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Aleksey Yefremov

Ph.D. in Law, Associate Professor at the Department of State and Law Theory, International Law and Comparative Legal Studies, Voronezh State University; Senior Research Fellow at the Centre for Public Administration Technologies at the Russian Presidential Academy of National Economy and Public Administration

The development of Eurasian integration is increasingly becoming the subject of various assessments and discussions. The recent publication of Report No. 43 by the Eurasian Development Bank (titled Eurasian Economic Integration), which focuses on the insufficient level of regulatory competition within the framework of the Eurasian Economic Union (EAEU), makes it necessary to analyse this phenomenon and the factors that affect it. It also prompts a deeper discussion on whether or not regulatory competition is necessary for international (and regional) integration.

The development of Eurasian integration is increasingly becoming the subject of various assessments and discussions. The recent publication of Report No. 43 by the Eurasian Development Bank (titled Eurasian Economic Integration), which focuses on the insufficient level of regulatory competition within the framework of the Eurasian Economic Union (EAEU), makes it necessary to analyse this phenomenon and the factors that affect it. It also prompts a deeper discussion on whether or not regulatory competition is necessary for international (and regional) integration.

Recommendations

The development of regulatory competition in conjunction with a reduction in inter-state barriers in international associations (so-called “negative” integration) is an important basis for harmonizing legal regulation (“positive” integration).

Moreover, judging from the numerous studies carried out overseas into the various aspects of economic relations, the fact that a real assessment of the attractiveness of a particular jurisdiction and its competition can only be based on a multifactor analysis that includes an evaluation of both a wide range of legally established requirements and a large number of economic and social factors should be taken into account.

Given the general understanding that monetary and fiscal policy (as well as regulatory competition in these areas) have their limitations in terms of promoting economic growth, a fact that has been well known in OECD countries since the 1990s, greater attention is being paid to regulatory policy, as well as regulatory reform.

Developing regulatory competition in the tax sphere is not enough; regulatory policy must be developed as well. The first step in this direction would be introducing a Regulatory Impact Assessment (RIA, also known as a Regulatory Impact Analysis) in all EAEU member states.

A promising area in the development of regulatory competition in the sphere of regulatory policy (in addition to the full implementation of RIAs in all EAEU member states) would be ensuring the possibility of listeners from other EAEU member states participating in public consultations as part of RIAs at the domestic (national) level.

In addition, it would be prudent to get businesses involved in public discussions of draft decisions taken by the Eurasian Economic Commission. Today, there is a noticeable lack of participation in public discussions on the part of business representatives EAEU countries. According to the Eurasian Economic Commission’s Annual Report on Monitoring the Regulatory Impact Assessment of Draft Decisions by the Eurasian Economic Commission in 2015, a total of 2586 comments and proposals were offered by the participants in public discussions regarding 94 Draft Decisions taken by the Eurasian Economic Commission and put up for public discussion as part of RIA procedures, an average of 27.5 comments and proposals per draft decision.

Throughout the course of the public discussion on the draft decisions of the Eurasian Economic Commission as part of the RIA procedures, a total of 317 participants – representatives of business associations, economic entities, experts (private persons), representatives of the scientific community and members of the authorized executive bodies of the EAEU member states – made comments or offered proposals. In 2016, a similar Annual Report stated that 34 Draft Decisions taken by the Eurasian Economic Commission and put up for public discussion as part of RIA procedures in 2016 received a total of 268 comments and proposals, or an average of 8 comments and proposals per Draft Decision. In 2016, throughout the course of the public discussion on the draft decisions of the Eurasian Economic Commission as part of the RIA procedures, a total of 317 participants – representatives of business associations, economic entities, experts (private persons), representatives of the scientific community and members of the authorized executive bodies of the EAEU member states and third countries – made comments or offered proposals.

With regard to factors that negatively affect regulatory competition in the EAEU, such as the high level of participation of states in their respective economies, it is unlikely that it will be systemically reduced in the coming years (with the possible exception of the Republic of Kazakhstan, which has moved towards large-scale privatization). This is due to the lack of the appropriate guidelines in the strategic planning documents of other EAEU member states.

It is more promising to develop regulatory competition in new industries, ensuring more comfortable legal regimes (including so-called regulatory “sandboxes” – regimes of legal experiment) for the digital economy, “the fourth industrial revolution” and the development of new technologies. The Eurasian Economic Commission can focus on identifying “best practices” in this sphere and using them for further harmonization.

These circumstances (the high level of the state’s participation in the economies of EAEU member states and the prospects for developing competition among legal regimes in order to develop new technologies and further the digital economy) also make the development of competition among the legal regimes of public-private partnerships (PPP) in these areas so relevant.

Provisions are directly made for the development of PPP in the field of digitization, for example, in the draft decision entitled Main Areas of Implementing the Digital Agenda of the Eurasian Economic Union until 2025 published on the Legal Portal of the Eurasian Economic Union in July 2017. In this connection, the regulation of PPP projects in the field of IT penetration in the Republic of Kazakhstan, where the new laws “On IT Penetration” and “On Public-Private Partnerships” call for such projects, is particularly interesting. Current Russian law states that information systems cannot be the subject of PPP agreements. The corresponding draft federal law has only just been submitted to the State Duma.

Thus, the study demonstrated the prospects, possibilities and likely areas for the development of regulatory competition within the framework of the EAEU, which will contribute to the economic development of the member states, as well as of integration associations as a whole.

A general algorithm of the consistent (cyclical) development of integration (harmonization) regulation and regulatory competition can be constructed as follows:

1) The Eurasian Economic Commission promotes the elimination of barriers, exemptions and restrictions in the regulation of individual markets (spheres, industries) – “primary harmonization”;

2) National (domestic) regulatory bodies, using advanced regulatory policy tools, including developing regulatory impact assessment mechanisms and carrying out legal experiments in leading industries, help improve the quality of legislative regulation and law enforcement in the respective countries, thus stimulating the development of regulatory competition and the flow of capital and human resources (mobile resources);

3) The Eurasian Economic Commission monitors the state and development of regulatory competition based on a complex multifactor analysis (which would require the relevant methodology to be developed and institutionalized on a legislative basis), identifies “best practices” and promotes their dissemination (“soft” secondary harmonization);

4) The decision is made within the framework of the EAEU to transfer new regulatory areas to the supranational level and, accordingly, unify them within the Eurasian Economic Commission. At the same time, in order to prevent bureaucratization within the Eurasian Economic Commission itself, it is necessary to carry out regulatory impact assessments of draft laws and existing legislation passed by the EAEU, as well as to encourage representatives of EAEU member countries to participate in public consultations (discussions) on these laws and regulations.

Regulatory Competition in the Eurasian Economic Union, 967 Kb

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