European Union, Eurasian Economic Union and Belt and Road ... · 3 Source: IMF WEO World GDP shares...

Wiener Institut für

Internationale

Wirtschaftsvergleiche

The Vienna Institute for

International Economic

Studies

www.wiiw.ac.at

Amat Adarov, Ph.D.

[email protected]

Vienna Institute for International Economic Studies

European Union, Eurasian Economic Union and

Belt and Road Initiative:comparative analysis and integration perspectives

Vienna, November 29, 2018

Connectivity in EU’s Wider Eastern Neighbourhood

mailto:[email protected]

2

Source: Adarov (2018)

Adarov Amat / EU and EAEU 2018

EU, EAEU and BRI in a comparative perspective

BRI

3

Source: IMF WEO

World GDP shares at PPP, 2008-2017 avg GDP shares at PPP within the EAEU, 2008-2017 avg

China, 15.4

EAEU-5, 4.1

EU-28, 17.9

ROW, 62.5

ARM0.5%

BLR3.9% KAZ

9.1%

KGZ0.4%

RUS86.0%



4

Preferential trade agreement

Free trade area

Customs union

Common market

Economic union

EAEU (2015): BLR, KAZ, RUS, ARM, KGZ:

1. Customs union (no internal border

controls, common external tariff,

harmonization of regulations)

2. ‘Four freedoms’ (goods, services, capital,

labour)

3. Coordination of some economic policies


EU

OBOR

BRI: 64-100 countries

1. Policy coordination

2. Cross-border connectivity

3. Unimpeded foreign trade

4. Financial integration

5. People-to-people links

EU modes of cooperation:

• EU Neighbourhood Policy

• Cooperation/partnership agreements

• AA/DCFTA agreements

‘EU-Russia Common Spaces‘

No formal framework with the EAEU

Source: Own elaboration


5

Causal chain of deep economic integration impact (DCFTA example)



6



EAEU CET; WTO obligations

EAC and GOST standards

Institutions/infrastructure gaps

7Source: own calculations based on the WTO data for Russia, 2015

10.2

6.9

8.1

4.1

6.0

6.0

7.0

7.6

8.6

9.2

12.7

7.2

3.5

8.5

8.4

80.0

33.2

20.0

10.0

13.3

15.0

15.2

16.4

17.5

17.0

20.0

17.0

17.0

22.0

18.1

0 20 40 60 80 100

01-05 Animal & Animal Products

06-15 Vegetable Products

16-24 Foodstuffs

25-27 Mineral Products

28-38 Chemicals & AlliedIndustries

39-40 Plastics / Rubbers

41-43 Raw Hides, Skins,Leather, & Furs

44-49 Wood & Wood Products

50-63 Textiles

64-67 Footwear / Headgear

68-71 Stone / Glass

72-83 Metals

84-85 Machinery / Electrical

86-89 Transportation

90-97 Miscellaneous

Tariff rate, MFN, simple mean, %EAEU CET, avg and max, %

Tariff rate, applied, weighted mean, %

Source: World Bank’s WDI

Import tariffs


0123456789

1011

EU-28 Armenia Belarus Kazakhstan KyrgyzRepublic

RussianFederation

China

2008 2010 2015 2016

0123456789

10

EuropeanUnion

Armenia Belarus Kazakhstan KyrgyzRepublic

RussianFederation

China

2008 2010 2015 2016

8



EAEU CET; WTO obligations

EAC and GOST standards

Institutions/infrastructure gaps

9

EAEU and EU: macroeconomic aspects

Source: own calculations using UN Comtrade data

Importer

EAEU-5 EU-28 China ROW

Exporter

EAEU-5 51.6 243.1 37.5 188.2

EU-28 142.3 3494.0 164.2 1686.5

China 52.4 319.2 1458.4

Trade among the EU, the EAEU and China, USD bn, 2007-2016 average


Asymmetric trade composition:

EU -> EAEU: high value-added products (machinery, electronics, etc.)

EAEU -> EU: petroleum, metals, and other commodity products

10

Sectoral competitiveness:

EAEU, EU, China

Source: Adarov (2018)

Balassa index ( values > 1

indicate global export

competitiveness of country

c in sector i):

𝑅𝐶𝐴𝑖 =𝑥(𝑖)𝑐/𝑋𝑐𝑥(𝑖)𝑊/𝑋𝑊

0 1 2 3 4 5 6

1. Animal Products

2. Vegetable Products

3. Foodstuffs

4. Mineral Products

5. Chemicals

6. Plastics / Rubbers

7. Leather / Furs

8. Wood / Wood Products

9. Textiles

10. Footwear / Headgear

11. Stone / Glass

12. Metals

13. Machinery / Electrical

14. Transportation

15. Miscellaneous

CHN EAEU EU28


where x(i) is the value of

exports of industry i, X is the

total value of exports from

country c or world (W).

