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Annex I.The Common European Economic Space (CEES) Concept Paper

Rome, Italy | 6 ноября 2003 года

Preamble

1. At the EU-Russia Summit in October 2001, the parties agreed to establish a joint High-Level Group (HLG) to elaborate the concept of a common European economic space (CEES). In March 2002, the Cooperation Council of the Partnership and Cooperation Agreement provided the HLG with a mandate to elaborate a concept for a closer economic relationship between Russia and the EU by October 2003. The co-chairs designated were Russian Deputy Prime Minister Khristenko and Commissioner Patten.

2. Since May 2001, the High-Level Group has met five times to develop the concept. In line with its mandate, the HLG considered the opportunities offered by greater economic integration and legislative approximation and assessed options for further work. It also identified means and mechanisms to achieve common objectives.

3. At its second meeting in March 2002, the HLG adopted a work plan for 2002/2003, including the task of assessing the potential impact of a CEES. A number of studies have been commissioned by the Parties to assess the CEES’ impact, both on the economy as a whole and across a range of its sectors, with particular emphasis placed on the relevance of regulatory approximation and removal of tariff and non-tariff barriers to trade and investment. In its report to the Summit in November 2002, the HLG has noted with satisfaction that preliminary results of these studies are positive.

4. At the summit in St. Petersburg in May 2003, the EU and Russia reiterated their intention to reinforce co-operation on a number of issues, including the placing of the CEES project into the broader context of four Common Spaces (economic space; space of freedom, security and justice; space of common external security; space of science, research, education and culture) to be created in the long-term.

5. In developing the CEES concept, the HLG took into account the existing level of cooperation in the framework of the Partnership and Cooperation Agreement (PCA) and ongoing negotiations on Russia’s WTO accession. Without prejudice to the outcome of these negotiations, the HLG took into consideration that the CEES concept and Russia’s forthcoming WTO accession have to be compatible. The HLG also took into consideration the ongoing economic reform process in Russia as well as developments in the EU Internal Market.

6. The present CEES concept sets out the overall objectives of the CEES, which are to be reached progressively. It identifies core elements and fundamental ingredients for the CEES and the ways and means to achieve them. While this concept defines a number of principles and guidelines for activities that can be implemented in a short-term perspective, more specific objectives have to be discussed and set at a later stage.

Rationale

7. Russia and the EU are geographically close, have complementary economic structures and assets, and have strong mutual interest in further economic integration. Against this background, there is great potential for growth of mutual trade and investment beyond its current pace and level, towards promoting balanced and sustainable economic development and stability in the EU and Russia as well as building competitive and dynamic economies.

8. The existing potential is not fully used. Thus, there is a clear need to bring Russia and the EU closer together and making the economic relationship more dynamic through a stable and predictable trade regime, based on common, harmonised or compatible rules. This would reflect our geographic proximity, and the existing level of our cooperation in many fields. Economic impact assessment studies, conducted separately by the Parties, clearly demonstrated the positive benefits of CEES, and, at the same time, highlighted shortcomings in certain areas, which should be addressed in the future work on the CEES.

9. The forthcoming enlargement of the EU will expand the common borders and common interests of Russia and the EU and thus gives a new impetus for closer co-operation. The EU is Russia’s most important trading partner and even more important after EU enlargement. Greater integration will bring greater interdependence between the economies and societies of the EU and Russia. The CEES reflects this new situation and will serve as important tool to facilitate further efforts to bring the EU and Russia closer together.

10. Economic integration between the two partners is not an end in itself: giving it a further boost will enhance general prosperity on both sides, improve the standards of living, increase the protection of human health and well-being as well as of the environment, and ultimately serve the purpose of political stability in the region and world-wide.

11. The creation of the CEES responds to these challenges. It will contribute to achieve the described goals by committing both sides, on a medium term and well structured basis, to work closely together towards making the identified potential become reality. A high degree of regulatory and legislative convergence, as well as trade and investment facilitation, creates substantial benefits for both the EU and Russia, not least in permitting economic agents to operate subject to common rules and conditions and boosting business and investor confidence in the predictability and transparency of rules.

Definition, objectives and guiding principles

Definition

12. The CEES means an open and integrated market between the EU and Russia, based on the implementation of common or compatible rules and regulations, including compatible administrative practices, as a basis for synergies and economies of scale associated with a higher degree of competition in bigger markets. It shall ultimately cover substantially all sectors of economy.

Objectives

13. For this vision to become reality, the CEES aims at:

Promoting trade and investment between the EU and Russia, based on well-functioning market economies, aiming at sustainable development, taking into account internationally recognised principles, such as, inter alia, non-discrimination and transparency and good governance;

Creating opportunities for business operators through common, harmonised or compatible rules and regulations, as well as through inter-connected infrastructure networks;

Enhancing the competitiveness of the EU and Russian economies worldwide.

Guiding Principles

14. The CEES will be based on existing and future commitments of the Parties in the PCA and WTO. Its scope shall be broader and deeper in comparison to the WTO and PCA provisions. Both Parties shall ensure that the CEES is compatible with existing or future commitments undertaken by the Parties in the context of WTO.

15. The CEES concept covers both horizontal and sectoral targets. A number of areas for action have already been considered for action (standardisation, technical regulation and conformity assessment, customs, audit and accounting, public procurement, competition, financial services, telecommunications, cooperation in space launching, several branches of industry and agriculture), and other sectors/issues shall be added as appropriate.

