How can the EU support Belarus’ private business to compensate the sanctions? |
The EU can unilaterally liberalise trade in services with Belarus for 12 to 24 months, prolongation conditional on the political and economic situation in Belarus. We at CASE Belarus do not find any legal limitations or negative implications under the legal frameworks of the EU, the Eurasian Economic Union, or the World Trade Organisation. We argue that it is a matter of the EU political will, similar to the EU’s experience in the Western Balkans in 2009. If implemented, we believe that free trade in services can help fair Belarusian business today more than the direct financial assistance.
Unlike trade in goods, on the services side Belarus’ annual exports have been growing fast and amounted to USD 8.8 billion in 2020 (USD 9.6 billion in 2019, up from USD 4.8 billion in 2010 and USD 1 billion in 2000), with USD 2.3 billion (23.5%) destined to the EU market in 2019. Four key sectors, namely, transport (41.7%), internet, computer and telecom (ICT) services (25%), travel (10%), and construction (7.6%), make up 84% of Belarus’ services export world- wide. Concerning the EU, the distribution of key export-driving services is the following: travel (19%), transport-related (18%), and ICT services (15%). The top EU destination countries are Germany (15.1%), France (12.7%), the Netherlands (11.7%), and Ireland (10.6%).
Construction, transport, and ICT services
Based on the methodology of revealed comparative advantage, we identify construction, transport, and ICT services as sectors with the highest untapped export potential for Belarusian services in the EU.
EU experience
The EU has been undertaking trade facilitation efforts with respect to countries which possess a European outlook. As such, the EU developed a stabilisation and association process for the Western Balkans (Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Serbia, and Kosovo). Council Regulation No 1215/2009 of 30 November 2009 served as a legal basis for asymmetric duty-free access to the EU market for nearly all products originating in those countries.
Mechanisms of implementation
- The first step is approval of unilateral (autonomous / asymmetric) trade liberalisation as exceptional trade measures for services originating from Belarus by the European Parliament and the European Council
For mode 1 (Cross border trade in services between Belarus and the EU):
2. Introduction of temporary exceptional trade measures for private legal entities (registered private companies and sole proprietorships) resident in Belarus allowing for access to the EU market for all services and service providers originating in Belarus without any limitation or restriction; once in the EU market, it is suggested that the services and service providers enjoy national treatment
3. To avoid making Belarus a “back door” for services from other EAEU members, the ben- efits of mode 1 should be extended only to those legal entities that were established before the introduction of unilateral measures by the EU
For mode 3 (Commercial presence of Belarus service providers in the EU):
4. Allowing for competition among EU member countries in terms of attracting Belarusian service providers to their business residency and special business programmes
For mode 4 (Presence of Belarus’ personnel in the EU):
5. Introduction of an on-line declaration mechanism for private legal entities resident in Belarus to send labour force to the EU based on the exceptional trade measures for services originating from Belarus. The EU Delegation in Minsk could run a database of labour force participating in the mechanism on the EU territory
6. Introduction of a free-of-charge visa or visa-free entry for the labour force registered in a single EU Delegation database for a period of 12 months (no longer than the period of the unilateral elimination of trade barriers for services by the EU).
Read full joint CASE and CASE Belarus report (19 pages, 15 minutes reading) by clicking here (Engilsh language)
