EAEU BUSINESS COUNCIL — ITS ROLE IN EURASIAN INTEGRATION

While Russia’s economic ties with a number of traditional Western trade and investment partners severed and sharply curtailed, its relations with EAEU partners experienced a different dynamic — exports from EAEU states reached 115.5% in 2023, and imports from Russia amounted to 106.9% of the 2022 volume.

Mutual investments also recorded a striking growth. The Eurasian Eco- nomic Commission (EEC) estimates that mutual FDI in the EAEU more than doubled in 2023 as compared to 2022, hitting $4.23 billion.

In 2023, for instance, Russia’s FDI in the EAEU countries exceeded $1.9 billion, i.e. amounted to almost 19.8% of all Russian FDI outflows (author’s calculations based on EEC data). In 2024, mutual FDIs continued to soar: in the first quarter alone, it increased by 4% compared to the same period in 2023 (EEC Statistics Department data). Companies from EAEU countries are actively engaged in the Union’s markets through a wide range of strategies, including industrial cooperations, joint ventures, affiliates, export-import transactions.

For example, in Kokshetau (Kazakhstan), KAMAZ PJSC in cooperation with NC Kazakhstan Engineering set up its own car assembly production. All manufactured goods are sold in the Kazakh internal market, supported by a well-developed network of dealers and certified service centres.

Yaroslavl Motor Plant and Kolomna Plant supply engines for BelAZ haul trucks. As planned, from 2025 BelAZ intends to produce the main types of dump trucks powered only by Russian engines. The affiliated production and dealer enterprises of the Belarusian holding Amkodor also operate in Russia and Kazakhstan, while continually ramping up their in-vestments. Indeed, in October 2023, Ufa launched the Amkodor-Agidel plant for the production of post-harvest grain processing equipment, and this list of examples is endless.

The achievements of robust co-operation between EAEU businesses are clearly seen in the gross indicators. According to the EEC Statistics Department, EAEU industrial production grew by 3.7% in 2023, while the growth rate of the processing industry stood at 7.4%. In 2024, the figures showed further momentum: by the end of the first eight months of the year, EAEU industrial production totalled 104.5% compared to the same period in 2023, while manufacturing output in the EAEU surged by 7.9%.

Worth mentioning that the special role of EAEU business cooperation as a factor in integration development is reflected in the fundamental texts of the Union. For example, the Treaty on the Eurasian Economic Union stipulates that one of its major goals is “to seek the creation of a common market for goods, services, capital and labour within the Union.”

The Strategic Directions for Developing the Eurasian Economic Integration until 2025 (Strategy 2025), approved by the Supreme Eurasian Economic Council (Decision No. 12 dated December 11, 2020), identifies the assistance in entrepreneurship development as a key measure and mechanism to implement the Directions (p. 1.7.).

The outcome of Russia’s EAEU Presidency in 2023 was the Declaration on Further Development of Economic Processes within the Eurasian Economic Union until 2030 and for the Period until 2045 “Eurasian Economic Path,” adopted by the Supreme Eurasian Economic Council on December 25, 2023.

This document contains six directions:

• providing the common market with key goods and resources and its efficient functioning;
• forming a common space of cooperative interaction and cooperation in the field of technological development;
• forming a common transport and logistics space; forming a common financial market;
• developing economic cooperation in the fields with integration po-tential;
• the EAEU functioning as a pole of economic attraction in the international arena.

The document is of particular interest to the business community, as besides individual sectoral and cross-sectoral areas, it sets out the goals to “improve the business environment within the EAEU,” as well as to “promote favourable conditions in the member states for the involvement of small and medium-sized businesses in cooperation within the EAEU.” Hence, the importance of business in the integration development was once again formalised.

Since 2015, the key business cooperation body, developing and promoting coordinated business positions in the EAEU, has been the EAEU Business Council, comprising all key business associations of the Union’s states: the Union of Manufacturers and Businessmen (Employ-ers) of the Republic of Armenia, the Union of Non-Profit Organizations “Confederation of Industrialists and Entrepreneurs (Employers) of the Republic of Belarus,” the National Chamber of Entrepreneurs “Atame-ken” of the Republic of Kazakhstan, and the Russian Union of Industrialists and Entrepreneurs (RSPP) of the Russian Federation.

The EAEU Busi-ness Council programme embraces a wide range of items on the agenda of Eurasian integration: from cooperation with partners on the EAEU’s external perimeter and sectoral regulatory framework to the removal of barriers and promotion of cooperation. The EAEU Business Council is actively interacting with the EEC under the Memorandum of cooperation, which outlines the following key areas of cooperation — the consideration of the Council’s proposals aimed at shaping the Union’s regulatory le-gal framework, and holding business fora involving the business communities of the member states.

The EAEU Business Council is permanently involved in the work of almost all Advisory committees under the EEC Board. Moreover, the Advisory Council for Interaction between the EEC and the EAEU Business Council serves as a platform for interaction and permanent discussions on strategic and systemic aspects of the development and functioning of the integration structure with business associations of the Union’s countries.

“We work very closely with the Russian Union of Industrialists and Entrepreneurs. We get feedback from the business community, which is very important. First of all, it’s important to follow the law enforcement practices of our EAEU partners to monitor the conformity of the law of these countries with the EAEU law, to duly identify and alert our colleagues on various trade barriers that impede entry of Russian goods and services to the markets of our countries, EAEU partners.

