Customs Union: Trade, Environment and Climate

In late May, the leaders of Russia, Belarus and Kazakhstan plan to sign a number of agreements, including the Agreement on the Eurasian Economic Union (Customs Union). Representatives of environmental organizations think that the unified economic policy pays insufficient attention to environmental issues, sustainable development and climate change. NGOs has approved the Position of environmental NGOs on environmental and energy policies in the Eurasian Economic Union/Custom Union.

The document to be signed by the leaders in the end of May this year determines not only the trade policy. However, environmental issues are not in the foreground. Meanwhile, in recent years an active discussion takes place in the international arena of the possibility to apply trade sanctions to countries whose producers do not turn to eco-friendly and energy-efficient production processes. States are looking for ways to distribute the "environmental responsibility." One of such methods is the use of trade measures. Some countries consider the use of border carbon tax to solve the problem of "carbon leakage." Essentially, this means additional customs duty for imported goods to compensate reduction of carbon emissions in the importing country. Thus, it is at least short-sighted to underestimate the environmental dimension of trade issues.

Given how important are issues of energy import and export for the countries, Russia, Belarus and Kazakhstan have a great chance to influence the global energy market in the future, and the rules it will function. Therefore, the documents being prepared for signing within the Customs Union came to the attention of representatives of environmental organizations.

Based on an analysis of the draft Treaty Eurasian Economic Union, experts conclude that today Russia and the Customs Union lobby the hydrocarbon sector, to the detriment of others, including "green" development issues.

NGO representatives believe that negative in the Treaty is the absence of procedure for public participation in discussions and decision-making concerning the Customs Union.

In their position based on findings from experts, representatives of EECCA non-governmental organizations express concern about the situation in the field of environmental and energy safety in the Customs Union.

Indeed, in terms of the environmental component, the Treaty on the Eurasian Economic Union has few sections directly related to the environment and natural resources. Meanwhile, one of the key points of the agreement is the part devoted to natural monopolies such as energy and transport. However, experts note that the framework of the Treaty allows seeing the points that provide opportunities for promotion of "green" technologies behind general formulas. Therefore, at this stage of the document preparation, environmental NGOs are planning to make proposals to this specific treaty and then to seek ways to promote environmental priorities through "subordinate" acts.

Experts believe it is important to include the section with items related to public participation in discussions and decision-making in the text of the treaty. According to the experts, environmental component can enhance the point on application of best available technologies, which improves efficiency and environmental safety at industrial sites within the Customs Union.

There are possibilities to make positive difference in the direction of "green development" within the trade association. These include the Agreement on Subsidies and Countervailing Measures in respect of "green technologies" and the Agreement on Environmental Standards and Labelling. In the first case, it may be initiatives on non-tariff regulation of green technologies market. The Union may subsidize interest rates on "green" loans and reduce costs for related projects due to their inclusion in the list of projects of regional, federal, and union importance. This may also be the initiative of public procurement in relation to "green" technologies.

With regard to the Agreement on Environmental Standards and Labelling, here one can talk about the voluntary CO2 labelling or taking into account environmental component (like the WTO Integrated Product Policy), which takes into account the entire ecological life cycle of products.
Inclusion of energy-efficient products and renewable energy technologies in the List of goods for special favour and industrial subsidies would be a step in the "green" direction.

In general, experts and environmentalists believe that coordinated policy in the green direction can not only significantly improve the environmental situation in the region, but also have a positive impact on the economy of the three countries of the Eurasian Economic Union and to enhance their image and competitiveness at the global level.