Union Against Cri­sis

Amid the eco­nomic cri­sis the in­dus­trial out­put and trade have been grow­ing in the Eurasian Eco­nomic Union

Economy of Belarus - - FRONT PAGE -

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.

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