Eurasian Economic Commission
Introduction
The Eurasian Economic Union (EAEU) is one of the key functioning institutions in the Eurasian region aimed at ensuring economic stability and constant development of its member-state population. Currently, five countries are abiding the laws of the EAEU Treaty, which gave a foundation to this institution in 2015. The member states of the Union are Russian Federation, Republic of Kazakhstan, Republic of Belarus, the Kyrgyz Republic and the Republic of Armenia. The main objectives of the Union include mutual cooperation as well as facilitating competitiveness among member states to strengthen economic integration in the Eurasian region. Most importantly, the EAEU Treaty establishes a common market for factors of productions as goods, services, capital, and labor. It has its own legal personality and should be recognized as an international organization of regional economic integration (Treaty on EAEU). The EAEU operates through its institutions of both supranational and intergovernmental character. The main focus of this paper is going to be on an executive body of EAEU – the Eurasian Economic Commission (EEC). Understanding the legal basis of this institution, its functions within the Union as well as some effective legal outputs of its work, will represent the importance of the EEC as a key agent of economic integration within the EAEU member states.
Legal Basis and Structure
The Eurasian Economic Commission is one of the oldest functioning bodies since the creation of the Customs Union (CU), the predecessor of the EAEU. One of the technocratic bodies of the CU was the Eurasian Customs Union Commission, which continued its function after the CU was replaced by EurAsEC and then by EAEU (Vinokurov, 2017). All of the powers of the CU Commission were delegated to the current EEC. Article 18 of the EAEU Treaty establishes a legal basis for the EEC as a body of the Union. The composition, functions, powers, and procedures of the EEC are described in Annex 1 of the Treaty. In general terms, the EEC is an unelected body, which manages the day-to-day business of the EAEU. According to the Treaty on the EAEU, “the Commission acts as a permanent body of the Union and consists of a Council and a Board” (Article 18). The main executive body of the EEC, the Board, is comprised of two representatives from each member state, and a Chairman of the Board all appointed by the Supreme Council (Treaty on EAEU, Annex 1). The Board of the Commission’s main function is to “manage the Departments of the Commission and implementing the decisions and dispositions adopted by the Supreme Council and Intergovernmental Council and decisions adopted by the Council of the Commission” (Annex 1). Decisions, dispositions, and recommendations by the Board are taken by a qualified majority with two-thirds of the Board votes. The Council is comprised of one deputy head of the government from each member state. (Treaty on EAEU, Article 12). In accordance with Annex 1 of the functioning treaty on EAEU, the responsibilities of the Council include “the regulation of the integration within the Union and general management of the Commission’s activities”. One of the prominent functions of the Council of the Commission is controlling the implementation of internal EAEU treaties, handing over the integration directions to the Supreme Council as well as overseeing the qualification requirements of the Commission employees and approving the draft of the EAEU budget (Treaty on EAEU, Annex 1). When it comes to decision-making rules, the Council can adopt decisions, dispositions, and recommendations reached by consensus among the Council of Commissioner members. Overall, decisions taken by the EEC have binding effect and are to be abided on the territory of all member-states.
