Union Against Crisis
Amid the economic crisis the industrial output and trade have been growing in the Eurasian Economic Union
In the first year of operation the Eurasian Economic Union (EEU) faced a lot of challenges. The global crisis, the sanctions against Russia, the fall in oil and gas prices did not allow the EEU to hit the targets it aimed for. However, much has been done to remove the barriers to mutual trade in goods and services, particularly in the manufacturing industry and agriculture. In an interview with the Economy of Belarus Magazine, Industry and Agriculture Minister of the Eurasian Economic Commission (EEC) Sergei SIDORSKY talks about the benefits of integration for Belarusian industrialists, cooperation with China and the EU, and plans for 2016.
Mr Sidorsky, the launch of the Eurasian Economic Union came at a difficult time. How did it affect the manufacturing industry and the agricultural sector of its five members?
Against the background of the global economic slump and the production decline, the Eurasian Economic Union achieved some good results in the real production sector. For example, we built up the gross agricultural output and bolstered the cooperation in the manufacturing industry.
Since the creation of the single economic space, the aggregate agricultural output rose by 28%
in 2014. Import decreased by 4.6%, export and trade in agricultural products surged by 42.1% and 37% respectively. In January-September 2015 the gross agricultural output in the Eurasian Economic Union amounted to $79.6 billion in current prices, which was up 2.3% from the same period a year earlier. Production of food, beverages and tobacco edged up by 1.4%.
With the production on the rise, the EEU member states boosted the trade in agricultural products and food. In January-September 2015 the mutual trade in poultry climbed up by 20%, that of milk and dairy products went up by 16%. The supplies of vegetables rose by 60%, and the mutual trade ballooned by more than 50%. While the mutual trade was growing, the import in physical terms was falling. The import of poultry dropped by 40%, that of dairy products plummeted by 70%. The supply of fruits and vegetables from third countries fell by an average of 12%.
The figures show that import is being gradually substituted and the common market is being filled with local farm produce.
Amid the general decline in production in the EEU, in January-September 2015 the pharmaceutical industry ramped up the output by 14.3% as against the same period of 2014, chemical industry by 6.5%, and the manufacture of coke and petroleum products inched up by 0.9%.
The EEU reduced the export and import of industrial products. The fall in import was much steeper. For example, in January-September 2015 the processing companies reduced export by 27.7% and import by 36.9%. The engineering sector saw import decline by 38.1%, and export by 3.1%, while the export of vehicles rose by 13.9%.
These indicators show that despite the unfavorable economic and political situation in the world, the manufacturers in the Eurasian Economic Union have largely retained their export markets and started satisfying the local demand.
Thus we see that the short-term factor of falling profits is being replaced by the long-term impact of import-substitution in the EEU market. In the future this will help our companies augment their share in the common market of the Union, intensify mutual trade, and build up the export capacity.
Would you tell us more about the benefits of integration for the Belarusian manufacturing industry and agriculture? Are Belarusian industrialists on par with manufacturers from other countries of the EEU?
The benefits and subsequent practical effect of integration for the real production sector are obvious: our producers get access to a bigger commodity market. The industrial output increases on the heels of higher demand. This, in turn, stimulates fair competition on the common market, offers more cooperation opportunities and eases the transfer of innovative technologies. This creates the real conditions for the manufacturing industry of the Eurasian Economic Union to reach a new level of development.
In respect of Belarusian products, I can say that they are competitive in the EEU market and enjoy a steady demand. Developing the cooperation, we will not only improve the quality of our products but also create new competitive products popular both in the EEU and abroad. Instead of dealing with undue competition in third markets and creating duplicate production facilities in the EEU, our countries will be able to explore new niches in the international trade thanks to the coherent cooperation and product promotion policy.
With regard to the mutual trade in agricultural products, the EEU arrangements to ensure the freedom of commodity movement, including the establishment of uniform safety requirements, veterinary and phytosanitary controls, helped us achieve a sustained growth in trade, and replace foreign supplies with our own competitive products.
At present, foodstuffs and agricultural raw materials from Belarus generate more than 60% of mutual trade between the EEU countries. Belarus’ major export items are meat and dairy products. Belarus could also increase the supply of pedigree dairy cattle to the common market as they are adapted to the conditions of the EEU member states.
At present, foodstuffs and agricultural raw materials from Belarus generate more than 60% of mutual trade between the EEU countries
In general, the development of agricultural manufacturing will give a powerful boost to the associated sectors. For example, it will help increase the sales of domestic agricultural equipment and machinery, fertilizers, crop protecting agents, and veterinary preparations and also contribute to the development of the food processing industry.
The establishment of the single services market is an essential part of integration. The single services market was set up in the Union on 1 January 2015. The market covers the services related to farming, agricultural machinery leasing and rental, construction of agricultural facilities, and the assembling of facilities with the use of prefabricated components.