The Impact of Eurasian Economic Union Membership on Mutual Trade in Services: What Are the Challenges for Small Economies?

Abstract

Despite the fact that a decade has elapsed since the establishment of the Eurasian Economic Union (EAEU), the impact of the EAEU on the economic development of its member states remains a subject of ongoing debate. This article examines the mutual trade in services between the Eurasian Economic Union (EAEU) countries, with the aim of assessing the impact of membership on it. The difference-in-difference model has been applied for impact assessment. The model utilizes data from five EAEU member countries—Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia—capturing periods both before and after their EAEU membership, spanning 17 years in total. The results show that membership in the EAEU has significantly affected the exports of services from Russia and Belarus and has a less significant impact on the exports of services from Kazakhstan to the EAEU. At the same time, it has no significant effect on the exports of services from Kyrgyzstan and Armenia to other EAEU countries. In order to ascertain the challenges that exist, expert surveys among service exporters from Armenia have been conducted. Representatives of companies exporting various services to the EAEU have been selected as experts. The survey results indicate the presence of various barriers, including legal, logistical (for cargo transportation companies), and cultural challenges. These barriers encompass licensing difficulties, technical obstacles related to VAT refunds, a ban on cash payments, and difficulties with financial transfers due to sanctions against Russia. The findings of this research are of practical importance and can serve as a guideline for policymakers in the EAEU.

1. Introduction

It has been 10 years since the establishment of the Eurasian Economic Union (EAEU). Established in 2015, EAEU during first few years was the Customs Union and Unified Economic Space between Russia, Belarus, and Kazakhstan. Subsequently, Armenia and Kyrgyzstan joined, and it has since represented the most significant attempt at a regional economic integration of post-Soviet countries in Eurasia. The Union has demonstrated notable successes in the elimination of internal tariffs and the harmonization of technical regulations; however, the goal of truly unified economic space and fully integrating markets is still not achieved. The EAEU’s economic development has been marked by uneven progress and essential asymmetries among its members, because of Russian dominant economic weight and highly heterogeneous levels of economic development of other member countries (Tanaguzova et al., 2023). Therefore, the EAEU’s impact on member states’ economic development is still subject to ongoing debate.

Some recent studies have detailed positive effects of the EAEU, such as increasing trade among member countries (Pomerlyan & Belitski, 2023; Janet et al., 2024), the minimization of barriers on the labor market (Cerqua et al., 2024), and the more rapid diffusion of innovations in some industries (Ratner et al., 2022). Thus, Cerqua et al. (2024) found that integration within the Eurasian Single Market and the reduction in non-tariff barriers have provided additional benefits to the original EAEU member countries. These positive effects also extend to smaller newcomer economies.

However, Kazakhstan was the trading partner that lost the most trade in the early stages of the formation of the EAEU. Its export flows increased after the later implementation of the Eurasian Single Market compared to Russia, Belarus, and Armenia. However, in bilateral trade with Kazakhstan, Belarus, rather than Russia, is the main beneficiary country. The Russian Federation increased its export flows to Armenia, but there was no significant increase in exports to Belarus, Kazakhstan, or the Kyrgyz Republic. Armenia registered a corresponding increase in export flows to all EAEU partners, while for the Kyrgyz Republic such an increase was only to Russia and Belarus.

At the same time, other academicians highlight the challenges caused by Russia’s economic dominance in the Union (Manurung, 2016; Vorona et al., 2020; Sergi, 2018). The dependence from Russian energy exports and limited diversification in mutual trade within the EAEU set constrains on economic growth, especially for smaller member states like Armenia.

While the formation of a free market for services in international integration structures is an important step (as in the examples of the EU or ASEAN), this process is not yet fully formed in the EAEU. Therefore, it is necessary to analyze whether membership in the EAEU has contributed to the development of trade in services between member countries or not. This study is also important in the context of the dynamics of economic integration in the EAEU, as the deepening of trade in services between member states can affect not only economic growth, but also the future of regional cooperation.

In addition, while many recent studies examine and assess the mutual trade in goods within the EAEU at a given point in time, very few studies are devoted to the topic of mutual trade in services. The existing literature does not provide any assessment of the impact of EAEU membership on the export of services of each member country, which indicates a significant gap in knowledge.

From this perspective, this paper aims to fill the gap and examine how union membership has affected reciprocal trade in services. Therefore, the main question of the research is whether membership in the EAEU has contributed to the development of trade in services between member countries, and if so, to what extent this impact has affected different economies. For this purpose, the difference-in-difference model has been deployed, which estimates the impact of membership on each country based on data on mutual trade in services before and after membership.

The OECD database serves as the information basis for the data, as it is the only source that publishes data on the exports of services for all countries, although it covers the period only up to 2021. The model has been built and all diagnostic tests and remedy measures have been applied using the R statistical programming language. Subsequently, the article addresses the EAEU legislation derived from its logic and analyzes the trade in goods and services among EAEU member states.

