Bakhyt Sultanov: "Kazakhstan benefits from membership in the EAEU"

Source https://www.facebook.com/bakhyt.sultanov 

Let's talk about integration

Recently, there has been frequent criticism of our country's membership in the EEU due, first of all, to Kazakhstan's non-leading position in the Eurasian Economic Union. I will try to explain why this is happening and why the EEU is more profitable for Kazakhstan than its absence.

The profitability of trade regionalization is an axiom, not a trend of the last century.

In the modern international economy, the competition is no longer for the markets of individual countries, but for the markets of individual regional trade associations. I often meet with potential investors in my field of activity. And most of them assess the profitability of their business not in terms of the market of Kazakhstan, but in terms of the potential for exports to Russia (the trans-Urals part of it).

By the way, in our commodity distribution system, we also orient the flow of our agricultural products to Siberia.

Practice shows that every integration association has economic leaders. But the advantage of less powerful economies is that they raise their level at the expense of stronger partners.

The European Union, for example, includes 27 states that are completely different in terms of economic development. And a quarter of all mutual trade accounts for only one country – the leader of the European Union-Germany. Almost all of Eastern Europe is reaching for the leaders. In particular, through joint projects, cooperation, increasing the level of education, free movement of people and capital.

And such "integration cores" - the countries that are the main driving force-are present in every association. In NAFTA, this is the United States, with a share in mutual trade of about 44%. In the South African Customs Union (5 countries) and the Southern African Development Community (16 countries), South Africa plays a leading role - more than 70% of mutual trade. In MERCOSUR, these are Brazil ( 50%) and Argentina (30%). In ASEAN (10 countries) This is Singapore, with a share in mutual trade of more than 30%.

In the case of the integration association of the EAEU, such a "core of integration" is historically Russia. It accounts for the main share of the total regional gross domestic product, oil and gas production, and total exports of goods and services.

So why do we benefit from the EEU?

For 5 years, an impressive array of supranational legislation has been created to ensure the free movement of goods, services, labor and capital in the single economic space. At the same time, all decisions are made by consensus - each Member state has an equal vote, regardless of its GDP, the amount of financial contributions or the size of the population. Our exports (including non-raw materials) to the EAEU member states in 2015-2019 (last year skewed all the figures in trade) increased by 25% or from 5.1 to 6.4 billion dollars. USA (to Russia-by 25%, to Belarus-by 2 times, to Kyrgyzstan-by 20%, to Armenia-by 6 times).

Yes, there are many barriers and restrictions – each country protects the interests of its producers (and Kazakhstan, by the way, too). But on the site of the Eurasian Union, the time limit for considering complaints from businesses about the presence of obstacles to trade is three months, and in the World Trade Organization (where we would defend our interests in disputes with Russia and Kyrgyzstan if it were not for the EEU), such a lawsuit could drag on for a couple of years.

Yes, the consequences of economic integration are not always clear-cut. The expansion of "more tradable" sectors of the economy and the reduction of others are inevitable. Integration inevitably affects investment flows, the distribution of economic activity and income. But it is almost impossible to ensure consistent and progressive economic growth and regional stability without participation in regional associations.

The importance of the EAEU for Kazakhstan is undeniable. Although there is an imbalance within the union, in which Russia remains the main trading center, for Kazakhstan, markets for products are expanding, costs with customs payments are reduced, and access to the markets of countries within free trade zones is facilitated. Vietnam, Singapore, Serbia, and Iran wanted to be "friends" not with individual Kazakhstan, Russia, or other republics, but with the Eurasian Union. And now in the Eurasian Union, a great emphasis is placed on industrial cooperation with the subsequent release of joint products to third countries. This will help us "weave" our economies and reduce the remaining degree of distrust.

Yes, there are still many issues of strengthening mutually beneficial cooperation in the EAEU, there are obstacles in trade and difficulties due to the sanctions pressure on individual members of the association. Yet the benefits, both economic and non-economic, are outweighed.