11

WB WGI Institutional quality (-2.5 = low to 2.5 = high)

A. Control of Corruption

B. Regulatory Quality

Source: World Bank WGI


-2.5-2

-1.5-1

-0.50

0.51

1.52

2.5

EU

-28

EA

EU

-5

Chin

a

Arm

en

ia

Be

laru

s

Ka

za

kh

sta

n

Kyrg

yz R

ep

ub

lic

Russia

nF

ede

ratio

n

Czech

Rep

ublic

Ge

rma

ny

Latv

ia

Po

lan

d

Ge

org

ia

Mo

ldova

Ukra

ine

2000 2005 2010 2017

-2.5-2

-1.5-1

-0.50

0.51

1.52

EU

-28

EA

EU

-5

Chin

a

Arm

en

ia

Be

laru

s

Ka

za

kh

sta

n

Kyrg

yz R

ep

ub

lic

Russia

nF

ede

ratio

n

Czech

Rep

ublic

Ge

rma

ny

Latv

ia

Po

lan

d

Ge

org

ia

Mo

ldova

Ukra

ine

2000 2005 2010 2017

Source: World Bank Logistics Performance Index

0 1 2 3 4

EU-28

EAEU-5

China

Armenia

Belarus

Kazakhstan

Kyrgyz Republic

Russian Federation

Georgia

Moldova

Ukraine

Tajikistan

Turkmenistan

2010 2016

Logistics performance index (1 = low to 5 = high)

12

EAEU: macroeconomic aspects

Real GDP growth rates, 2000-2018 (projections: 2019-2023)

Source: IMF WEO, own calculations

Real GDP per capita,

PPP 2011 intern. dollars


0 10,0

00

20,0

00

30,0

00

40,0

00

50,0

00

EU-28

EAEU-5

China

Armenia

Belarus

Kazakhstan

Kyrgyz Republic

Russia

Czech Republic

Germany

Latvia

Poland

Slovak Republic

Georgia

Moldova

Ukraine

Tajikistan

Turkmenistan

Uzbekistan

2000

2017

Armenia, 6.0

Belarus, 4.0

Kazakhstan, 3.7

Kyrgyz Republic, 2.8Russia, 1.7

-15

-10

-5

0

5

10

15

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

Armenia

Belarus

Kazakhstan

Kyrgyz Republic

Russia

2005 2010 2017 2018 (e) 2019 (f)

Armenia Inflation, average consumer prices 0.717 7.274 0.917 3.027 4.446

Unemployment rate 31.2 19 18.906 18.862 18.561

Current account balance -2.528 -13.622 -2.847 -3.798 -3.786

Belarus Inflation, average consumer prices 10.336 7.743 6.032 5.523 5.511

Unemployment rate 1.704 0.827 0.768 0.768 0.768

Current account balance 1.518 -14.471 -1.711 -2.497 -4.236

Kazakhstan Inflation, average consumer prices 7.541 7.126 7.43 6.411 5.572


Current account balance -1.814 0.936 -3.358 -0.153 0.176

Kyrgyzstan Inflation, average consumer prices 4.339 7.968 3.175 2.912 4.643


Current account balance 3.798 -2.186 -4.039 -12.266 -11.833

Russia Inflation, average consumer prices 12.683 6.854 3.674 2.826 5.088


Current account balance 10.284 4.117 2.246 6.158 5.19

13

EU-EAEU relations

Challenges:

Geopolitical tensions and mutual sanctions (Russia-EU)

Induced import substitution and partial export reorientation in Russia

Lack of cooperation between the EU and the EAEU regulatory institutions

Non-tariff barriers to trade: differences in TBT/SPS measures

General regulatory approximation is challenging

Intra-EAEU issues related to harmonization of its regulatory framework

concerning the ‘four freedoms’

Significant differences in sectoral competitiveness stemming from the issues in

infrastructure and institutions

Limited capacity to implement reforms in the EAEU: macroeconomic

challenges, bottlenecks in less developed member states, structural issues


14

EU-EAEU relations

Way forward?

Foster pragmatic systematic dialogue: EU-EAEU-BRI

Avoid conflict / competition ideology and imposing ‘either-or’

choices on third countries

Focused cooperation at the technical level

Identify areas of common economic interest:

Infrastructure connectivity

Facilitate development of lagging regions along the integration

route

Trade and investment cooperation, especially in the context of

regional/global value chains and sectoral priorities

Coordinated external financial and technical support for

structural reforms

Regulatory framework (EU-EAEU-BRI general coherence)


15

Thank you!

Amat Adarov, Ph.D.

[email protected]

Vienna Institute for International Economic Studies

mailto:[email protected]

European Union, Eurasian Economic Union and Belt and Road ... · 3 Source: IMF WEO World GDP shares...

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