Eurasian Economic Commission
Name of institutions:
The Eurasian Economic Union (EAEU) is a comparatively new regional integration that was created in 2015 to develop the economies of its member states and to establish a common market for goods, services, capital and labor (Dragneva & Wolczuk, 2017). The EAEU is composed of Kazakhstan, Russia, Belarus, Kyrgyzstan and Armenia (Member State) and strives to achieve its goal through its four interrelated institutions. This paper will consist of two parts with a focus on the Commission. First part is a description of the Commission’s composition, key functions, decision-making rules, accountability and inter-institutional dynamics. The second part will provide an analysis of the supranational nature of the Commission.
Legal basis:
According to the official website of the EAEU, the Commission is a permanent regulatory body of the Union that has been functioning since 2012 (About the Commission, 2020). This institution operates based on the Annex no. 1 of the Treaty on the Eurasian Economic Union that was signed on 29 May 2014 by Kazakhstan, Russia and Belarus and came into force on 1 January 2015 (Dragneva & Wolczuk, 2017). As this treaty is a law of the Union, it identifies all the rules and procedures of the Commission.
Composition/structure:
With regards to Article 18 of the Treaty on EAEU (2015), the structure of the Commission consists of two parts: The Council of the Commission (the Council) and the Board of the Commission (the Board). The Council is formed by one deputy head of the government from each Member State, a Chairman of the Council and Departments of the Commission (Annex 1(2), Treaty on the EAEU, 2015). The Chairman is appointed for one year without a right of prolongation and there is a rotation of chairmanship according to the Russian alphabetical order by name of each member’s state (Art. 8(4), Treaty on the EAEU, 2015). The Chairman’s functions are to prepare the agenda and issues for discussions during the meetings as well as to open and close the meetings. Currently, there are 23 departments in the Commission where officials are employed if they have a professional qualification and at least 5 years of experience in their field (Annex 1(54), Treaty on the EAEU, 2015). According to the Treaty on the EAEU (Annex 1(55)), their main functions are to work as preparatory bodies who prepare materials, documents, and prepare draft decisions and international treaties for the Board.
The Board consists of some representatives of each Member State (the number is decided by the Supreme Council), the Chairman of the Board and advisory bodies for holding consultations on specific issues (Annex 1(31), Treaty on the EAEU, 2015). Advisory bodies are representatives of authority of the member states who provide the Commission with recommendations within their competence (Annex 1(45)). According to the Treaty (Annex 1(32)), each member of the Board is appointed by the Supreme Council for 4 years with a right to extend this period. The Chairman, one of the members, is also appointed by the Supreme Council (Art. 12(2), Treaty on the EAEU, 2015) and changes by rotation every 4 years according to the Russian alphabetical order. It is important to emphasize that the members of the Board are experts in their fields who are independent of their states, whereas members of the Council of the Commission act on their national interests (Karliuk, 2015).
The composition of the Eurasian Commission is different from the European Commission, which consists of the president, the college of commissioners and cabinets (Peterson, 2017). In comparison, the European Commission is more presidential and independent because it does not have an intergovernmental body in its structure as does the Eurasian Commission.
Key functions/jurisdiction:
The functions of the Eurasian Commission and the European Commission are also considerably different in that the European Commission is more powerful because it has a monopoly on the legislative initiative (Karliuk, 2015). In the EAEU, however, the Commission is not the only initiator of legislative acts because each institution can adopt its own acts (Karliuk, 2015).
The Council of the Commission is responsible for the general regulation of the integration processes in the Union and the general management of the Commission's activities (Annex 1, Treaty on the EAEU, 2015). Among other functions, the Council controls the implementation of the international treaties, approves the draft budget and instructs the Board of the Commission (Annex 1, Treaty on the EAEU, 2015). The Treaty (2015) also provides function of the Board (Annex 1) that develops draft budget, drafts international treaties and decisions, and prepares meetings for the other institutions. The Commission as a whole is responsible for the connections with the third parties. As Article 39 states, the Commission is a body that should assist the Member State to reach the market of the third country (Treaty on the EAEU, 2015).
Decision-making rules:
In performing its functions, the Commission adopts decisions with regulatory and binding effect for the member states. Besides, the Treaty (2015) on the EAEU (Annex 1(4)) states that “decisions of the Commission shall form part of the Union law and shall be directly applicable on the territories of the Member States”. This means that the decisions of the Commission have priority over the national law of the member states. The Treaty (2015) mentions that in decision- making process the Commission should “ensure mutual benefit, equality and respect for the national interests” (Annex 1(2)).
There are two decision-making procedures that the Commission uses. The Council decides only by consensus, while the Board uses both qualified majority voting and consensus (Art. 18(2)(3), Treaty on the EAEU, 2015). According to Article 18, the Supreme Council provides to the Board a list of sensitive topics that should be decided by the consensus. Regarding the distribution of votes, to represent each member country equally, with no consideration of country’s size and population, each member of the Council and the Board has one vote. It was made to avoid the dominance of one country in promoting the interests of its own nation.
