Eurasian Economic Commission

Legal basis:

The Customs Union which was created in 2007 introduced the Court of Justice and the Eurasian Economic Commission in 2012. According to Article 6 of the Treaty on the Eurasian Economic Union (hereinafter Treaty of the EAEU or TEAEU), the Eurasian Economic Commission (hereinafter EEC or the Commission) is a body of the EAEU. According to Article 18 on the Treaty of EAEU, the EEC is located in the city of Moscow, Russian Federation.

Composition/structure:

According to the Article 18 of the Treaty on the EAEU, the Commission is a single body de jure, and de facto, unlike the European Commission, it works through two distinct organs within: the Commission Council and Commission Board or Collegium (Art.18(1)). In terms of supranationality and decision-making, the Board is more comparable to the European Commission itself since it consists of ten members, two ministers per member state, appointed by member countries, who act independently from their states similarly to Commissioners in the EU.

The Council, in turn, can be compared to the European Council representing the interests of member-state governments since it is composed of representatives of member states each being deputy heads of government (Karliuk, 2017).

The work of the Council and the Collegium of the EEC are supported by 25 Departments of the Commission. According to Article 9, Departments consist of officials and employees (Annex 1 (12) of the TEAEU). They are similar to Directorates-General or DGs of the European Commission.

Key functions/jurisdiction:

Article 18 of Annex 1 of the TEAEU gives the Commission responsibility for adopting Customs Union technical regulations, decisions and recommendations (Art.18. Annex 1). The role of the EEC is driven by its ‘executive’ functions. It produces legally binding decisions that enable the body to create a new (secondary) legislation. However, according to Article 3 on TEAEU, it still has such barriers as the Interstate Council’s decisions and existing legislation. According to Article 6 of the Treaty of the EAEU, the Commission is responsible for observing and implementing compliance of the international treaties if they follow the legal basis of the Customs Union (hereinafter CU) and the Common Economic Space (hereinafter CES).

The Council of the Commission is accountable for the overall management and overseeing of the Commission work (Art.189), overseeing general regulations stipulating Eurasian integration in the Customs Union and Common Economic Space (Art.8). The Council is in charge of organizing work within the Commission with regards to the legal regulation and the main integration directions of the Supreme Council, and approving the draft Budget (Annex 1 to the Treaty of the EAEU). The Collegium is responsible for ratifying decisions, dispositions, and recommendations, monitoring the compliance of international treaties and the main policies, assisting members of the Union on settling conflicts and working in accordance with the Council of the Commission (Annex 1 to the Treaty of EAEU).

Decision-making rules:

According to Article 7 of the Treaty, each member of the Council of the Commission and the Collegium has one vote. All decisions in the Council are passed by consensus only (Art.12), while in the Collegium — where two representatives per state act independently — decisions can be taken by unanimity or by qualified majority depending on the issue at stake (Art.21). This is not similar to the voting procedure in the Council of the EU, where decisions are taken by a qualified majority which makes it a supranational body (Karliuk, 2017).

The Eurasian Economic Commission is said to have an infringement procedure similar to the European Commission. In the case of the EEC, however, if a member state breaches a provision of the Treaty or a certain decision of the EEC, the Board can advise a member state to remedy the violation in a given period of time (Art.20). For this “notification” to pass, two-thirds of the votes in the Collegium are needed. If the member country ignores the “advise”, the Collegium refers the matter to the Council of the Commission (Art.20). And only in the case if the member state under question ignores the Council’s verdict, the case is referred to the Court. The Commission does not have any authority to bring actions against member states, only members are endowed that right.

Inter-institutional dynamics and accountability:

Within the Union, the EEC interacts mostly with the Supreme Council of the EAEU. Members of the Commission Collegium as well as the Chairman are appointed by the Supreme Council (Annex 1, Regulation III). Additionally, the Supreme Council decides on the number of Collegium members and on the distribution of certain responsibilities (Annex 1 to the Treaty of EAEU).