Inter-Institutional Dynamics
There is a complex inter-institutional dynamic between the existing bodies of the EAEU. On top of all institutions within the EAEU is the Supreme Eurasian Economic Council, comprised of heads of the state of member states. As it is stated in the EAEU Treaty, “The Council Shall be a supreme body of the Union” (Article 10). Therefore, “in case of any conflict between decisions of the Eurasian Economic Commission, decisions of Supreme Eurasian Economic Council shall prevail” (Treaty on EAEU, Article 6). In other words, if we put the EAEU institutions in a hierarchical order, the Supreme Eurasian Economic Council would be at the top, while the EEC would be positioned on the bottom. However, meetings of the Supreme Council may be attended by the Chairman of the Board or members of the Council, if the Supreme Council finds the need to invite them and listen to their proposals (Treaty on EAEU, Article 11). Looking at the institutional structure of the European Union, there, the work of the European Commission is overseen by the European Parliament and it has the power to dismiss the Commission as a whole (Shackleton, 2017). Besides, the European Parliament is the institution that confirms the President of the Commission and the College thus there might be a constrained relationship between these institutions. In contrast, the Supreme Council of the EAEU is the body that appoints the EEC as well as issues instructions to them. The Supreme Council has the power to terminate the Board Commission member’s power, therefore, it is possible to say that EEC is accountable to the Supreme Council. The Intergovernmental Council, comprised of heads of governments of member states, also has power over the EEC. The decisions of the Intergovernmental Council prevail over the ones of the EEC, according to Article 6 of the Treaty on EAEU. The Commission is also responsible for preparing the agenda for Intergovernmental Council meetings. Another interesting inter-institutional feature of the European Union is the ability of the European Commission to initiate an enforcement proceeding, carried out by the European Court of Justice, against a member state for violating the obligations imposed by the EU Treaty (Shuibhne, 2017, p.168). This represents the supranational element of the European Commission as an effective regulator of abiding the laws of the EU. This kind of power is not granted for the EEC, even though it was available and written in the Treaty for a short period of time (Dragneva & Wolczuk, 2017). The absence of this procedure can be explained by the willingness of each member state to ensure a trustworthy and cooperative relationship. Since the Union has a small number of member states, in comparison to the EU, it would be unprofitable to impose such procedures.
The power dynamics within the EAEU institutions is commonly described as “a Belarusian elevator system”. It encompasses the system where the power is vested in the hands of higher institutions, so it does not allow any independent decision-making in the lower levels of the system (Karliuk, 2015). The EAEU decision-making system is indeed similar to this model because for a decision to become part of the legal framework of the Union, it has to go through multiple steps starting from an examination by the Commission departments and only after going through two Commission’s bodies arriving at the Supreme Council (Eurasian Economic Commission [EEC], 2014).
The adoption of the EAEU Treaty gave a stronger supranational character to the EEC, unlike during the functioning of the Customs Union. Now, EEC can negotiate on international treaties and ensure its implementation on the territory of the member states. International treaties form the Union law, so they are required to be obliged by all member states in line with their national law. Granting this function to the EEC is going to help to strengthen the EAEU’s international position and recognition by other international actors (Kirkham, 2016). Nevertheless, many scholars still argue that EEC has a very weak supranational character because the future success and implementation of its decisions is mainly rested on the approval by the Supreme Eurasian Council or Intergovernmental Council. This problem has raised a debate upon the question: To what extent we can consider the EEC as a supranational and independent body? Different scholars have a varying stance on this issue since EAEU is a relatively young institution with its own strengths and weaknesses. However, despite an imposed regulation on the decision-making scheme of the EEC by higher bodies, it still manages to generate successful legal output in both international and domestic areas.
Literature Review
The two-tier structure of the EEC is one of the distinct features of this institution in comparison to the European Commission. Both of the bodies (the Council and the Board) perform differing functions, each of them has its own Chairman and holds regular meetings within the members of the body. The upper tier of the EEC, the Council, comprised of deputy heads of the governments, represents the national interests of the state, while the lower tier, the Board, consists of commissioners nominated by member states, who act as non-political representatives (Dragneva & Wolczuk, 2017). As Dragneva & Wolczuk (2017) point out, the powers in-between two bodies lie in opposite directions since the Council is more intergovernmental in character but the Board tries not to take national interests on the first stake. Karliuk (2015), in his comparative research between EU and EAEU, also highlights that the position of the Council has more of a political nature. According to Karliuk (2015), the EEC cannot be analyzed as one institution because it is comprised of internal units which he describes as “an organization within an organization”, and each is granted with independent decision-making power. Therefore, it would be incorrect to consider the EEC as a supranational body as a whole since it embodies two other rather distinct institutional structures (Karliuk, 2015). In line with that Karliuk (2015) compares the Eurasian Commission Council to the Council of the European Union since both of these institutions represent the national interests of their governments. Even though the Eurasian Commission Council votes by a qualified majority, a sign of supranationalism, the general framework and functions of the institution still correspond to intergovernmental nature. However, Glazev et.al (2013), even claim that the Commission that existed under the Customs Union had qualified under the description of an international organization that could have been classified as sui generis institution on its own. Taking into consideration the fact that the powers of the Customs Union Commission were delegated to the current EEC, this interpretation can be taken into account for the functioning Commission.