So, here the role of the EAEU Business Council is extremely significant,” Russian Deputy Prime Minister and Member of the EEC Council Alexei Overchuk noted. Efforts are underway to remove barriers in the EAEU internal market with the active engagement of the business community. As noted in the EEC report, summarising the outcomes of its work for 2020—2023, since 2016, 67 barriers, 16 restrictions and 26 exceptions hampering access to the EAEU markets have been removed.

In 2022—2023, 15 barriers, 10 obstacles with signs of barriers, 3 restrictions and 2 exceptions have been eliminated. In the end, as of November 2024, there is only one barrier and 35 restrictions on the EAEU internal market (according to the Portal of General Information Resources and Open Data).

The Action plan of the Presidium of the EAEU Business Council for 2024 provided for “regular monitoring and detection of barriers, restrictions and exceptions within the EAEU space, elaboration of proposals of the EAEU Business Council on their elimination and their promotion in cooperation with national and supranational bodies and organisations.”

Russian businesses surveyed by RSPP, for instance, re-ported obstacles in such areas as payments and settlements, customs and trade policy, technical regulation and standardisation, transport and logistics, digital agenda, and services. Consolidated proposals are currently underway to overcome these hurdles. Removing barriers is closely linked to improving the EAEU business environment. In 2023, the first report on the business and investment climate in the EAEU countries, drawn up in cooperation with the EAEU Business Council, was made public. This paper was drafted pursuant to paragraph 1.7.1 of the Action Plan to implement Strategic Directions 2025, and it serves as a tool to improve the business climate and develop cooperation within the EAEU, as well as with partners from third countries, who are given comprehensive information on the opportunities and terms of cooperation with EAEU partners.

It was used as a basis to develop and adopt Recommendation No. 36 of the EEC Collegium “On creating the most favorable conditions for establishing and doing business” dated December 8, 2023, which received high appreciation from the business community. Another meaningful result of the constructive dialogue with the business community was the establishment of the Eurasian mechanism for financing industrial cooperation launched in 2024.

A number of proposals put forward by the business community were integrated into the key documents defining its work — the Regulations on selecting joint cooperation projects in industries and providing financial support for their implementation by the Eurasian Economic Union States (approved by Decision No. 3 of the Eurasian Intergovernmental Council dated October 26, 2023), as well as the List of financial organisations participating in the financial support mechanism for joint cooperative projects in industries implemented by the EAEU countries (approved by Order No. 47 of the EEC Council dated December 12, 2023).

This mechanism covers interest rate subsidies on the loan equal to 100% of the interest rate of the central bank emitting the currency in which the project is financed. The maximum interest rate of financial institutions involved in the mechanism on the relevant loans cannot exceed 6.5% for the borrower, while the maximum amount of subsidy per project mustn’t be more than 350 million roubles per year, and the project timeframe should be up to 5 years.

The requirement of cooperation — participation of parties from at least three EAEU states in the project — is an important condition for receiving a subsidy. Other criteria set out in the Regulations are also applicable. The fact that projects for subsidies are submitted to the Commission by eligible banks, which first examine their compliance with the established Eurasian requirements, their own risk profile and procedures, is an import-ant feature of the mechanism, adding up to its attractiveness.

Developing cooperation with third countries and partners from the leading international organisations is also a priority of the EAEU and its Business Council in their internation-al activities. In particular, one of the focus areas of the Strategy 2025 is “positioning of the EAEU as one of the most significant development centers of the modern world” (Direction 11). The EAEU Business Council signed Memoranda of cooperation with partners from China, Mongolia, Iran, Cu-ba, Moldova, Belgium, Luxembourg, and Uzbekistan, as well as with the International Congress of Industrialists and Entrepreneurs (ICIE), which brings together national industrialist and entrepreneurial unions from 26 countries.

The Memoranda launched business dialogues with the RSPP from one side and partner business associations from the other. These mechanisms open up vast opportunities for involving business in the development of relations with external partners. Hence, paragraph 2 of Article 1.6 of the EAEU - Iran Free Trade Agreement stipulates that “The business dialogue platform shall have a right to bring proposals to the Joint Committee on issues concerning the application of this Agreement, including proposals on development of trade and economic cooperation between the Parties, as well as on other issues related to mutual trade between the Parties.”

Another important area of the business dialogue will encompass seminars, business exhibitions, fairs, round tables and other joint events to develop mutual EAEU-Iran trade and economic relations. As Russian President Vladimir Pu-tin stated at the plenary session of the First Eurasian Economic Forum, held in Bishkek in May 2022, the business dialogue system may become an example for a potential business co-operation platform in Greater Eurasia. In conclusion, attention should be drawn to the importance of progressively deepening cooperation within the Eurasian integration.

Alexander Shokhin, President of the Russian Union of Industrialists and Entrepreneurs, pointed out the following promising business axis within the EAEU:

• forming a favorable EAEU business and investment climate to launch new drivers of Eurasian in-tegration;
• developing existing mechanisms in areas where significant progress is seen, such as customs co-operation;
• developing a system of payments and settlements in national currencies using digital tools to drastically reduce transaction costs of all participants in cooperation;
• identifying and removing excessive barriers, restrictions and exceptions in the internal market;
• strengthening ties with friendly and neutral partners in Asia, Afri-ca, Latin America, and internation-al institutions — the SCO, BRICS, ASEAN, among others, — aimed at improving the cooperation potential between EAEU states and their companies in third-country markets and diversifying ties “on the external perimeter” of the Union.

The EAEU Business Council, for its part, will continue to actively support the domestic business community in making full use of the opportunities of Eurasian integration both on the current agenda and in new areas of cooperation.