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Towards a New
EU-Russia Agreement:
Key Challenges
Sergey Afontsev
Institute for World Economy and
International Relations
EU-Russia Industrialists Round Table
Vienna Process, 6th Meeting
Vienna, February 27, 2013
Presentation Structure
1.
Russia’s WTO Accession
2.
CU/CES Project
3.
Business Perspective
WTO Accession: What About Exports?
WTO Accession: What About Imports?
Just to compare: Ruble appreciation in 2011 was roughly
equivalent to a once-for-all drop in import duties by 4.7
percentage points.
WTO Accession: What About Output?
CEFIR-TML-ZEW study using SUST-RUS computable
general equilibrium model (2011): Industry Effects
WTO Accession: Political Implications
 Substitution of tariff barriers with ‘compensatory
measures’ (‘utilization fee’ on cars, bans on meat
imports, etc.) to protect specific industries.
 Despite moderate economic implications of the WTO
accession, politicians insist on temporary
moratorium on ‘WTO+’ deals.
 Strong opposition to services liberalization (esp.
financial services).
Key Integration Projects in the CIS Area
Deep Integration: Customs Union / Common
Economic Space (CU/CES). Russia, Belarus,
Kazakhstan, anybody else?
Preferential Trade Arrangements: CIS Free
Trade Agreement (CIS FTA). Signed by Russia,
Belarus, Ukraine, Kazakhstan, Kyrgyzstan,
Tajikistan, Armenia, and Moldova on October 18,
2011 (fuels & energy and metals are exempted).
Operative since September 20, 2012 (Kazakhstan
and Moldova fully join in December 2012, Tajikistan
still pending).
CU/CES Project:
Whither Economic Rationale?
CU/CES Trade Structure, 2011 (per cent)
CU/CES Project:
Whither Enlargement?
Economic consequences of Ukraine’s accession, ‘optimistic
estimate’ (Institute for Economic Forecasting, 2012).
Potential Integration Partners
Kyrgyzstan
Potential (but problematic) CU/CES candidate.
The only WTO member in the region with 5.1 per cent
weighted tariff rate in 2011 (as compared with Russia’s 10.3 per
cent before and 7.1 per cent after the WTO accession).
Highly fragile political system with a nomadic-cycle April
peak of political protest.
Drug production (esp. in Fergana valley) and trafficking.
Potential Integration Partners
Tajikistan
Potential (but highly problematic) CU/CES candidate
with a tiny contribution to total CU/CES trade.
Highly fragile political system with civil war memories
and risks of terrorist infiltration from Afghanistan .
Drug production and trafficking.
CU/CES Project: Political Implications
 Despite dubious economic and political prospects,
creation of Eurasian Economic Union is scheduled
for January 2015.
 Russia-EU FTA is postponed for indefinite future.
 Kazakhstan’s WTO accession can change a lot (with
much political struggle expected), but Belarus under
Lukashenko is a political invariant poisoning
prospects for EU-CU/CES cooperation.
Business Perspective on the New
EU-Russia Agreement
Not the form (‘Basic Agreement’ or
‘Comprehensive Agreement’) but timing matters.
The New Agreement should target bilateral issues
and rely on ‘Russia first’ principle in dealing with
issues delegated to the CU/CES level.
Problem- and field-oriented agreements should be
signed wherever/whenever possible.
Interest-based approach should dominate valuebased one (business needs rules and projects, not
disputes over gay/lesbian rights).
EU-Russia Industrialists’ Roundtable:
Toward a Common Technology Market
 Development of a unified legal framework for
commercialization of innovations (including simplification of
the cooperation regime in dual-use technologies)
 Accelerated convergence of technical standards and
regulations, with the special emphasis on high-tech products
and markets
 Strengthening property rights protection and the convergence
of the respective legal norms used in Russia and the EU
 Exempting cross-border trade operations with goods under
technology transfer projects from customs duties, and
improving custom clearance procedures
 Promoting joint R&D projects, including those implemented by
Russian and European companies in cooperation with
scientific and educational institutions.
EU-Russia Industrialists’ Roundtable:
Toward a Common Technology Market
Given the fact that the leadership of both Russia and
the EU prioritize the development of high-tech
industries, technological cooperation is the most
promising area where regulatory rules can be
successfully harmonized during the next few years.
Negotiations on Common EU-Russia Technology
Market can work as a success story paving way for
broader regulatory cooperation to move from fieldoriented (sectoral) agreements to the New EURussia Agreement.