When it comes to the fulfillment of the functions of the EAEU, despite the Union’s effort to carry out deep economic integration among its member states, some scholars still see a major influence of Russia on the development of the Union. Dragneva and Wolczuk (2017) claim that the creation of the EAEU was in solely political interest for Russia as a tool to maintain its hegemony in the Eurasian zone. Therefore, there might be weak institutional order due to the lack of commitment among member states. Nevertheless, according to Vinokurov (2017), the change of the EEC Board’s structure after departing from the Customs Union, has diminished Russia’s influence in the voting process. Now, Russia has only a 20% share of votes, even though it accounts for nearly 90% of the Union’s total GDP (Vinokurov, 2017). Still, weak institutionalism prevails within the Union’s structure. Karliuk (2015) demonstrates the phenomenon of “the Belarusian elevator”, which describes the power dynamics between EAEU institutions. The decisions that are taken in the lower level, the EEC, can be challenged at a higher level, the Supreme Eurasian Council or Intergovernmental Council (Karliuk, 2015). This system has a similar nature to the vertical system, which prevailed during the Soviet regime. Since the decision-making is highly centralized, there is no room for the EEC to act as an independent body. Even though the EEC’s main function is controlling the integration process its place in the hierarchical system does not allow it to fully perform its duties. Osadchaya (2019) agrees that for an integration within a common cultural space, it is impossible to act without the supranational body of management. Therefore, she claims that it is necessary to grant such powers to the EEC and expand its competences within the EAEU as a supranational decision-making body.
Theoretical Analysis
To understand the functioning of the EEC within the EAEU, it is possible to apply one of the EU governance theories. Rational choice institutionalists use the principal-agent theory to explain the relationship between the national governments and supranational institutions. It focuses on explaining the constraints imposed on actors through various institutional structures (Bache et.al, 2011). Mark Pollack (2003), using the EU structure, tried to show how national governments delegate certain powers to supranational institutions such as the European Commission, and its effects on the integration process. According to his findings, “governments delegate to supranational institutions to reduce the transaction cost of EU policy-making” (Pollack, 2003). The same principle can be applied to explain the powers and outputs of the EEC. Under Annex 1 of the EAEU Treaty, the Commission operates within twenty different areas which include customs and non-tariff regulation, technical regulations, competition policy, and macroeconomic policy. The power of decision-making upon these spheres can be provided by both international treaties and the EAEU Treaty. In addition, the Commission can act as a depositary of international treaties and the Supreme Council can even give the Commission the power to sign the international treaty if it corresponds to EEC’s competences (Treaty on EAEU, Annex 1). Besides, the decisions taken by the Commission can have a regulatory and binding effect for all member states, as it is stated in the EAEU Treaty. Therefore, the EEC acts as an agent of Eurasian integration, which is still controlled by principals (The Supreme Council and Intergovernmental Council) but has some independency within its competences. This process certainly reduces the transaction costs of decision-making within the EAEU.
