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The Eurasian Economic Commission

Legal basis: Treaty on Eurasian Economic Commission dated November 18, 2011, Annex I of the Treaty on Eurasian Economic Union

  • Composition/structure:

The EEC consists of a Council and a Board. Members of the EEC Council are deputy heads of governments chosen by each member state independently. The EEC Board consists of 10 Ministers: each country recommends candidates to the Supreme Council, which selects 2 Ministers from each member state. One of the Ministers is chosen as a Chairman of the EEC Board by the Supreme Council. There are also 23 Departments and 20 advisory committees working within the EEC. Each member of the Board is the head of certain departments (Eurasian Economic Commission, n.d.).

Unlike the EEC, the European Commission positions itself as a single entity. It has the College of Commissioners appointed every 5 years. There are 27 Commissioners, one from each member state headed by the Commission President. The President and other Commissioners are selected by the European Council upon the suggestions from a member state and with approval from the European Parliament. Work of the European Commission is organized into policy departments known as Directorates-General (DGs) and each Commissioner is responsible for certain policy areas, in the same way as Ministers in the EEC Board. Members of the Commission give the oath to act in the interests of the EU and to be independent of their capitals, and the Annex 1 of the EAEU Treaty also obliges Ministers of the EEC Board to serve ‘Eurasian’ interests (European Commission, n.d.). There is no such requirement for the members of the EEC Council, even though the whole EEC is supposed to be supranational regulatory of the union and this is clearly stated in the official website of the commission (Eurasian Economic Commission, 2016).

In this way, the EEC Board may resemble the European Commission, however, in the EEC there is also the EEC Council which is one. Cabinets act like a bridge between the College and civil servants.

  • Key functions/jurisdiction:

The official website of the EEC states that it is a permanent regulatory body that ensures proper functioning of the EAEU and develops proposals for economic integration. The EEC fulfills the role of the executive body in the EAEU as it works with national governments and businesses to issue decisions, dispositions, and recommendations (Article 18). Its main areas of activity include trade, macroeconomic policy, the establishment of trade regime with third parties, import customs duties, competition policy, industrial and agricultural subsidies, labor migration, monetary policy, financial markets, transport and transportation, communication technologies, and others (Eurasian Economic Commission, n.d.).

The EEC Council is responsible for the general guidance of the Commission’s actions, it identifies the direction of EAEU integration and submits it to the Supreme Council. It also supervises and gives instructions to the EEC Board, approves the composition and the number of departments of the EEC and distributes them among the Board members and approves the budget of the Commission (Protocol on the EEC, 2014, Article II)

Responsibilities of the EEC Board are more specific and bureaucratic, which is why it is often regarded as “the most executive” body of the Union and as a de-facto secretariat of the Supreme Council and the Intergovernmental Council (Treshchenkov, 2014, p.164). The EEC Board controls the work of the Commission departments, implements decisions and dispositions of the Commission, the Intergovernmental Council and the Supreme Council. It also monitors how international treaties within the EAEU law are implemented on the territory of the union, represents the EEC in the EAEU Court, drafts the budget, develops projects on international agreements, and the decisions or dispositions of the EEC. It is given the right to form advisory bodies, which “shall consist of authorized representatives of the executive authorities of the member States” (Protocol on the EEC, 2014, Article III). Moreover, the EEC Board has to “arrange meetings of the Council of the Commission, the Intergovernmental Council and the Supreme Council as well as subsidiary bodies established according to pint 3 of Article 5 of the Treaty” (Protocol on the EEC, 2014, Article III).