The EEC interacts not less with the Court. During and as a result of the Court’s decision on a certain dispute, if members of the Commission regard the decision to affect their interests, it can request for intervention as an interested party to that dispute (Annex 1(60) to the Treaty on EAEU). Due to the hierarchy in the EAEU’s decision-making process, the Supreme Council decisions stand above the decisions of any of the lower bodies, which are the Intergovernmental Council and EEC (Art.6(4) TEAEU). Following this hierarchy chain, any decision of a lower-body can be overruled by the upper body. Thereby, according to the Law of the Union, in the case of disagreement between Eurasian Intergovernmental Council and the Eurasian Economic Council, if the decision were approved by EEC but not by the Intergovernmental Council, it would still go into force (Art.6).

Research question

Is the Board of the EEC an autonomous body?

Literature Review

Role in the Eurasian Integration

The picture of the Eurasian Economic Commission in the literature is not consistently positive or negative: as the main executive body of the EAEU, on one hand, it is considered as a promoter of the further economic integration within the union (Yeliseyeu, 2019), on the other hand, the Commission is criticized for being an ineffective body of the EAEU (Karliuk, 2017; Байльдинов, 2014). Yeliseyeu (2019) claims that despite the limited competences of the Commission, the EEC is the institution busiest with working on reducing the number of existing exemptions within the Eurasian Single Market, in the area of single labor market especially.

However, Bayildinov (2014) goes further by criticizing the legal aspect. It is argued that the body cannot perform an effective executive role since the political elites of the integrating states did not define in the treaties the goals of observing the basic rights and interests of their peoples (Байльдинов, 2014). Instead, the goals defined in the agreement are just methods for achieving more important, fundamental, and for some reason implied goals. What makes the EEC inefficient, claims Bayildinov (2014), is that it is impossible to develop any methods of achieving these goals if they are absent or implied. Thus, the EEC is the body of low efficiency in the integration project that does not have specific basic goals.

Karliuk (2017), Yeliseyeu (2019), Blockmans, Kostanyan and Vorobiov (2012), Verdiyeva (2018) would agree with the argument of limited powers of the EEC. This nature of limitations prevents the executive body of the EAEU from promoting economic integration in the union. The Commission is not able to move beyond tariff issues while negotiations with outside parties (Verdiyeva, 2018). When most of the bilateral and multilateral trade agreements entail an emphasis on non-tariff barriers (Kostanyan, Blocksmans, and Vorobiov, 2012), the Board of the Commission, is bound by the hierarchy within the Union and the member-states unwillingness to push their sovereignty (Karliuk, 2017; Verdiyeva, 2018).

In the EAEU, institutions that are higher in the hierarchy can overrule decisions of the lower one and this has been used from the very creation of the EAEU: the decisions of the Board of the EEC are usually overruled by the Supreme Council, but this was used both by the Council of the EEC itself and the Intergovernmental Council. Additionally, since decisions in the Board of the EEC are passed de facto by unanimity, in the case of any discrepancy the Board members tend to make no decision (Karliuk, 2017).

In terms of pulling national interests by member-states, in the period of five years, seven decisions of the Board of the Commission were vetoed by member states if they were contradicting their national interests or national law (Доклад о реализации основных направлений интеграции в рамках Евразийского экономического союза, 2018). Additionally, the EAEU as a whole was affected by the unilateral actions of the Russian Federation: applying trade restrictions on third parties without an agreement with the union, banning the imports of goods from the EU, banning agricultural goods from Turkey, food embargo to Ukraine (Verdiyeva, 2018). If decisions proposed by the Board were conflicting to the interests of member-states, consequently, they were vetoed by Russia, Belarus, Kazakhstan in the Council (Доклад о реализации основных направлений интеграции в рамках Евразийского экономического союза, 2018).

