed a working group for approximation of laws of the member states regarding price control for the markets that are not subject to natural monopoly.
Increasing the Community’s External Competence
The Treaties have vested the Commission with the right to negotiate and to enter into international agreements within its competence, if authorised by the Interstate Council. Consequently, the Commission carries out trade negotiations with third countries, for example the negotiations on free trade agreements with Vietnam, New Zealand and India. The Commission is now promoting a new approach to accession to international treaties (e.g. the Convention on Common Transit of 1987) whereby the CU but not its member states should be the contracting party.
The Commission’s external competence is also being shown in respect of international organisations. In June 2013 a Memorandum of understanding was signed between the Commission and the UN Economic Commission for Europe (UNECE), and on 1 July 2013 the Commission was granted the observer status with the UNCTAD.
EurAsEC Court’s Case Law: First Experience
In its first case (South Kuzbass Coal Company v. Commission) the Court nullified certain provisions of a Commission Resolution laying down discriminatory formalities for Russian exporters. The Court further required national courts of the member states to bring their practices on similar cases in compliance with the Court’s ruling.
The second claim, ONP (Limited Liability Company) v. Commission, was satisfied by the Panel on 15 November 2012 and by the Board of Appeal on 21 February 2013. The Court ruled on nullification of a Commission Resolution on customs classification of certain means of transportation. The International Convention on the Harmonised Commodity Description and Coding System was recognised as a part of the CU legislation.
A Commission Resolution on anti-dumping measures regarding forged steel rolls originating from the Ukraine was examined by the Court in Novokramotorsk Engineering Plant (Joint Stock Company) v. Commission, satisfied by the Panel on 24 June 2013. The WTO agreements were recognised as a part of the CU legal system, but the CU treaties were regarded as lex specialis in relation to the WTO agreements. The Panel’s ruling is still to be reviewed by the Board of Appeal.
The first reference for the Court’s preliminary ruling was made by the Cassation Board of the Supreme Economic Court of the Republic of Belarus, heard by the Grand Panel on 10 July 2013. The Court resolved that the tariff preferences may be regulated by the member states’ national law only to the extent not covered by the CU legislation. The Court also confirmed the status of the Commission as a supranational regulatory body whose resolutions are mandatory and apply directly on the entire CU territory.
It should be noted that long before the Court delivered its first rulings, the national courts of the member states had in numerous cases supported the supremacy of the CU legislation over the national law. One of the recent examples is the resolution of the Constitutional Court of the Russian Federation of 2 July 2013 in the case Team Niinivirta AY v. Vyborg Customs. However the practice of national courts involving certain aspects of the CU legislation is still far from uniformity (even within a single member state), which increases the importance of the Court as the vehicle for the uniform application and interpretation of the Eurasian law.
Where to Move Further?
The EurAsEC agenda for the coming years includes a number of ambitious tasks, and the top priority has been given to the completion of the single economic area with its concept of four freedoms (free movement of goods, services, capitals and persons) and reorganisation of the EurAsEC into the Eurasian Economic Union by 2015-2016. Further approximation of macroeconomic, budgetary and competition policies of the member states, harmonisation of their laws in banking, currency, securities and insurance areas are also to be fulfilled during 2014–2015. At the same time, the number of the member states may increase (a Roadmap for Kyrgyz Republic accession to the CU should be presented by the end of 2013; negotiations have been launched with Armenia). In the long-term perspective, the member states are projecting the introduction of a common currency.
In the legal sphere, serious work is to be done to codify the huge number of the existing EurAsEC/CU treaties by 2015, and at the same time to adopt new legal acts for the completion of the single economic area. The list of legislation to be drafted and implemented by the Commission in the coming years is impressive, and many of such new acts will seriously affect the legal pattern and business practice in the member states. We may also expect the extension of the Court practice which will inevitably start resolving disputes between the member states and the EurAsEC institutions.
Will the Court and the Commission keep the distance from the member states’ political interests and ensure the supremacy of law in the Eurasian dimension? Will the EurAsEC economic operators see the real benefits from the formation of the single economic area and its legal system? Will the oncoming Eurasian Economic Union become a competitive player in the world market and build up strong competence in the international legal relations? The answers are expected within the next couple of years.