Both the European Commission and the EEC in many policy areas act as executive bodies of their union. They enforce union law, implement policies, and draft the budget before submitting it to higher bodies, but there are several key differences in other functions of these two institutions. Firstly, the European Commission has an exclusive right to initiate legislative acts and this role significantly increases the power of this institution within the EU (Nugent and Rhinard, 2015). Secondly, the European Commission represents the EU on external trade negotiations, while the EEC lacks a single multilateral authority that handles trade with third parties (Duchâtel et al.,2016). The absence of such powers undermine the autonomy of the EEC in the EAEU. Thirdly, the activity of the EEC mostly concerns economic integration, while the European Commission, for instance, has a separate agency for developing policies on education, sports, culture, and media (ec.europa.eu). Moreover, the European Commission acts as a mediator between the Council and the European Parliament, whereas there is no Parliament in the EAEU, hence the need for such function (Nugent & Rhinard, 2015).

  • Decision-making rules:

Decisions, dispositions, and recommendations are issued both by the Board and the Council of the EEC, but they are decided by consensus in the Council, and by the qualified majority voting in the Board. According to Article 18 of the EAEU Treaty, the Supreme Council may find certain issues as exceptions, on them, the Board has to make a unanimous decision. Within 10 days of their adoption decisions of the Board can be amended or repealed by the Council of the EEC. Decisions of the EEC have to be adopted on the territory of the EAEU, dispositions carry administrative-organizational role, whereas recommendations are not binding. The EU Commissioners bear collective responsibility for their decisions and mostly they reach a consensus and rarely vote on a qualified-majority voting system.

  • Inter-institutional dynamics and accountability:

Issues, on which the EEC Сouncil cannot reach a consensus, are reviewed by the Intergovernmental Council, which also selects candidates for the EEC Board and the EEC Council and submits the list to the Supreme Council (Yeliseyev, 2019). Decisions of the Intergovernmental Council can overrule the ones made by the EEC. Moreover, a member state can appeal to the Intergovernmental Council of the Supreme Council if it wants to amend or cancel any decision of the EEC no later than 30 days after it is officially published (Yeliseyev, 2019). Neither European Commission, nor the EEC is accountable to citizens and their members are not elected. However, the European Commission’s accountability for the European Parliament has increased, as the latter not only confirms the College and the President of the Commission but also enjoys the right to dismiss the college as a whole and examine Commission’s activities by informal means (Peterson, 2017).

Part Two:

  • Research question

This paper is interested in evaluating the extent to which the EAEU is autonomous. To answer this question, the paper focuses on the functions that member states are willing to delegate to the Commission (1) and on the extent to which the EEC can act autonomously within these functions (2).

  • Literature review

The first part of my research question is very “intergovernmental” and it assumes that national governments decide to join supranational institutions. This is because most of the existing literature regarding Eurasian integration adhere to realist theories. For instance, Van der Togt, Montesano, and Kozak (2015, p.22) build their arguments on the intergovernmental approach and conclude that the fate of Eurasian integration and its main engine, the Commission, is “contingent upon enduring political will in all capitals (and Moscow particularly)”. However, this approach underestimates the importance of the membership to the EAEU as such. All five members of the EAEU probably joined the union realizing that benefits of membership outweigh the costs. In particular, they might consider a supranational authority as the solution to a collective action problem and favor integration. Yeliseyev (2018) argues that EAEU institutions are the reflections of the domestic political and economic structures of its member states. Given that internal political and economic systems of EAEU members are vertical and hierarchical unless domestic reforms take place, there is little ground to expect horizontal power-sharing among and supranationality of the EAEU institutions. However, this argument ignores nuances, such as the particular policy areas where integration is happening slower than in others. It also neglects the possibility that the EEC might acquire unintended powers and turn into a “policy entrepreneur” with its preferences and interests, the argument developed by scholars as Keohane (1984) and Kingdon (1984) in regards to European Commission (Pollack, 1997). This is why the second part of the research question is to assess the independence of the current.