The Supranationality of the Body

The most literature on the Eurasian Economic Commission (Karliuk, 2017; Yeliseyeu, 2019; Verdiyeva, 2018) describes the body as not a supranational but as an organization with organizations within. According to the Treaty on the EAEU, while Article 11 states that both the Council and the Board of the Commission mirror the “one state – one vote” rule of the EEC, Article 12 states that the decisions in the Council are passed by unanimity only. The Commission’s Board includes two representatives from member states acting independently from member countries (Art.15), each being in charge of a particular department within the Commission, and decisions are passed either by consensus or with a qualified majority vote (Art. 21). This hierarchical two-tier nature of mixed decision-making within the Commission, according to Kostanyan, Blocksmans, and Vorobiov (2012), complicates the processes of decision-making particularly in such important policy areas as competition policy and non-tariff regulation. Additionally, the Eurasian Economic Commission is not endowed with enough power in the area of trade policy to negotiate agreements with the third parties on behalf of the CE as it only may be given a right to sign international treaties on its own by the Supreme Eurasian Economic Council (Kostanyan, Blocksmans, and Vorobiov, 2012).

Yeliseyeu (2019) also addressed the issue of the hierarchical structure of the union, arguing that the institutional structure of the EAEU itself represents a hierarchy, where a higher institution is able to override decisions of the lower one: the decisions made by the Board are the least of importance in the hierarchy. Thereby, it can be overruled by any of the above in the hierarchy and are usually overruled by the Supreme Council of the Union. Besides the existing hierarchy within the union, Karliuk (2017) claimed that the fact that decisions made by international institutions are hierarchically lower than national acts makes the decision-making process more complex.

Kühn (2017) stated that the supranationality presumes to have such characteristics as an (1) ability of an institution to adopt legislative acts with a direct effect on the Member States, (2) endowing these legal acts supremacy over the conflicting national law, (3) the adoption of these institutions based on the majority voting rather than unanimity, (4) has a capacity to implement decisions, (5) legal personality, and (6) fiscal autonomy, framing a legal framework sui generis.

The EEC is found to be only partly following these characteristics. Considering Annex 1 (12) of the regulation on the EEC, first and the second criteria are met. According to Article 1 of the TEAEU and Annex 1 (10) of the regulation on the EEC, the fifth criterion is also fulfilled. However, according to Kühn (2017) and Verdiyeva (2018), the nature of the EEC and the aspect of voting through consensus in the Council erupts the supranational picture of the body. Moreover, the fulfillment of the fourth criteria is undermined by the ability of the Member states to veto any decision they consider as conflicting to their interests and/or national law (Verdiyeva, 2018; Roberts and Moshes, 2016). The sixth criterion is not met completely since the Union does not have its own system of resources and is highly dependent on the member-states contributions (Байльдинов, 2014; Kühn, 2017), which makes the decision-making process in the Board more complex and less autonomous. In accordance with international legal documents within the framework of the EurAsEC, the CU and CES, the only sources from which the activities of the CU and CES bodies are financed are contributions from member states (Байльдинов, 2014). Moreover, any suspension of funding by member-states, especially of Russia, due to a possible economic crisis may lead to paralysis of activities of the Board of the Commission.

Overall, the image of the Board of the Commission in literature is nothing but ineffective highlighting its dependence on the structure of the EAEU and EEC itself. The hierarchy within the Commission does not let the Board be an autonomous decision-maker: the veto powers of the member-states let them act upon national interests rather than the EAEU goals, while the bodies higher in the hierarchy are able to overrule any decision of the Board.

Analytical framework

The principal-agent model provides a useful approach for understanding how the structures within the EEC vary and what explains the decision-making of the body. The principal-agent theory is aimed at explaining the agency relationship where the principal enters into a relationship with the agent expecting the agent to pursue the principal’s preferences to produce a certain outcome also desired by the principal (Moe, 1984). As a part of the integration process, principal states in intergovernmental organizations delegate authority to a supranational structure. In the case of EEC, the principal-agent theory will explain the power delegation of the EAEU member governments as a group of principals to the Commission, as a supranational agent. In supranational structures, unlike in intergovernmental ones, member states delegate the power of making decisions to an organization itself. Thus, member states of the EAEU are required to tolerate decisions made by the EEC even if those are not of the greatest advantage for them. Agent, the EEC has expertise and resources to make decisions. Following the idea of PA, in supranational bodies, integration is more effective since it is driven by the idea that economic integration is more important than member-states' own preferences and autonomy.

