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Interview by Nurlan Aldabergenov, EEC Minister for Competition and Antimonopoly Regulation, to the Liter-Nedelya periodical "Benefits for Kazakhstan Entrepreneurs from the Customs Union - Nurlan Aldabergenov"

Interview by Nurlan Aldabergenov, EEC Minister for Competition and Antimonopoly Regulation, to the Liter-Nedelya periodical "Benefits for Kazakhstan Entrepreneurs from the Customs Union - Nurlan Aldabergenov"

10/25/2012
Beginning with February, the supranational body of the Eurasian Economic Commission (EEC) became operational, being the only regulatory body of the Customs Union and Common Economic Area embracing the Republic of Belarus, Kazakhstan and Russian Federation.
Nurlan Aldabergenov, EEC Minister for Competition and Antimonopoly Regulation, represents our interests in the organization. During the interview with the LITER-Nedelya's correspondent, Mr. Aldabergenov talked about the works accomplished and those awaiting.

- Can we refer mutual CU market penetration to the opening of border?

- Removal of customs clearance procedures at internal CU borders significantly accelerated the movement of goods between Kazakhstan, Belarus and Russia. Entrepreneurs from the three countries are relieved from the burden to perform customs clearance in mutual deliveries, which, according to the recent figures, has boosted business activity.
Thus, in 1H 2013, the volume of mutual trade between the three countries totaled about USD 34 billion, which is a 13.2% rise on a year-to-year basis. The results may be safely attributed to the opening of borders and mutual market penetration within the Customs Union and the Common Economic Area. What is more, Kazakhstan has improved its stock transit to third countries expanding its export of hydrocarbons and energy. In 2011, international freight traffic totaled 239 million tons, outpacing 2010 by 7%.
Kazakhstan entrepreneurs have benefited from the Customs Union and have significantly increased volumes of traditional Kazakhstan exports. In 2012, in contrast to 1H 2013, exports of wheat increased by 13 times, and those of flour – by 25. Exports of macaroni products, same as some other products, increased by 70%.
 
Anticipating your question, I will say that customs statistics don't prove the concerns of vast CU expansion to the Kazakhstan food market. According to the available data, CU frozen beef import increased 8 times to reach 3.8 thousand tons or $17.4 million, which were as well imported from third countries. The figures exceed those from Russia and Belarus. Thus, in 1H 2013, beef imports from third countries totaled 3.9 thousand tons. CU poultry imports increased by 1.5 by weight to total 16.9 thousand tons. Imports from third countries totaled 48.4 thousand tons with the major share falling at the USA. Cheese and curd import increased by 17% to total 4.7 thousand tons. Meanwhile, 5.6 tons were imported from third countries with Ukraine being the leader.
Consequently, it is not the CU representatives who are most active on the Kazakhstan food market, but third countries, which proves the need to continuously improve local goods marketability.​

- What are the challenges of domestic businesses in approaching neighboring markets?


- First of all, it is the unreasonable administrative barriers resulting from CU legislative differences. Consequently, an entrepreneur from one country is not able to come head-to-head with entrepreneurs from other countries or get access to the market.
Another dramatic example is the licensing system. That is, within the territory of the Customs Union tobacco products are subject to licensing only in the Republic of Belarus. Similar differences exist in Russian and Kazakh legislation. 
Therefore, business community and entrepreneurs should analyze the licensing system and legislation of the Republic of Belarus, Kazakhstan and Russia, identify barriers in mutual trade and submit to the EEC and government proposals on how to remove unjustified administrative barriers.
Removal of unjustified administrative barriers will increase the number of market participants and develop competition at the UEA commodity markets.

- How complicated is it to harmonize legislation of Russia, Belarus and Kazakhstan?

-- Currently, we observe certain differences in legislation of the three countries in terms of competition policy and the EEC's task is to foster their harmonization.
First of all, legislation of Belarus, Kazakhstan and Russia should be brought in compliance with the principles and rules of competition established by the Agreement on Unified Principles and Rules of Competition.
The ultimate goal of harmonization is to create environment fostering equal competition at CU commodity markets, including non-discriminatory access for business entities, effective development of economy, stimulation of innovation processes and qualitative, competitive production.​

- To your mind, what are the prime objectives of the Eurasian Economic Commission in the field of anti-monopoly regulation?

- The prime anti-monopoly objectives of the Eurasian Economic Commission include harmonization of the legislation of Belarus, Kazakhstan and Russia in the field of competition policy, adoption of regulatory legal acts to prevent competition rules violations at trans-frontier markets on the supernational level.

It should be noted that only the Agreement on Unified Principles and Rules of Competition establishes exact deadlines to harmonize legislation (by 1 July 2013) out of all international treaties forming the contractual-legal base of the Customs Union and the Unified Common Area.

One of the routine tasks is the adoption by next January of regulatory acts to monitor the unified competition rules compliance. The package includes such documents as Criteria for Trans-Frontier Markets, Competition Assessment Procedure, Methodology to Identify Monopoly High (Low) Prices, Methodology to Calculate and Impose Penalties, Review of Applications (Materials) for Competition Rules Violations, Procedure of Investigating the Competition Rules Violation and Procedure of Legal Investigations on Competition Rules Violation and Procedure of Cooperation, including informational.
The specified acts have been developed and are subject to intrastate agreement in the Republic of Belarus, Kazakhstan and Russian Federation.
Another key objective of the Eurasian Economic Commission related to anti-monopoly regulation is the adoption of Model Law on Competition, a recommendatory statute intended to bind legal regulation of economic relations in competition policy of the Member-States. The Agreement on Unified Principles and Rules of Competition stipulates that the Model Law should be signed by the leaders of Belarus, Kazakhstan and Russia by July 1, 2013.
Development and adoption of Model Law on Competition will be based on best legislative norms, international expertise and practice of the recognized competition leaders with profound regulation of competitive relations, in particular, USA, UK, Japan, South Korea and others.
 
Currently, the EEC is investigating the prospects for the Competition (Anti-Monopoly) Code of the Common Economic Area, which could have become a codified direct act defining the rules of competitive behavior both for entrepreneurs and state authorities.​

- Is there any mechanism to challenge the EEC decisions related to competition?

-In the near term, one of the important issues of EEC activity will be the establishment of dispute settlement procedure within the Unified Economic Area. The Agreement on Unified Principles and Rules of Competition stipulates procedure to challenge EEC decisions. Such decisions will be challenged in EurAsEC court according to the procedure established by the EurAsEC court statute and by the Agreement on Submitting CU Legal Disputes to EurAsEC Court and Specifics of Their Proceeding. Should the dispute be submitted both to the Member-State court and EurAsEC court, the Member-State court should abandon the dispute.
The EurAsEC court statute stipulates pre-trial procedure to settle the dispute, and in particular: the preliminary application to the Commission shall be the mandatory prerequisite for the application of a business entity to be accepted by the EurAsEC court.
 
It is worthy of note that the EurAsEC court statute establishes such requirement not only for business entities but for CU Member-States in particular categories of proceedings.
A business entity has the right to appeal to court should EEC fail to take measures against the application.​
 

Lubov ARTYMOVICH, Astana