Common Economic Space Must Secure Unhampered Commodity Flow

The Customs Union of Belarus, Kazakhstan and Russia has been functioning for several years already; the creation of it allowed to establish uniform rates of customs duties on the external borders of the union and cancel inter-state duties. On January 1, 2012 a new stage of the economic integration of the three countries began - the Common Economic Space was created, functioning in conformity of the norms and principles of the World Trade Organization.

By definition the Common Economic Space must secure free transfer of commodities, manpower and capital across the borders of the member states, as well as equal competition conditions for all manufacturers and consumers. The present-day version of the agreement does not secure the above-mentioned conditions, for it envisages the regulation of production and consumption on the basis of national legislations.

The three countries' market space will become single if it is regulated by unified norms. If in one of the countries budgetary and consumer transfers on milk amount 60% of the production cost, in a second country -20%, and in a third - 10%, then there is no common market. Because of unequal competition conditions, milk manufacturers from the first country will force the producers from the second and the third countries out of the market. And the natural consequence of the situation will be the imposition of restrains on milk comings-in from the first country on the part of the second and third countries' governments.

With the view of establishing of the Common Economic Space, the Agreement for uniform rules of agriculture support must be complemented with some specifications; in particular, the initial agricultural types of products must be defined, for which the single agricultural market of the three countries will be formed. The current agreement stipulates functioning of the single market for all types of agricultural products at once. The duties inside the Common Economic Space are canceled, but the national measures of support of agricultural products manufacturers and consumers are preserved. Lowering of the general level of support is foreseen for Belarus (from 16 to 10%); Russia and Kazakhstan do not have any liabilities in this respect.

The experience of the European Union shows that at the very first stage the single market starts from a relatively small list of types of products. But these are the agricultural products which must have the uniformed budget support rules for all the member countries of the CES. Only in this case the market will really be single one. It is obvious that the initial list must include basic crops, milk, beef, pork, poultry meat, basic vegetables, potatoes, basic fruits. The initial stage will hardly demand including products of rabbit husbandry, honey, sorgo, berries etc. The list of types of products, forming the single market, must be specified as a result of negotiations and analysis of the past experience.

In connection with this it should be mentioned that even after 55 years of the European Union existence, not all types of agricultural products are embraced by the unified rules of single agricultural policy. About 2% of all the production volume have not been covered by the unified rules yet.

V.Ya. Uzun - Leading Researcher of Department of Agricultural Policy