In order to adopt a decision by consensus, all the members should be in favor of the decision but it does not happen in all cases. That is why, when the consensus is not reached the decision is passed to the Intergovernmental Council (Art. 16(2), Treaty on EAEU, 2015) or the Supreme Council (Art. 12(9)).
Inter-institutional dynamics and accountability:
Also, there might be the cases where the Commission or the Chairman violate some rule. In those cases, the Supreme Council can terminate the power of the Commission as well as the Chairman. It shows that the Commission is accountable to the Supreme Council. Continuing the inter-institutional dynamics, Article 15 of the Treaty states that the Intergovernmental Council can cancel or amend the decisions of the Commission within 15 days when it is requested by the Member State. It is important to mention that there are some dynamics within the Commission because one of the functions of the Council is to instruct the Board of the Commission (Annex 1(14), Treaty on the EAEU, 2015).
Part Two:
The main function of the Eurasian Economic Commission is further deepening the economic integration in the Union (EURASIAN ECONOMIC INTEGRATION: FACTS AND FIGURES). To achieve this goal the Integration Development Department of the Commission is working in both internal and external directions. As of today, the EAEU unites the market of 183,8 million of people and have an aggregate GDP of almost 2 trillion USD (About the Commission, n.d). The Union have succeeded in the international arena by signing several memorandums and trade agreements with the third countries. Currently, the Union has two Free Trade Areas (FTA) with Vietnam and Israel that will be followed by Egypt and Serbia where negotiations have already started. Despite the achievements in the external markets, the pace of the integration in the internal market is slowing down (Vinokurov, 2017). The Commission is not always successful, however. Thus, the following paragraphs will address a research question: How autonomous is the Commission in executing its functions in the Union? This question will be analyzed using some existing literature and EU’s theoretical framework.
The success of the integration in the EAEU depends on the bottom-up dynamics that demand more cooperation between the member states (Vinokurov, 2017). Cooperation and joint work mean the need for the “rules of the game” that in the long run will preserve fair competition among the member states as well as contribute to the development of the economy in the Union (Vinokurov, 2017). Veronika Nikishina, member of the Board, agreed that forming joint policies and practices are essential for integration but at the same time challenging task for the trading unit of the Eurasian Commission (p.42). It is believed that the Commission is a key institution in promoting and deepening the integration because of its power to implement decisions that are directly applicable in the territories of the members. However, the autonomy of the Commission is limited.
According to Maksim Karliuk (2015), one reason for the Commission’s weakness is the vertical institutional system that is called “the Belarusian elevator”. Following this procedure, any decision that was adopted at the lower levels can be challenged by the higher-level institutions (Karliuk, 2015). Considering the fact that the higher institutions are comprised of the heads of states and governments, national interests will be prioritized in decision making over the objectives of the union (Karliuk, 2015). Also, each Member State can appeal to the Intergovernmental Council of the Supreme Council when it is not satisfied with the decision of the Commission (Dragneva & Wolczuk, 2017). This system makes it difficult for the Commission to act as an autonomous supranational institution in promoting further integration of the union.
It is added that in such a hierarchical system the Commission cannot adopt any key decision because most of its functions are preparing and drafting decisions or other documents for the higher-level institutions (Dragneva & Wolczuk, 2017). In the EU, the supremacy of the EU law is the main feature of its autonomy but in the context of EAEU, the supremacy of the Commission’s decisions is unclear (Karliuk, 2015). Karliuk presents the constitutions of each member of the Union and analysis how the Treaty on the EAEU and the Commission’s decisions apply to it. It turns out that not all the members’ constitutions accept the EAEU law as a supreme one (Karliuk, 2015). And only Kazakhstan has a line in its constitution that accepts Commission’s regulations and decisions as supreme, while in other member’s constitutions the Commission’s decisions are lower in status than their national law (Karliuk, 2015). That is why it is difficult for the Commission to demand compliance from the members.
The Commission lacks compliance mechanisms that will enhance the integration partly because of the Astana Treaty that excluded some supranational features of the Commission (Dragneva & Wolczuk, 2017). If the European Commission can bring the state to the court when it (state) violates conditions of the agreement, this is not the case for the Eurasian Commission (Karliuk, 2015). This function that was available before is performed by the states themselves. This means that the Member State is the one who initiates action of bringing the state to the court. However, it rarely happens because of the acknowledgement of the state about future cooperation with this country and fear of retaliation (Karliuk, 2015).
At this point, there is a need for an analytical framework that will explain the division of power in the Union and the source of delegated power. The principal-agent theory that is used a lot in the framework of the European studies can also be applied for the Eurasian Commission.