The rest of the papers is organized as follows: Section 2 presents a literature review on the article devoted to the impact of EAEU on its member-state economic development and briefly discuss the cases of DiD model’s practical implications. Section 3 provides statistics on mutual trade of EAEU countries in the timeframe of 2005-2021. In the Methodology section (Section 4), the selected methods are presented and justified in detail. The Discussion section (Section 5) presents the results and their analysis from the perspective of Armenia’s interests and benefits in EAEU membership. Given that EAEU membership has not significantly affected Armenia’s export of services to other EAEU countries, expert surveys have been conducted to identify potential obstacles. The Conclusions section summarizes the results obtained and presents some policy recommendations.

The novelty of this study lies in the fact that previous studies have mainly focused on the impact of the EAEU in the context of trade in goods. In contrast, this study examines the impact of the EAEU on trade in services, taking into account the specificities of each country. Due to limitations in data sources, this study is limited to 2021, which should be taken into account when interpreting the results. The theoretical contribution of this study lies in the fact that it sheds light on the development of the EAEU services market, taking into account both economic and regulatory factors.

2. Literature Review

According to Bela Balassa (1961), the author of the theory of economic integration, the main difference between cooperation and integration is that the latter implies the elimination of discrimination in the given area. In his opinion, a key component of the integration process is that it requires the elimination of economic restrictions, ensuring deeper ties between the integrating countries. The success of the Eurasian Economic Union as a regional integration union can be considered from this perspective.

The question of the usefulness of the Eurasian Economic Union as a regional integration association for the member countries is the subject of rather close attention by scholars from Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. Most of the studies on this topic have been published in the national languages and indicate that the reduction in trade barriers and the unification of technological regulations have had a significant positive impact on mutual trade in goods between member countries (Ganeeva, 2017; Vinokurov et al., 2017; Andronova et al., 2018) and innovations (Ramenskiy et al., 2017; Ratner et al., 2022). However, some European scientists in their studies of the trends in the formation of the Eurasian Economic Union conclude that the stated goals of its creation do not always correspond to the real goals of the authorities of the member countries of this integration association, which may consist of creating conditions for Russian economic and political expansion (Mostafa, 2013; Spechler & Spechler, 2013; Sergi, 2018).

From this point of view, analyzing the economic benefits of membership for other countries, especially those with small economies, seems particularly important and provides an understanding of whether the EAEU is a regional association in the full sense of the word, or whether it is an attempt to maintain Russia’s political and economic dominance in the post-Soviet space.

In contrast to studies devoted to the topic of mutual trade in goods, studies on trade in services between the countries of the Eurasian Economic Union are very few in number. The first to mention is a survey of Eurasian Development Bank and the Eurasian Commission (EBD & EEC, 2015), conducted in the early stages of the EAEU formation and aimed to identify barriers for mutual trade in services. This study revealed the existence of some non-tariff barriers, such as market access permits, driver inspections, short green-card validity periods, insurance requirements, etc. However, this study was conducted among service exporters from only the biggest countries—Belarus, Kazakhstan, and Russia; in addition, focus groups and in-depth interviews were organized only among freight transport companies and financial organizations.

Yelikbaev (2019), studying the trade in services of the EAEU countries based on the EAEU database (where data for Armenia are missing), concludes that during the period under review, which covers 2015–2017, mutual trade in services between the countries increased. At the same time, the study highlights that the trade in services between EAEU member states and third countries has grown faster than trade among EAEU countries. The author also emphasizes that the EAEU countries still have the problem of unifying regulations on trade in services. The conditions for providing the free movement of services and diversification of business in the service industry are still not favorable enough.

Komov (2022) investigates the barriers and drivers of the formation of a single transport space of Eurasian Economic Union in 2016–2020 and shows that the growth rate of the volume of mutual trade within the Union in the period 2016–2019 exceeded the growth rate of the turnover of foreign trade in goods with countries outside the EAEU. In 2020, the decrease in the turnover of foreign trade in goods with countries outside the EAEU exceeded decrease in the volume of mutual trade within the Union. In general, freight and passenger turnover are characterized by positive dynamics of development; however, for Armenia, the passenger turnover has decreased.

According to a study (Cieślik & Gurshev, 2022) assessing mutual trade among the EAEU countries, in which the authors applied a gravity model deploying data on mutual trade in goods for 2008–2019, EAEU membership provided short-term benefits to all member countries except Kyrgyzstan. Regarding the EAEU free trade agreements with other countries, such as the EAEU–Vietnam Free-Trade Agreement, the study claims that they have had a positive impact from the point of view of imports.

Another study where the author examines the shift in comparative advantages among Eurasian Economic Union (EAEU) member states before and after its formation uses the comparative advantage method (Movsisyan, 2023). The paper evaluates the competitiveness of services exports among EAEU member states and reveals a core strength in traditional sectors like transport, construction, and tourism. While modest changes occurred in these advantages over the EAEU’s first five years, with some areas experiencing a decline in global competitiveness, the 2022 Russian–Ukrainian military conflict significantly altered the landscape. Russia saw a decrease in its comparative advantage in transport services, but a lessening of disadvantages in modern services. Conversely, Belarus and Armenia experienced gains; Belarus in telecommunications and information services, particularly, and Armenia in both these areas and tourism.