Legislative Outputs of the EEC
The EAEU has generated some major outputs that had a legal effect since its official establishment. The “Eurasian Project” has generally been open to new members and new modes of cooperation among member states. The EEC has greatly contributed to this process of regional integration through its persistent work. On 10th October 2014, the Kyrgyz Republic has joined an agreement on creating EAEU and the EEC has done extensive work to ensure the necessary environment and a scheme of successful joining of the Kyrgyz Republic (EEC, 2015). The Commission is also responsible for preparing the normative legal and methodological framework regarding the further development of macroeconomic policies. The Commission annually prepares macroeconomic policy guidelines for each member state, which are to be approved by the Supreme Council. According to the book published by the Eurasian Economic Commission titled Eurasia: From an Idea to Integration, such guidelines proposed by the Commission were approved for the members of the customs union and Eurasian Economic Space for 2013-2014 and 2014-2015. In addition to that, the Commission prepares a list of events aimed at monitoring the compliance of each member state with the general laws of the Union in the macroeconomic sphere (EEC, 2015). One of the major functions of the Commission also includes interacting with international organizations such as the WTO, the World Bank, the committees and commissions of the UN and the Eurasian Development Bank (EEC, 2015). According to the annual report of the EEC for 2018, “In 2018, the Commission worked on obtaining observer status in the WTO bodies. The principal agreement from the EAEU countries was obtained”. If the Commission obtains the observer status, it will be recognized as an international actor, which is very important for the successful functioning of the EAEU. In accordance with this event, in 2018, the Commission also signed the memorandum of understanding between EEC and International Trade Center (ITC), a joint agency of the WTO. ITC’s main goals include the development of trade networks, export promotion and most importantly supporting the internationalization of small and medium-sized enterprises (SMEs). (International Trade Center, n.d). This memorandum is highly essential to establish an effective business environment among the EAEU countries because SMEs are now becoming an integral part of every nation’s economy. It is in the interests of all member states to facilitate their businesses in order to improve the overall outlook and performance of the economy. Another important trade partner of the EAEU is China. The Union tries hard to maintain a stable economic relationship with China because establishing economic ties with it will push the economies of member states on a new international level. Therefore, the EEC and the Ministry of Commerce on the Principles of Trade and Cooperation in Hangzhou signed a joint statement on October 1, 2017 (Czerewacz-Filipowicz, 2019). This would reduce the trade barriers between the member states of the EAEU and China, as well as create future opportunities for the development of the trade and logistics system between China and the EAEU.
Nevertheless, the Commission’s work is still not limited to big international actors. It has been working hard to maintain a trustworthy relationship with the CIS countries that are non-member states to the Union. In 2017, the Memorandum on Deepening Cooperation between the EEC and the CIS Executive Committee was signed, which allows the representatives of each institution to attend each other’s meetings (EEC, 2018). This will facilitate the tightening of the economic relationships among the CIS states. In times of economic instability and unpredictability, this kind of cooperation is what will keep the economy of these states functioning. It essential for the EAEU to demonstrate its global competitiveness through cooperation with international and domestic actors.
Conclusion
The Eurasian Economic Union is a complex structure with a set of inter-related institutions that facilitate the economic development of the Union not only in the Eurasian region but also on the global level. The EAEU is an economic bundle between Europe and Asia. In its part, the Eurasian Economic Commission has done extensive work within its competences and has regulated the general integration pattern throughout the Union. Even though there is a weak institutional structure in the EAEU, and the vertical power system still prevails, the Commission has managed to create a beneficial output on the Union’s integration. The power dynamics is an issue that can be resolved through mutual cooperation and equal delegation of power between the institutions. The Supreme Council is still going to be the supreme body of the Union because it consists of the heads of the member states who are responsible for the well-being and successful functioning of the Union. However, as principal-agent theory suggests, handing over some share of the power to the EEC will only make the national governments better off since this action would reduce the transaction costs of the decision-making process. At the moment, the EEC has a substantial amount of power in the spheres of macroeconomy and trade development, and it has recently started acting as an international agent of integration. If the EEC continues this kind of hard work in the international and domestic arena, the EAEU will have all chances to become as successful as the EU. Granting the EEC all the necessary powers to facilitate the integration process by ensuring the independence of this institution will result in the economic development that the EAEU member states are aiming to achieve.
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