News report on the EAEU agreement on special subsidies
News Report #1
News Article: "Medvedev: the EAEU agreement on special subsidies will strengthen the rules of fair competition". 2017. TASS Russian News Agency. http://tass.ru/ekonomika/4901968
The news article is about the Russian Head of Government, Medvedev, who on the government session stated that “the EAEU agreement on special subsidies will strengthen the rules of fair competition”. The reason why this was put on the session’s agenda is that this agreement was already signed on 26th of May in Kazan but it had to be ratified by each member state’s government because it contains rules which are different from their national corpus juris (Eurasian Commission 2017).
The agreement contains rules of procedure on the voluntary coordination of special subsidies with the Eurasian Commission; 15 criteria on the basis of which the Commission will make decisions on special subsidies’ acceptability; rules of procedure on appealing for allowing specific subsidies if there is evidence that the Commission’s decision may bring harm to a state (gov-news.ru 2018).
The reason why this news is important is that since all the EAEU member countries are post-socialist states, many of enterprises, especially in natural resources sector, are under state control. For states this creates the interest to protect national industries by subsidizing them. The EU had been undergoing through the same and in order to facilitate integration and fair competition, the European Commission used privatization and further liberalization as a set of European integration requirements, especially in such sectors as energy, airline, and telecoms (Judith Clifton, Comín and Fuentes 2006, 744).
In order to analyze it, it could be speculated on why the member states decided to give up the ability to regulate and chose to harmonize some special subsidies, and moreover, give the power to decide on this to the Eurasian Commission, which has both supranational and intergovernmental features due to its composition. According to Mittrany, a proponent of functionalism, states would like to give certain functions to the functional agencies because they would be able to coordinate enterprises at the regional level, and the states would appreciate this advantage (Bache 2011, 5). This argument makes sense, because the Commission regulates and sets standard subsidies, the market will become more predictable and integration will proceed smoother. This is supported in the Explanatory Note written by the Minister of National Economy of Kazakhstan (2017), which was supplemented to the agreement when it was undergoing the ratification process in Kazakhstan. Mr. Suleimenov argued that the purpose of this agreement is to enhance transparency and provide a predictable environment in industrial spheres.
Alternatively, another theory that may explain this desire for harmonization is intergovernmentalism. Especially, the second point of Hoffman’s criticism of neofunctionalism (Bache 2011, 11) is relevant here. The idea that national governments are powerful figures in integration and that they are guided by their duty to protect their national interests. Interestingly, support for this also can be founded in the Explanatory Note, which says that this agreement will create legal conditions for preventing future claims from other member-states complains regarding these special subsidies. This may tell us that country-members would like to bargain on certain special subsidies and secure some of them through the Eurasian Commission decisions than to put them all at risk at once.
To conclude, the decision of member states to engage in the harmonization of subsidies is considered favorable for facilitation of the EAEU integration and various theories like intergovernmentalism and functionalism may explain the nature of this integration. Nevertheless, since the EAEU is a young organization, it is too early to definitely say what are the roots of this process and scholars should pay attention to further developments of the EAEU as an institution.
Word count: 587
Reference List
Bache, Ian, Simon Bulmer, and Stephen George. 2011. Politics In The European Union. Oxford: Oxford University Press.
Clifton, Judith, Francisco Comín, and Daniel Díaz Fuentes. 2006. "Privatizing Public Enterprises In The European Union 1960–2002: Ideological, Pragmatic, Inevitable?". Journal Of European Public Policy 13 (5): 736-756. doi:10.1080/13501760600808857.
"On The Ratification Of An Agreement On The Procedure For The Voluntary Harmonization Of The Eurasian Economic Union With The Eurasian Economic Commission Of Specific Technologies In The Field Of Commodities In The State Duma". 2018. ГОСНОВОСТИ.РФ. https://gov-news.ru/о-внесении-в-госдуму-законопроекта-о-ратификации-соглашения-о-порядке-добровольного-согласования-государствами/
Suleimenov, Timur. 2017. "EXPLANATORY NOTE To The Draft Resolution Of The Government Of The Republic Of Kazakhstan "On The Draft Law Of The Republic Of Kazakhstan" On The Ratification Of The Agreement On The Procedure For The Voluntary Coordination Of Specific Subsidies For Industrial Goods By The Member States Of The Eurasian Economic Union With The Eurasian Economic Commission And The Eurasian Economic Commission's Conduct Of Proceedings Related To The Provision By Member States Of The Eurasian Economic Community Economic Union Of Specific Subsidies "". Economy.Gov.Kz. http://economy.gov.kz/sites/default/files/pages/pz-pprk-rus.docx.
"В ЕАЭС Подписано Соглашение По Добровольному Согласованию Специфических Субсидий". 2017. Eurasiancommission.Org. http://www.eurasiancommission.org/ru/nae/news/Pages/26-05-2017-6.aspx.