However, the decisions of the EEC, which is a mix of intergovernmental and supranational bodies and lacks autonomy being driven by the bargaining activity of governments, are not tolerated by the states (Patalakh, 2018). In the EAEU, since Russia has more authority than other states in the EAEU (Papava, 2017), member-states can choose to delegate their powers to the more powerful agent rather than to a supranational body. Hancock (2009) called it “plutocratic regionalism”, arguing that in plutocratic structures, the agent — Russia — is a greatly independent actor and principals — member states — have a lack of control over its actions.

From the very creation of the EAEU, Russia, in the role of a founder of the Union, was described as a key principal-player both in the promotion and in being a barrier for the integration in the region. The Eurasian Commission was assumed to be an agent for Russia to push their own interests and delegate the power to promote them. These interests, unlike of Belarussia and Kazakhstan, are not economic but geopolitical. Although a supranational body cannot be dominated by a member-state, the Council of the Commission is considered a Russia-dominant, while the Board is constrained by the Treaty provisions to act independently from the Council.

Analysis

This part of the paper will argue that the Board of the Eurasian Economic Commission is not an autonomous body since it is bound by the interests of member states in the Council to protect their domestic producers. This part of the paper focuses on cases of Russia blocking EEC decisions to protect its core manufacturing sectors (i.e. automobile, clothing) and geopolitical interests, while Kazakhstan is resisting the Russian power protecting its multi-vectorism politics. The principal-agent theory argues that states will delegate power to a supranational body enabling it to promote the economic integration. In case of “plutocratic regionalism” as in the EAEU, Russia, playing a role of agent, has more power in decision-making than other member-states, which play a role of principals. Thus, it decides both the direction and the pace of the integration.

The EEC is based on Moscow with Russian as a working language, and Russian officials already dominate the staff of the EEC (Papava, 2017). The idea that the main goal of Russia in this integration is driven by a desire to counter the EU is supported by several findings (Engvall, 2014; Daly, 2014; Patalakh, 2018). Russia has been trying to attract as many countries into the union although the instance (i.e. with Armenia) went counter to the goals of the EAEU itself (Engvall, 2014). Additionally, one of the main concerns of Moscow for the last several years was speeding up the integration process which, instead, went counter to the preferences of Kazakhstan, which aimed at less rapid but firm integration (Daly, 2014). This also supports the Russian unilateralism in pursuing its own goal of showing the EU that EAEU is an organization that can be comparable to the European one (Patalakh, 2018).

Russia, as a separate state, more prevalent economically and militarily, causes concerns for weaker member-states. Thus, Russia is simply more independent than principals which, in their turn, have no power to overturn the agent’s decisions. The economic survival of such states as Belarus and Armenia depends on the subsidies and security assurance from Russia, while for Kazakhstan, Russia is the source of transit corridors and a huge market with a population of 144.5 million people (Roberts and Moshes, 2016).

In 2012, the Board of the Commission adopted Decision No.160 pursuing cancellation by Russia of exemptions from the national regime in relation to Belorussian goods “On establishing additional requirements for participants when placing orders for the supply of clothing property for the needs of federal executive bodies''. This decision was vetoed by Russian Federation and all new requirements have been staying in place (Доклад о реализации основных направлений интеграции в рамках Евразийского экономического союза, 2018).

In 2015, the EEC Board adopted Decision No.81 on the need to revoke certain orders of the Russian Government in the field of state procurements as a result of which the access for EAEU member-states' goods and suppliers to the public procurement market was limited. For unstated reasons, Russian Federation successfully blocked this decision of the Board, while protecting its domestic manufacturing sectors (Доклад о реализации основных направлений интеграции в рамках Евразийского экономического союза, 2018).