16. The CEES shall be created progressively and in stages with appropriate interim reviews. While specific activities shall be undertaken in selected priority sectors with a view to demonstrating tangible results as early as possible, it shall be kept in mind that the CEES aims at covering substantially all sectors of economy. The Parties shall ensure the consistency of activities undertaken with the overall aims of the CEES as set out above, notably the development of a comprehensive framework for economic co-operation. Experience gained in on-going activities should be used, and synergies between new initiatives and existing areas of co-operation be exploited wherever possible.

17. Established co-operation in specific sectors (i.e. Energy Dialogue) shall continue to be worked on under the respective separate procedures with a view to integrating their results into the CEES in due course. Both sides shall ensure that the development of the CEES concept and sector specific co-operation will be coherent and compatible.

IV. Components and implementation instruments

18. The CEES shall focus on eliminating obstacles and creating opportunities in four main areas of economic activity, i.e.

Cross-border trade of goods, covering substantially all industrial and agricultural goods, including the necessary rules – whether set by standards, technical specifications or other regulatory and legal requirements, – organisational structures and procedures; while ensuring that these do not create unnecessary obstacles to trade and promoting equivalent levels of the protection of safety, health and the environment.

Cross-border trade in services, including relevant regulatory standards and requirements;

Establishment and operation of companies, including, inter alia, issues related to movement of capital, environmental standards and good corporate governance;

Related aspects of movement of persons, in the relevant fields of economic activity.

19. The main instruments to be applied in these areas are market opening, regulatory convergence, and trade facilitation. These instruments shall be used in accordance with the following:

Market opening: Appropriate measures shall ensure, when possible, the gradual removal of obstacles to trade and investment between the EU and Russia. The definition of specific objectives and measures in this area will be based on Russia’s and the EU’s commitments in WTO, as well as on WTO general principles.

Regulatory convergence: Co-operation in this field, particularly with regards to legislative approximation, is an essential element in order to promote trade and investment between the EU and Russia. Regulatory convergence is an important condition for strengthening the bilateral economic links. This is particularly true for the case of standards, technical regulations and conformity assessments, but should also cover other fields.

Trade facilitation: Measures in the field of trade facilitation will be another important element in the creation of CEES. These measures may refer to the simplification, standardisation and automation of trade procedures, in particular the import, export and transit requirements and procedures applied by customs and other agencies.

20. Cooperation and specific dialogues: Both sides shall pursue and strengthen their co-operation in upgrading and enhancement of infrastructure networks (transport, energy, telecommunications, cooperation in research and development). Increased cooperation in this field will have the double effect of, on the one hand, integrating important parts of the EU and Russian economies which will be beneficial to these sectors, and, on the other hand, contributing to the improvement and enhancement of the framework conditions for other business activities in other sectors:

Discussions on enhancing the existing links in energy, transport and telecommunication networks are underway, and the necessary framework for the transport sector exists (i.e. pan-European transport corridors etc.). Regarding the energy sector, key projects for gas and oil pipelines as well as interconnection of the electricity networks have been identified as ‘common interest’ projects under the EU-Russia Energy Dialogue and work is continuing in that framework. Under the CEES, the EU and Russia should focus on the transport sector and give a new boost to progress in this area.

Both sides have strong assets in the field of research and development and they have, as a matter of domestic economic policy, made research, innovation, and technology keystones for their competitiveness and long-term development. A number of instruments are already used for cooperation in this domain, aiming at promoting linkage, innovation and technology transfer between Russian and European partners in pursuit of mutually beneficial scientific excellence. Work under the CEES should serve to further expand cooperation by way of pooling resources and reciprocal access to R&D programmes, settling any intellectual property issues in this field, and promotion of the use of the results of such research. The development of activities under the CEES also needs to bear in mind that the EU-Russia Summit of St. Petersburg of May 2003 decided to create a common ‘space’ of research and education.

21. In all of these areas, the Parties shall promote closer and more structured permanent relations between their respective institutions, whether public or private. The resulting better information exchange and closer cooperation are prerequisites for achieving the stated goals and at the same time serve to avoid as much as possible any undesirable side-effects on either party of measures contemplated for broader reasons. Development of compatible institutional structures as well as creation of specific joint institutions may be anticipated in the framework of some commitments and agreements. The activity of such institutions should be aimed at the implementation of the achieved arrangements and decisions.

V. Institutional and Legal Aspects

22. For making the concept operational, the objectives set out above will need to be transformed into specific goals and actions by way of action plans.

23. The elaboration of the Action Plans and respective negotiations will be provided under guidance and coordination of the High Level Group. The HLG will report progress to the EU-Russia Summit on a regular basis. This shall in particular establish the review of progress at the end of the first stage of implementation of the CEES. The relevant mandate will be requested. The Parties shall take expert input of the PCA bodies and use the PCA provisions in the CEES building process as widely as possible. In cases where action plans will mainly give specific operational content to already existing provisions of the PCA, they can take the form of political statements of intent or memorandums of understanding.

24. Where, however, the envisaged content of an action plan calls for a negotiation to be done, both sides will use their internal rules and principles for preparing and conducting such negotiations and the negotiating mechanisms between both sides will be the usual ones. In such cases, the relevant action plan would need to be made a bilateral agreement, to be formalised by way of Protocol attached to the PCA or to take the form of a self-standing agreement as the case may require.

25. A dispute settlement mechanism based on WTO rules needs to be available to address disagreements which may occur in the context of implementing bilateral agreements concluded in the CEES context. The existing dispute settlement mechanism under the PCA shall be considered for use as long as it corresponds to the provisions of the new agreements.

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