  • Analytical framework

To answer my research question and address the gaps in existing literature, I will use principal-agent theory as a theoretical framework in Pollack’s (1997) interpretation. He applied this theory to evaluate the power of and the European Court of Justice and the European Commission. In principal-agent theory, a principal delegates certain tasks to an agent, because delegation, in a certain way would minimize costs such as transaction or lack of expertise. However, there is a problem in this contractual relation, because a principal cannot always control the agent, and the latter may shirk or act contrary to the preferences of the principal. Moreover, the agent develops expertise, which leads to an asymmetry in information. In this case, there must be some control mechanisms, which would guarantee that the agent fulfills the task efficiently, but at the same time, does not deviate from the principal’s desired path. There are ex-ante and ex-post control mechanisms, the first referring to administrative procedures or limits on the scope of action, while the second implying monitoring the agent’s behavior by budgetary constraints. Pollack (1997, p.101) argues that ‘the autonomy of a given supranational institution depends crucially on the efficacy and credibility of control mechanisms established by member state principals, and that these vary from institution to institution – as well as from issue-area to issue-area and over time – leading to varying patterns of supranational autonomy’. Such a detailed approach allows deepening our understanding of the conditions, in which the EEC can affect the governance and foster integration of the EAEU. Thus, this paper uses a principal-agent theory to provide a more detailed analysis of the EEC powers. As existing literature suggests, although the EEC is largely bound by constraints, inbuilt into the institutional setup of the EAEU by its member states, its achievements in fostering integration prove that it enjoys a certain degree of autonomy

  • Analysis

There is a case that can demonstrate the unwillingness of member states to have a Commission that fosters integration is connected to trade conflicts between Russia and the West. The 2014 decision of Russia to introduce countersanctions on agricultural goods from the EU and the U.S was unilateral, and it neither got permission nor consulted the Customs Union (the predecessor of the EAEU and it already had the EEC). Other members of the union, however, did not stop purchasing Western products on the territory of the union, breaking the rules of origin. To stop this from happening, Russia’s corresponding agency found Belarussian milk and meat products violating the phytosanitary norms of the union, even there had to be a harmonization of norms before this event. Even though the Commission possesses the right to monitor compliance of states to the union law and treaties, in these situations it did not use it. Only in March 2015, one member of the EEC informed that it had been working on creating an agreement that would fix the rules on how to deal with a member state introducing unilateral sanctions to a third party. However, the results of this process never became clear, and it is still unclear how to handle such situations and balance the interests of member states (Van der Togt, Montesano & Kozak, 2015). This case demonstrates how the de-jure powers of the EEC can be constrained by the interests of the survival of the member states, in other words, the unwillingness of the capitals to empower Commission may be pronounced only in very serious cases. For instance, here the problem for Kazakhstan might have been the risk of inflation and supply risks (Van der Togt, Montesano & Kozak, 2015).

In Pollack’s theoretical framework, such institutional constrains of the Commission (European, in his work) might be classified as control mechanisms, by which the member states ensure compliance of their supranational agent. Applying his argument onto the EAEU case, I argue that the ability of the EEC Council, Intergovernmental Council, and the Supreme Council to cancel or amend the decisions of the EEC Board prove that so far member states are afraid to give much autonomy to a supranational authority. Indeed, the EEC fulfills several responsibilities within different policy areas, but at the same time, it is constrained by the powers of three councils above it

Two bodies of the EEC are often considered as two separate entities. The EEC Council, which consists of the deputy heads of governments, can be viewed as a hierarchical continuation of the Supreme Council and the Intergovernmental Council (Treshchenkov, 2015). Each member state decides for itself whom it is going to send to the EEC Council, and no further approval by another body is required. Usually, countries send senior officials there, and one would expect them to have ties with their states. The second body of the Commission, the Board is positioned as a supranational body in the Protocol on the Eurasian Economic Commission (2014). It states that “in discharging their official duties, the members of the Collegium of the Commission (Board) shall not depend on state bodies and officials of the member States and shall not request for or receive instructions from the authorities or officials of the member States” (Annex 1 of the EAEU Treaty, wto.org). A crucial distinction from the EEC Council is that members of the Board cannot be dismissed by member states directly, only by the Supreme Council upon the recommendation from a member state. This rule was introduced to ensure the independence of the Board members, which in practice does not necessarily happen because capitals still take an active part in selecting and dismissing the candidates. This suggests that formally the Board is probably the least intergovernmental body among all, but its dependence on national governments cannot be denied. Vedomosti.ru (2013) reported that Nazarbayev had condemned Russian members of the EEC Board of taking part in government meetings and receiving instructions there.Putin’s adviser on Eurasian integration Sergey Glazyev also complained that the EEC is a de-facto intergovernmental body (Yeliseyeu, 2014). Even assuming that independence of members of the EEC Board is guaranteed by this design, the fact that their decision can be overruled by three higher-standing bodies, undermines its supranational nature.