In 2017, the EEC’s decision stated that Russia’s metallurgical combine “Novolipetsk” and VIZ-Steel violated competition rules. Russia introduced new discriminatory conditions for the export of electrotechnical steel to Belarus and Kazakhstan (Решение Коллегии ЕЭК от 1 ноября 2016 г. No. 130). The decision proposed by the EEC was to fine Russia for 3.5 million dollars. However, this decision was suspended as a result of the initiation of appeal by the Russian Federation.

This case was influential in terms of the possible modifications to the EEC law. In the Report on the implementation of the main areas of integration within the framework of the Eurasian Economic Union in 2018 (Доклад о реализации основных направлений интеграции в рамках Евразийского экономического союза, 2018), in connection with this case, the Commission was advised to introduce mechanisms for preventing violations and restoring competition without imposing fines on bona fide market participants.

In June 2018, the EEC introduced the new rules, according to which the Commission is empowered to issue proposals in case of detection of possible signs of violations of the general rules of competition in cross-border markets (EAEU Commission Council, Decision #39). Instead of solving the problem of non-compliance, however, the new decision gave more freedom to member-states, and Russia especially, to not to comply with the Treaty provisions without fear of being punished by sanctions. However, for all states, Russia, besides being a hegemon, is also seen as a threat.

The veto was used against Russia as well. Belarus blocked the decision to suspend free trade agreement with Ukraine proposed by Russia as Russia attempted to impose sanctions against Ukraine in the EAEU (Staeger and Bobocea, 2018). Russia, in turn, breached the Treaty provisions by bringing sanctions against Ukraine at the national level. This was not followed by any punishment in the form of sanctions from the EEC since, additionally, the institution does not have a right to bring actions against member states.

Kazakhstan, in turn, found to use veto and threat to leave the Union against the attempts of states to limit the country's multi-vectoral foreign policy. The record from the states that Kazakhstan cancels and dissents with more EEC proposals than all the other members taken together (Staeger and Bobocea, 2018). Other than with the EAEU, Kazakhstan’s foreign policy is driven by bilateral agreements with China and the EU. Since Kazakhstan is forced to export oil through Russia, the latter tried to take advantage of it by deciding the conditions of price and the number of supplies of Kazakhstan’s oil. With the purpose of protecting the oil industry and security, Kazakhstan started participating in Atasu-Alashankou oil pipeline projects with China and the Baku-Tbilisi-Ceyhan oil pipeline with Turkey Azerbaijan (Nurgaliyeva, 2016). The argument that these projects allowed Kazakhstan to reduce its dependence on Russia and diversify its export markets makes the idea of “plutocratic regionalism” less relevant to the current situation in the EAEU.

Kazakhstan and Belarus are states which try to avoid the enhancing Russian influence in the region (Roberts and Moshes, 2016). Due to the required consensus in the Commission for any decision to pass and veto power delegated to members of the Council, Belarussia and Kazakhstan are more prone to not give much power to Russia. Russia, in turn, cannot use its economic statecraft against member-states for the sake of its greater international visibility and recognition (Roberts and Moshes, 2016). This may signal a weakening of the plutocratic structure in the region and, a slow but sure, transformation towards power delegation to a supranational body, rather than Russia being an agent and other states — principals. The divergence in views of the EAEU among member-states impedes the Board of the EEC from acting as a supranational organ and having autonomy from the member-governments.

Conclusion

At the level of the Eurasian Economic Commission, the economic-integration-oriented goals of the EAEU conflicts with member-states’ interests driven by the protection of domestic sectors and economic sovereignty. Balancing between Russian interests as a hegemon and the collective decision-making within the framework of the EAEU is the main task of the EAEU bureaucrats. Consequently, the autonomy of the EEC is bound by those conflicting interests which are pronounced by means of veto of all the key member-states and unilateral decision-making of Russia. This casts doubt on the ability of the EAEU to purposefully act as an integrated region. EAEU member-states are not fully committed to the Treaty provisions and such agency limitations of the Board of the EEC as its inability to bring states to the Court and the ability of governments to veto the decisions of the Board enable countries to act upon their own interests. This can be observed in trade restrictions imposed within the Union, as well as the unilateral decision-making by member-states.

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