The theory is focused on two aspects: 1) the principal’s control mechanisms of the agent; 2) the cost of the control mechanism (Bailer, 2013). It is provided that the act of delegation is key when discussing the principal-agent theory (Delreux & Adriaensen, 2017). The delegation is usually formal and in the case of the EAEU based on the Treaty where members of the Union agree to delegate some power to the Commission (Delreux & Adriaensen, 2017). There are two reasons for the principal to delegate power to the agent. Firstly, considering the expertise of the agent, the principal reduces the cost of decision making and receives some benefits from this relation (Bailer, 2013). Secondly, the delegation resolves the commitment issues and establishes trust between two sides (Bailer, 2013).
In the context of the EAEU, the member states are the principal who delegates some power to the Commission which acts as an agent. According to the theory, the principal prefers the agent that represents its interests, that is why the Commission should be careful when implementing acts that are not supported by the states. For example, the EAEU Customs Code proposed by the Commission that should have been signed-in 2016 was delayed because the member states had another perception of the document (Dragneva & Wolczuk, 2017). After the delay, the Commission received about 1500 comments that should have been improved in the Code (Vinokurov, 2017). In addition, the theory states that the preference of the supranational Commission in decision-making will never be too extreme in the sense that no state will support it (Bailer, 2013). That is why the Commission tries to do the “reality check” before drafting any regulation or making a decision (Bailer, 2013).
The principal-agent theory is about delegation of some power to the agent. However, it seems that in the EAEU the member states are not fully ready to give up some of their sovereignty and delegate it to the supranational institution like the Commission. The Commission is not fully autonomous because member states want to secure their national interests that are in fact slows down the integration. The Commission is limited by the fact that the extend of applicability of the Commission’s decisions is decided by the states. The procedure allows the members to amend or delay the decisions of the Commission that was the case with the decision of the Commission #81 in 2015. The decision was on the need to cancel certain decisions of the Government of the Russian Federation in the field of state (municipal) procurement. The officials of the Russia send a proposal to the Intergovernmental Council to amend the decision. In this case, after the second investigation of the case it was proven that Russia violated the regulations. Thus, the decision #31 demanded changes from the Russia that were mentioned in the decision, concerning the state (municipal) procurement. Moreover, the Commission cannot effectively promote the integration because it lacks commitment procedures. It cannot bring the country to the court, so it fails to effectively control the compliance of the member states with the agreements and international regulations.
Nevertheless, another way of the development of the internal integration is by effective integration in the global scale (The Commission, 2016, p.62). As the EAEU’s international activities are mainly performed by the Commission, this institution is successful. In May 2015, Vietnam and the EAEU made an achievement by signing an agreement that established free trade area (FTA) which opened the Union an access to attractive market of 90 million people (The Commission, 2016, p. 63). The Commission also signed some agreements with the Republic of Korea, Mongolia, China and other Asia-Pacific regions (The Commission, 2016).
Despite the fact that the Commission is successful in the international arena by promoting the development of economy of the union, it lacks the autonomy to further deepen the integration in the internal market. In order to improve it, the EAEU should improve its supranational institution.
References
About the Eurasian Economic Commission. (n.d). Eurasian Economic Commission. Retrieved from http://eec.eaeunion.org/en/Pages/about.aspx
Bailer, S. (July 30, 2013). An agent dependent on the EU member states? The determinants of the European Commission’s legislative success in the European Union. Taylor & Francis Online. Retrieved rom https://ezproxy.nu.edu.kz:2102/doi/full/10.1080/07036337.2013.809342
Delreux, T. & Adriaensen, J. (October 18, 2017). Introduction. Use and Limitations of the Principal–Agent Model in Studying the European Union. SpringerLink. Retrieved from https://ezproxy.nu.edu.kz:2351/chapter/10.1007/978-3-319-55137-1_1
Dragneva, R. & Wolczuk, K., (May, 2017). The Eurasian Economic Union: Deals, Rules, and Exercise of Power. London: The Royal Institute of International Affairs Chatham House.
Eurasian Economic Commission. (2016). Eurasian Economic Integration: Facts and Figures. [Infographic]. Library of Eurasian Economic Union. Retrieved from http://eec.eaeunion.org/en/Pages/library.aspx
Karliuk, M. (2015). The Eurasian Economic Union: An EU-like Legal Order in the Post-Soviet Space? Moscow: Higher School of Economics.
Peterson, J. (2017). The College of Commissioners: Supranational Leadership and Presidential Politics, in D. Hodson and J. Peterson (eds.) Institutions of the European Union, 4th edition, Oxford University Press.
“The Decision No.81 On the need to cancel certain decisions of the Government of the Russian Federation in the field of state (municipal) procurement.” [Official website of EAEU 07.15.2015]
Treaty on the Eurasian Economic Union. (January 1, 2015). Eurasian Economic Union. Retrieved from https://docs.eaeunion.org/Pages/DisplayDocument.aspx?s=bef9c798-3978-42f3-9ef2-d0fb3d53b75f&w=632c7868-4ee2-4b21-bc64-1995328e6ef3&l=540294ae-c3c9-4511-9bf8-aaf5d6e0d169&EntityID=3610
Vinokurov, E. (2017). Eurasian Economic Union: Current State and Preliminary Results. Russian Journal of Economics 3: 54-70.