To illustrate, let’s examine Russia’s appeal to the Intergovernmental Council against the EEC Board decision № 130 dated 26.09.2017, which found that two Russian corporations VIZ-Steel and Novolipetsk Metallurgical Plant (NLMK) violated the competition law, particularly, subparagraph 6 of paragraph 1 of Article 76 of the EAEU Treaty. Starting from January 1, 2015, when selling their goods to Belarus and Kazakhstan, NLMK and VIZ-Steel set an additional coefficient on the initial price which ranged from 5.3% to 23%, while no Russian buyers faced such surcharges. In their defense, the companies justified these terms by instability and small size of Kazakhstani and Belarussian markets, macroeconomic risks, and volatility of the national currencies of these two countries. Since the sales were carried out in rubles with 100% prepayment, the EEC Board rejected these claims and set a fine for both companies (EEC alta.ru, Forbes.). However, on November 31, Prime Minister of Russia Dmitry Medvedev appealed to Intergovernmental Council, which stopped the decision from entering into force. Such practices can set an example for other members and they can also undermine any EEC decisions that contradict their national interests, which will further reduce the power of its only supranational body.

On the other hand, the mere fact that the EEC Board came up with such a significant decision demonstrates that its members adhere to the Treaty rules because if they were dependent on their capitals, the decision won’t be made at all. Despite the cancellation, this decision is still an indicator of the willingness of the EEC Board to fulfill its significant responsibilities, especially keeping in mind that often European Commissioners are also criticized for representing interests of their home states (Peterson, 2015). Also, evidence shows that many other decisions of the EEC were not canceled or amended. For instance, although there are many exemptions, decisions concerning a single labor market is a big achievement (Yeliseyeu, 2019). Lastly, Kassim and Anand (2003) explanation for the increase in the power of the European Commission may become applicable for the EEC too. They point out that the European Commission has expanded its expertise so that it probably exceeds one of the most systematized state administration. Similarly, the member of the department under the EEC Board might develop more knowledge and expertise than an individual public employee about certain sectors, and in this case, there will be more push factors for national governments to delegate and trust their tasks to the EEC.

In conclusion, I tried to analyze the autonomy of the EEC in a more detailed way and go beyond purely realist approaches, which state that institutions do not possess any power unless member-states decide to endow some. There is some truth to this part of the literature, and the willingness of EAEU members to grant autonomy to the EEC is compromised by strong control mechanisms in a hierarchical power architecture. The example with NLMK and VIZ-steel companies at least indicate the presence of supranational sentiments within the EEC Board, which may not seem great when compared to the powers of the European Commission, but still should not be neglected. Moreover, states do not turn to means of control so frequently as they can and successes in creating a single labor market are one evidence for that. These control mechanisms rather serve as the airbag for the most crucial interests, as in the case of competition policy and security interests, but member states themselves understand the dangers of using these mechanisms too frequently. Сonstant blocking of the EEC decisions would undermine the fact of integration as a whole, and this is not a desirable outcome for the EAEU members, who has been allowing its only supranational body, the Commission, to pass a large number of decisions without blocking them through those oversight mechanisms. Future research on this topic might address the applicability of the rational choice and principal-agent theories on the EAEU states by addressing the specifics of their regimes and internal power dynamics. In the context of Eurasian integration and delegation, it would also be interesting to examine the process of preference formation within each member state and apply the lense of Putnam’s two level game.

References

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