The Research Center of Sviatlana Tsikhanouskaya's Office (OST Research Center) holds weekly online discussions with international and Belarusian experts on Belarus’ pressing matters. On November 18, 2021, we discussed the topic “Liberalizing import of services from Belarus to the EU: a revolutionary win-win step”.
Aleś Alachnovič, Sviatlana Tsikhanouskaya’s Representative on Economic Reforms, and Prof. Krassen Stanchev, Sofia University; Chairman of the Institute for Market Economics (Bulgaria), shared their visions on the positive economic agenda for Belarus. Alesia Rudnik, a Ph.D. fellow at Karlstad University and research fellow of the think-tank “Centre for New Ideas,” moderated the discussion.
The EU could unilaterally liberalize imports of services from Belarus for up to 24 months, and prolongation would be conditional on the political and economic situation in Belarus. Belarusian economists do not find any legal limitations or negative implications under the legal frameworks of the EU, the Eurasian Economic Union, or the World Trade Organization. They argue that it is a matter of the EU political will, similar to the EU’s experience with the Western Balkans in 2009 when imports of goods from the Western Balkans were liberalized unilaterally by the EU. If implemented, economists believe that free trade in services will help fair Belarusian business much more than direct financial assistance. In particular, since the latter has become almost impossible under the current political crisis. The EU will also benefit by receiving control over skilled and unskilled labor migration from Belarus to the EU.
One of the core issues for Belarus when Lukashenka finally steps down is whether Belarus will be able to have free trade agreements with both Russia and the EU. And it seems like the EU can start answering this question right away. The example of Armenia, which signed agreements on trade preferences with both the EU and Russia, shows that Belarus will not be a unique case but will only fit into the overall regional trade facilitation process.
These and other issues were discussed during the expert discussion organized by the OST Research Center.
The participants came to the following conclusions:
- Trade liberalization was a very important step for all the new member states of the EU and for the countries that did not join the EU like Ukraine. It is important to introduce unilateral free trade measures by the EU for Belarus’ services for up to 24 months, conditioned for prolongation upon political and economic situation in the country.
- Sanctions for Belarus are constructed in a way that they should touch only state-owned companies/ enterprises (SOE), which are the engine of Lukashenka’s regime and finance him. Meanwhile, SOEs are approximately just a half of the Belarusian economy. While the private sector in Belarus was and still is the key driver of the political change in the country. That’s why we need a longer perspective on foreign support for the private sector in Belarus.
- Foreign support for the private sector in Belarus doesn’t have limitations on the legal level of the EU, Eurasian Economic Union (EaEU), and WTO. Thus, within the EU, such support requires a political will only (like it was in 2009 when the EU took a unilateral decision for 6 Western Balkans’ countries to liberalize their trade in goods).
- There are three sectors in Belarus – construction, transport, and IT – which could be most advantageous in the EU market.
- By allowing Belarusian service providers to trade closely with the EU, we don’t allow Russia to absorb Belarus as a country. The EU will also gain from the changes in regulations in such spheres as 1) labor migration, 2) the trade framework, 3) strengthening the EU’s geopolitical role in the region.
- The majority of Belarusian exports are low value-added exports. These are industries where there are commodities or raw materials like petroleum products, potassium products, etc. There is still a lot of room for Belarus to increase the competitiveness of Belarusian companies in global value chains or global markets. One such way is to join finally (after 28 years) the WTO.
- Armenia might be such a case when it comes to a kind of role model for Belarus in trade liberalization with the EU. This country joined the EaEU but later negotiated with the EU Comprehensive and Enhanced Partnership Agreement (CEPA) that consent to trade and investment liberalization between Armenia and the EU. It demonstrates that it is possible to be a member of the Eurasian Economic Union and still have some autonomous policy regarding trade liberalization in goods, services, and capital and labor.
- For Belarus, Armenia’s case is a good example that there is room for us to support Belarusian companies and create additional demand for goods and services produced in Belarus.
- Belarusian democratic forces should use the political crisis to prepare the ideas with the European Union for future liberalization of financial trade flows and political cooperation.
- In order to have an effective policy from the EU towards Belarus, the EU should adopt both sticks and carrots. The EU has already started adopting sticks with sanctions and some carrots when it comes to the support of civil society but also the EU Comprehensive Plan of Economic Support for Democratic Belarus worth 3 billion Euro for the new democratic government for the realization of economic reforms. However, this support is about the future.
- Meanwhile, the trade liberalization is about current Belarus and the current situation. And since there were precedences already in the past with six Balkan countries, and the current situation in Belarus requires the EU to have leverages on the regime, trade liberalization might become such leverage.
- Trade liberalization creates a win-win situation for Belarusian businesses and society and for the EU who will have a stable neighbor near its eastern borders.
For more information on the topic of liberalizing the import of services from Belarus to the EU, see https://case-belarus.eu/free-trade-in-services-between-belarus-and-the-eu/.
For questions about the discussion, contact [email protected].
For the OST position on economic issues, contact Aleś Alachnovič, Sviatlana Tsikhanouskaya’s Representative on Economic Reforms: [email protected].
