TRADE with the European Union

1. TRADE with the European Union Michael Geistlinger University of Salzburg

2. Please, Remember the Origin Agreement between the European Economic Community and the European Atomic Energy Community and the Union of Soviet Socialist Republics on Trade and Commercial and Economic Cooperation of 18 December 1989, OJ L 068, 15/03/1990 P. 0002 – 0017.

3. General Characteristics of the EEC/EURATOM – USSR Trade Agreement • Wish to Establish Direct Contractual Relations • Complement and Extend Bilateral Relations of the Member States • Implement Final Act Helsinki CSCE • Favourable Conditions for Harmonious Development and Diversification of Trade and Economic Cooperation Based on Equality, Mutual Benefit and Reciprocity • Consider Potential for Mutual Trade and Economic Cooperation • Favourable Contribution to Economic Restructuring in the USSR • Reference to Direct Relations between CMEA and EEC

4. Contents of the EEC/EURATOM –USSR Trade Agreement • Trade in goods, except coal and steel, originating at treaty partners • Most favoured-nation treatment • Relief from duties, taxes etc. • Applicable regulations • Highest possible degree of liberalization of imports of the other‘s products • Abolition/elimination of quantitative restrictions, at least liberalization • Export licences, open import quotas

5. Contents of the EEC/EURATOM –USSR Trade Agreement ff • Treatment of goods at market-related prices • Avoidance of conflict situations, consultations • Measures to be applied the least disturbant ones • Exchange of commercial and economic information • Cooperation in vocational training, simplification of customs documentation and procedures, etc • Encouragement of trade promotion activities • Guarantees of property rights • Encouragement of contacts between business associations

6. Contents of the EEC/EURATOM –USSR Trade Agreement ff • Free choice of trading pattern • Favourable business regulations • UNCITRAL arbitration • Adequate protection and enforcement of industrial, commercial and intellectual property rights • Economic cooperation in order to strengthen and diversify economic links, contribute to development of standard of living, encourage environmentally sound policies, etc • Cooperation in statistics, standardization, industry etc by facilitating exchanges and contacts between persons etc • Joint Committee for Implementation and Monitoring

7. The status quo: Lack of Multilateralism • EU on the one hand • States of the Regions on the other hand • Disadvantages for States of the Regions: • Lack of Equality • Lack of Bargaining Power • Subject to Dictates of Treaty Conditions and Contents • Subject to Interventionist Behaviour and Treaty Regimes • Subject to Primacy of Foreign Politics over Trade Interests

8. Focus on Caucasus • Armenia (WTO member since 2003) • Azerbaijan (No WTO member) • Georgia (WTO member since 2000)

10. The Legal Framework as to the EU • Armenia: Partnership- and Cooperation Agreement, OJL 239, 9 September 1999, p. 1 – 50: 99/602/EC, ECCS, Euratom Council and Commission: Decision of 31 May 1999. • Azerbaidjan: PCA, OJL 246, 17 September 1999, p. 1 – 2: 99/614/EC, ECCS, Euratom: Council and Commission Decision of 31 May 1999. • Georgia:PCA, OJL 205, 4 August 1999, p. 1 – 2: 99/515/EC, ECCS, Euratom: Council and Commission: Decision of 31 May 1999.

11. Some Examples from the PCA EC/Azerbaijan of 26 April1996 • Objectives of the Partnership: • To provide an appropriate framework for the political dialogue between the Parties allowing the devlopment of political relations (art 1, first line) • - To support the Republic of Azerbaijan‘s efforts to consolidate its democracy and to develop its economy and to complete the transition into a market economy (art 1, second line) • - To promote trade and investment (art 1, third line) • - To provide a basis for legislative, economic … cooperation (art 1, fourth line)

12. EC‘s/EU`s Understanding of Political Dialogue (Title II, arts 5 – 8) • Strengthen the links between Azerbaijan with the EU and ist Member States, “and thus with the community of democratic nations as a whole“: EU defines “democracy“ • Increase convergence of positions on international issues of mutual concern: EU defines “position in issues of mutual concern“ • Observe the principles of democracy, and the respect and promotion of human rights, particularly those of persons belonging to minorities: EU defines understanding of “human rights, including those of minorities“

13. EC‘s/EU‘s Understanding of „Legislative Cooperation“ (title V, art 43) • Approximation of laws: customs law, company law, banking law, company accounts and taxes, intellectual property, protection of workers at the workplace, financial services, rules on competition, public procurement, protection of health and life of humans, animals and plants, the environment and legislation regarding the exploitation and utilisation of natural resources, consumer protection, indi-rect taxation, technical rules and standards, nuclear laws and regulations and transport. One way road from EU to Az • Safeguarded by: exchange of experts, early information, seminars, training activities, translation of EU legislation.

14. EC‘s/EU‘s Understanding of Economic Cooperation (title VI, arts 44 – 70 • Community participation in Az‘s efforts to restructure its industry (art 46 para 1 2nd line) • Enforcement of EU competition rules (art 46 para 2) • Promotion of the use of EU technical regulations and the application of European standards (art 50 para 2 2nd line) • Promotion of teaching in the field of European studies (art 53 para 2 5th line) • Teaching EU languages (art 53 para 2 6th line) • Approximation of Az standards to EU technical regulations as to industrial and agricultural food products (art 54) etc

15. EC‘s/EU‘s Understanding of Democracy and Human Rights Art 71 in full directed towards Azerbaijan

16. The Other Side of the Medal:Advantages for Azerbaijan - Temporary financial assistance from the EU (title X, arts 77 – 80) .

17. Options for Multilateralisation on the Regions‘ Side • The CIS Free Trade Zone or CIS directly (CIS FTZ/CIS) • The Eurasian Economic Community (EAEC) • The Shanghai Cooperation Organisation (SCO) • The Eurasian Economic Union (EEU, from 2015 onwards) • The Centralasian Cooperation (CAC) (de facto abolished in 2005) • .

18. Preconditions • Membership of all states of the regions (Central Asia, Caucasus): • - Two major issues: Georgia/Russia, Azerbaijan/Armenia • - Rivalries of EU/Russia for political influence on the regions, at least interest in the regions on Chinese side

19. The Key Issues Pending

20. Options • CIS, CIS/FTZ): Rather loose organisational framework, not sufficient to balance EU, in addition dominating influence of Russia (eg gas price), • SCO: Weakest organisational framework, influence of Russia neutralised by China, not at all balancing EU, at least for a while

21. Options ff • EAEC, once developed into EAU: strongest organisational potential and real option for balancing the EU. • - Concept of international activity of EAEC 2007: commitment to UN, development of partnership on international level, cooperation for a more just international trading system, equality and respect of mutual interests, strengthening of regional stability and economical safety, respect of international law, territorial integrity, cooperation within WTO, considers EU as structural partner in the interests of sustainable development, cooperation with OSCE. • - Concept has potential for balancing EU‘s, Russia‘s and China‘s interests in the regions.

22. There is a German Saying: Mancher Handel ist wie ein Igel,wo man ihn angreift, da sticht man sich.

23. НЕКОТОРОЕ ТОРГОВЛЯ – ЭТО КАК ЕЖ: ГДЕ ТЫ ХВАТАЕШЬ ЕГО, ТЫ КОЛEШСЯ. SOME TRADE islike a HedgehoG: WhereyouTouchit, You prick yourself.