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Business supported the EEC initiatives

Business supported the EEC initiatives


Project Office for the Implementation of Digital Initiatives, headed by the Chairman of the Board of the Eurasian Economic Commission (EEC) Tigran Sargsyan will be launched before the end of this year. This was announced at the session of the Advisory Council for Cooperation of the EEC and the Business Council of the Eurasian Economic Union (EAEU). The session of the Council was attended by members of the EEC Board headed by the Chairman of the EEC Board Tigran Sargsyan, the President of the Business Council of the EAEU Victor Khristenko and heads of business associations of the Union countries, representatives of large and small businesses of the EAEU Member States.

In addition to topics related to digital transformation of the economies of the Union countries, harmonization of excise taxes on tobacco and alcohol products, removing barriers and obstacles to the implementation of integration projects in the industrial and agricultural sectors, development of Eurasian technological platforms, creation of Eurasian brands, as well as changes to the Rules of origin of goods imported from third countries were discussed.

The Chairman of the EEC Board Tigran Sargsyan noted that the EEC Ministers, members of the Business Council of the EAEU and business community representatives “discussed a number of key issues, without which it is impossible to further deepen the integration of the Union countries.” First of all, these are the prospects of the digital transformation of economies in the Eurasian Economic Union. According to Tigran Sargsyan, “it is impossible to imagine the modern integration association without a common digital agenda. The agreed policy in this area is one of the key factors to achieve success and avoid the emergence of new technological barriers already.”

According to the President of the Business Council of the EAEU Victor Khristenko, “the figure and the opportunities it offers completely change the nature of our activities both in the economy and in other spheres of life. This is a new image of the world around us. Digital transformation begins to affect the fundamentals of the Eurasian Union, how integration projects, allowing increasing their effectiveness, are being implemented”.

In his speech, Tigran Sargsyan formulated the basic approaches to the implementation of initiatives under the digital agenda of the EAEU and informed the participants of the session that a project office will be created before the end of the year. It will consist of five persons with experience of working with projects in the field of digital technologies - one representative from each EAEU Member State. The key task of the office is to evaluate the prospects of varied initiatives, identify their integration potential, and ensure their implementation. According to the Chairman of the EEC Board, the acutest, but at the same time the most difficult will be initiatives aimed at introducing the concept of traceability of goods and services, as well as their labelling and identification.

The EEC has already started receiving applications and proposals from the Union countries, said Tigran Sargsyan. For example, Armenia presented an initiative to develop and implement a unified system of electronic invoices, which will reduce the number of documents to be provided to tax authorities and the time for their registration.

Proposals by the Armenian side are particularly relevant for those cases when goods need to be transported through the territory of third countries outside the EAEU.

Speaking about principles and mechanisms for formation of agreed policies in the field of digital programs, Tigran Sargsyan proposed an algorithm envisaging mutual notification and a possibility of accession of countries to certain projects. In particular, the initiating country informs its partners of planned initiatives, and during a certain period of time other Union States can join these projects. Moreover, this procedure minimizes risks of new technological barriers for free movement of goods and services. The Chairman of the EEC Board stressed that this idea had been supported by Prime Ministers of the Union countries at the session of the Eurasian Intergovernmental Council (EIC) on October 25 this year.

The President of the Russian Council of Industrialists and Entrepreneurs (RCIE) Alexander Shokhin noted that a Committee on Digital Transformation will be created in the RCIE in the nearest future. The participants of the discussion noted the importance of an active dialogue with society and inclusion of all the active supporters of digitalization in joint projects.

Removing barriers in the common economic space of the Union and the role of the business community is another important topic of the past session. Karine Minasyan, the EEC Board Member - Minister in charge of Internal Markets, Information Support, Information and Communication Technologies, said that the elimination of barriers in the domestic market of the Union is one of the priority tasks of the Commission. “We have recorded 198 barriers in your register. Those are barriers, limitations and exceptions, and we are working on each of them,” Karine Minasyan said. In the first place, efforts are taken to eliminate barriers, that is obstacles violating the law of the EAEU. As noted by the EEC Minister, 20 barriers are now being worked on, 15 of which have already been eliminated.

Another important result was the preparation of the “White book” that describes 60 barriers agreed by all Member States that have the greatest deterrent effect on the free movement of goods, services, capital and labor in the domestic market of the Union. According to Karine Minasyan, road maps for their elimination are being developed that envisage specific events and deadlines. On October 25, the “road map” for 2018-2019 was adopted at the session of the EIC in Yerevan that includes 17 barriers and a number of practical measures to eliminate them.

Members of the Business Council of the EAEU and business representatives discussed the EEC proposals on approving new Rules of origin for goods imported from third countries. As noted by the EEC Minister in charge of trade Veronika Nikishina, update of the existing rules is provided for by the Treaty on the Eurasian Economic Union and become particularly relevant in connection with the entry into force of the new Customs Code of the EAEU at the beginning of 2018. In particular, the EEC Minister drew attention of the participants to the introduction of the concept of “residual origin criteria”. They will allow determining the country of origin of imported goods in difficult situations and avoiding possible additional customs fees for foreign trade operators.

