F. Schauff. Prospects of the EU – EAEU dia

PROSPECTS OF THE EU-EAEU DIALOGUE AND RUSSIA’S ROLE IN THE PROCESS

THE CORRESPONDENT OF THE EURASIAN FINANCIAL AND ECONOMIC HERALD ASKED A FEW QUESTIONS TO THE CEO OF THE ASSOCIATION OF EUROPEAN BUSINESS DR. FRANK SCHAUFF

– What was the sentiment of the Association members going into 2020? – 2020 is a major landmark for the AEB as we are celebrating the 25th anniversary of the Association this year. The anniversary year encourages us to set the most ambitious goals, such as conducting several large-scale events involving representatives of the European Commission, Business Europe, Russian cabinet ministers and prominent business actors. The main event will take place in Moscow in October. Events will also take place in Saint Petersburg, Krasnodar, Kazan and Yekaterinburg during the year. The annual Northern Dimension Forum will be in Saint Petersburg. This year the Forum will focus on CONNECTIVITY. NOW—boosting flows of people, information, energy, goods and services.

We have every reason to be proud of what our Association has achieved in these years. We have transformed from a small business club into the main representative body of foreign businesses in Russia and the Eurasian Economic Union. Since 1995, we have been promoting foreign investors' interests in Russia and shaping the business and investment environment together with the Russian and Eurasian government agencies. We will be happy to continue acting as intermediaries in this productive dialogue with the new Russian government.

– Tell us a little about what 2019 was like for the European businesses – In 2019, the economic cooperation between Russian and the EU remained intensive despite a complicated economic and geopolitical situation. On the one hand, in terms of the investment climate, the remaining political tension creates continued pressure on direct foreign investments which make up 0.2% of GDP in Russia, the lowest among emerging markets. On the other hand, we observe relatively high mutual demand of the Russian and European business communities for developing trade relations. According to the annual study Strategies and Prospects for European Companies in Russia conducted by the AEB and GFK Rus in March –April 2019, the AEB member companies have sufficient confidence in Russia's economic capabilities: 45% of the AEB member companies are expecting the Russian economy to grow in the short term. The mid- and long-term forecasts are more positive: 66% of the companies are expecting economic growth in the next 3–5 years, and 80%, in the next 6–10 years; 17% of the companies are expecting increased investments in their production in the next 2–3 years; 28% are expecting investment growth in Russia in general.

European businesses are closely following the work on the Investment Code. It will create a framework of investment regimes to make the legal regulation predictable and the investment conditions more consistent, while encouraging investments. Considering the general trend for capital outflow from emerging markets, the ambiguities in the investment area clearly do not benefit the Russian economy. Consequently, a stable legal framework is virtually the key determining factor in further investment.

Another important initiative according to the business is the revision and abolition of obsolete and contradictory regulations, especially those from the Soviet period,—the so called 'regulatory guillotine'.

Meanwhile, last year also raised a lot of concerns for European companies.

The initiative to extend the responsibility of producers and importers for their waste that not only prevents the companies from using their own resources for waste disposal, but also obliges them to pay a new tax, produced mixed reactions. Although this draft law is still under development, European producers that have already invested big money in their own disposal infrastructure are looking at the possible scenarios with trepidation.

The work on defining the requirements for mandatory labelling of goods will continue in 2020. In 2019, the AEB held extensive discussions about the technical support for this process with the representatives of the Ministry of Industry and Trade and the Centre for Development of Promising Technologies, first of all on implementing the Track and Trace System.

We hope that the Association of European Businesses will act not only as a bridge between the Russian and European business communities in this respect but will remain a reliable communication channel between the European Union on the one hand and Russian and Eurasian authorities on the other hand. Over the entire last year, we have sup

ported a rapprochement between the European Union and the Eurasian Economic Union. We welcome the latest official contacts made in October between Sabine Henzler, Director of International and General Affairs at DirectorateGeneral for Tax and Customs Union of the European Commission, and representatives of the Eurasian Economic Commission. This, to a great extent, became possible thanks to the AEB's efforts to build relations between the two organisations.

– What do you think of the future dialogue between the EU and the EAEU, and what is Russia's role in that process? – The Association of European Businesses feels quite strongly that a closer economic cooperation between the European Union and the Eurasian Economic Union is the key to restoring trust. It may serve as a platform to overcome the current dead end in the relations between Russia and the West, and economically benefit all participants. This is why we have been supportive of a rapprochement between the EU and the EAEU for the last few years.

However, the expansion of cooperation between the EU and Russia, and the EU and the EAEU faces political obstacles. There have still not been any official negotiations between the EU and the EAEU, or any cooperation beyond harmonising technical standards. We need to change the situation and develop a strategy of mutually beneficial cooperation between the EU and the EAEU. Already now we have some promising ex

amples of such interaction: since 2017 the AEB has become a platform for facilitation of working contacts between the EAEU, DG Trade and DG TAXUD (Directorate General of Customs and Excise). The experts from the EU and the EAEU are able to exchange their experience and share best practices on a wide range of trade and customs matters.

We believe that there are at least four more areas where the European Union and the Eurasian Economic Union could effectively cooperate with each other on specific technical issues:

Cooperation in the Arctic, Digitalisation issues (5G mobile communication, personal data protection), Creating regional infrastructure, Developing a common policy within the Northern Dimension framework between the EU, Russia, Norway and Iceland.

We believe that economic cooperation with the EAEU will increase the land transportation capacity and the Transeurasian flow of goods, raising trading efficiency and creating a range of possibilities for production and various supply chains. In our opinion, the EU could use its strategy for connecting Europe and Asia to engage the Eurasian European Union members in eliminating trade imbalances and barriers.

We hope that, in 2020, the dialogue between the EU and the EAEU will transit from the current technical level to a political one. Such dialogue could involve coordinating multilateral cooperation that may provide an important synergistic effect in uniting the Eurasian continent.

Dr. Frank Schauff

Dr. Frank Schauff was elected CEO in June 2007 and re-elected in April 2016 for the fourth term. Dr. Schauff’s professional and academic experience position the AEB to promote and expand recognition in Russian and expatriate circles of lobbying and policy advisory.

Before joining the AEB, Dr. Schauff held the post of Advisor on Foreign Policy to the Party Executive of the Social Democratic Party of Germany (SPD) from 2001.

Dr. Schauff has had a deep interest in Russia since his days as a student of Russian Studies at the University of Cologne and Volgograd State University (USSR). He went on to take a degree in Economic History and Political Science at the London School of Economics and Political Science (LSE) and a Masters Degree in The Government and Politics of Russia and Economic History. He obtained his doctorate in East European history from the University of Cologne in 2000, and spent a number of years as a lecturer in East European studies at the Free University in Berlin.

Dr. Schauff's academic background is accompanied by a strong linguistic attainment – aside from his native German, Dr. Schauff speaks or understands English, Russian, Spanish, French, Italian, as well as conversational Bulgarian, Croatian and Serbian.