Veronika Nikishina said that in a situation where goods are produced in one country from components manufactured in another country or countries, it is recommended to use the basic criterion - change of tariff classification. At that, the sufficient level of processing may be considered a change in tariff classification of imported goods at the level of the first four digits of the CN of FEA. In case of no change, the country of origin becomes “unknown” for the purposes of the Customs regulation of the Union.

This legal uncertainty can lead to negative consequences after the entry into force of the new Customs Code of the EAEU. With regards to bona fide suppliers of goods with “unknown” country of origin, non-tariff measures or anti-dumping duties could be applied on the basis of Article 314, established for similar goods. As a result, importers and consumers of such goods may bear additional costs due to the imperfection of the legislation.

According to the EEC, the best way out of this situation will be the introduction of “residual origin criteria” that would allow avoiding additional burden. The main purpose of using the “residual origin criteria” is to ensure a possibility to determine and declare the actual country of origin of the goods, if the main criterion is not met. In this case, the principle of the biggest cost of components or the definition of the origin country of the raw material can be used, even if technological operations at the enterprise of an end manufacturer do not lead to the change of the first four characters of the CN of FEA (packing or packaging, final product processing, etc.).

The EEC is confident that it will not complicate the existing procedure for the confirmation of the origin of goods. Importers will still be able to choose an acceptable option, either provision of a declaration of origin of the goods or a certificate of origin of the goods. “This approach is in line with the best international practices,” the EEC Minister noted.

Another important topic of the discussion was harmonization of excise taxes on alcohol and tobacco products. The EEC Board Member - Minister in charge of Economy and Financial Policy Timur Zhaksylykov said that at present, there has been considerable variation in the rates of excise taxes among the Union countries on spirits (from 2.2 euro to 7.7 euro per 1 l of ethyl alcohol) and tobacco products (from 11.6 euro to 31.3 euro per 1,000 cigarettes). According to the EEC Minister, the best way to tackle the task would be a definition of the corridor of excise taxes, including an indicative rate of the excise tax and a tolerance range for each of the Union countries. This will allow considering the difference in the social and economic development of the Union countries and income of the population, as well as providing predictability of the EEC and the EAEU Member States actions for business. According to Timur Zhaksylykov, other options, including a dramatic increase of excise taxes, could lead to a price shock and the growth of illegal volumes of tobacco and alcoholic products in a number of the Union countries.

Business representatives supported the Commission's position on this issue. “Today we have discussed this hot topic, and business is still inclined to think that the agreement on alcohol market should move towards harmonization of excise policies with a clear corridor of possible differences between the tax rates of the respective national markets, as well as with a clear adjustable corridor and with an understandable perspective,” the President of the Business Council of the EAEU Viktor Khristenko explained.

The EEC Board Member - Minister in charge of Industry and Agroindustrial Complex Sergey Sidorskiy spoke on the assessment of the most promising cooperative projects in the real sector of the economy. In his opinion, the creation of an orbital space constellation of the Union countries’ satellites run by the single operator of the EAEU can be considered the most worked-through project.

Moreover, a project for the creation of the modern high-efficiency combine harvester that uses electronic technologies for monitoring and control is now under consideration. The implementation of this project will allow developing new competences and technologies in agricultural engineering, as well as increasing the efficiency of agriculture. “The cooperative effect of the implementation of this project is rather evident. It includes innovation activity of enterprises, usage of capacities, new jobs, approaching the strategy “Industry 4.0”, significant growth in related industries,” Sergey Sidorskiy assured. Development and manufacture in the EAEU of innovative electric traction vehicles and vehicles with unmanned driving is under consideration.

The EEC Minister noted that companies in Armenia, Belarus, Kazakhstan, and Russia are ready to implement the project for the creation of the Eurasian lighting holding. “The Subject of the program is very interesting: the transition from light bulbs to LEDs and the creation of lighting products of the Union,” Sergey Sidorskiy said. Moreover, he noted that the implementation of the idea of Eurasian technological platforms allowed us to begin the development of initiatives in the field of biotechnologies, photonics, and medicine.

The idea of creating a vertically integrated jewellery holding in the EAEU could also be considered a promising project. The Union countries have developed the industrial base represented by more than 120 major enterprises.

According to the results of 2016, the volume of jewellery from precious metals imported to the EAEU Member States was more than twice as much as the volume of exports, and jewellery made of precious and semiprecious stones - by ten times more. Whereas the absence of cooperative interaction of industrial complexes withholds the possibilities for their further development in the context of global competition. Consolidating efforts in the jewellery industry would contribute to the loading of enterprises capacities and strengthening positions of Eurasian manufacturers on the market. Work on the creation of such a holding can be based on a specialized Eurasian technological platform.