Knobel and Pyzhikov (2024), studying the trade of the EAEU countries and the common external tariff operating in the EAEU, conclude that although the integration union implies deeper integration and interconnection between countries, the EAEU is still more like a customs union, which contains elements of a common market and an economic union.

Some other studies assess the impact of EAEU membership from the perspective of individual member states. Thus, according to research (Zhunussova & Dulambayeva, 2022), where the authors study the impact of EAEU membership on Kazakhstan’s service exports, EAEU membership has not significantly affected the latter’s service exports. The only article devoted to Armenia (Hayrapetyan, 2023) analyzes Armenia’s foreign trade within the framework of EAEU and concludes that despite the difficulties, Armenia’s trade between the EAEU countries is developing.

Therefore, the existing literature argues that the Eurasian Economic Union (EAEU) has had mixed impacts on the economic development of its member states. While it has facilitated increased trade flows among members, its broader economic benefits are less clear.

Referring to the methods for assessing the impact of integration processes, it is important to emphasize that the difference-in-differences (DiD) method was developed in the 1980s and has been widely used to analyze policy effects (Zhang et al., 2023; Wang, 2023). This method is particularly useful in cases where multiple subpopulations exist—some exposed to the intervention (treatment group) and others not (control group). The approach relies on comparing outcomes in both groups before and after the policy change, even if the same individuals are not observed across both periods (Athey & Imbens, 2006).

Thus, Ogrokhina (2015) used the DiD model to assess the impact of the Single European Act and the euro on price convergence in EU countries. Other authors (Campos et al., 2022) have also applied the DiD model to estimate productivity change in the EU and found that if Norway had joined the EU, productivity would have increased by 0.6 percent on average. Another researcher, studying the impact of mandatory language and civic education requirements on migrants in EU member states, applied the DiD model and found that mandatory integration requirements had a positive and significant effect on the economic integration of immigrants, but did not affect their social and political integration (Neureiter, 2018).

A modified version of the DiD model has been applied to assess the public health impact of the sugar trade agreement within NAFTA member countries (Adu et al., 2023). Another study (Calcagno et al., 2024) assessing the impact of a free-trade agreement with the United States on corruption in Latin American countries also employs the DiD model. Therefore, the difference-in-difference (DiD) model is a popular and efficient method of addressing issues pertaining to the impact of integration processes in different economic unions.

To sum up the literature review, it can be noted that the EAEU’s impact on member states’ economic development is still a subject to ongoing debate. One of the indisputable proofs of the positive influence of the regional integration union on the economy of the member countries is the growth of mutual trade in goods. At the same time, the effectiveness of the EAEU in the field of trade in services has not yet been sufficiently studied.

3. Economic Background

The EAEU treaty has been signed in 2014 between Russia, Belarus, and Kazakhstan. A few months later, Armenia (EEC & Armenia, 2014) and Kyrgyzstan (EEC & Kyrgyzstan, 2014) have also joined the agreement. According to Article 38 of the EAEU Agreement, the Union’s member states independently coordinate their relations with third countries in the field of trade in services. Therefore, in contrast to trade in goods, which is often subject to the requirements of the EAEU general policy, member states are given greater independence to build relations with third-party countries in trade in services. According to the latest estimates, the EAEU single services market in 2015–2022 includes 151 service sectors, which together account for 60% of the total EAEU services market (Chamber of Commerce and Industry of the Russian Federation, 2023).

Since the formation of the EAEU, mutual trade in goods between countries has increased to some extent (Mekhdiev et al., 2019). Although the available data allow us to compare indicators until 2021, the growth of mutual trade between the EAEU countries is noticeable even during that period. Thus, compared to the pre-accession period, Armenia’s exports to the EAEU increased 2.5 times in 2021. During 2015–2021, exports from Armenia to Belarus increased 5 times, exports to Russia increased 3 times, and exports to Kazakhstan and Kyrgyzstan, although more volatile, periodically increasing and decreasing, nevertheless increased several times. Overall, mutual trade in goods between the EAEU countries reached 70 billion USD in 2021 (United Nations, n.d.). Mutual trade in goods between the EAEU countries has increased not only in absolute terms but also in relative weight (Figure 1).

However, the picture is different for trade in services to some extent. According to the EAEU Agreement signed in 2014, some types of services have been included in the single market, which mainly relates to construction. Then, the types of services included in the single market expanded year by year and now cover almost all sectors (Adilet Legal Information System, n.d.).

In Figure 2, which depicts the share of mutual trade in services of each EAEU country, it can be observed that since membership, countries have displayed different behavior in terms of trade in services. For example, in the exports of services of Armenia and Kyrgyzstan, the share of the EAEU in the observed period has been lowest after accession (in the case of Armenia, in 2021; in the case of Kyrgyzstan, in 2019) and on the contrary, the highest share has been recorded before accession (in the case of Armenia, in 2010; in the case of Kyrgyzstan, in 2013).

Meanwhile, in the case of Belarus, Kazakhstan, and Russia, the change in the EAEU share in services exports shows a more logical trend, in the sense that in the mentioned countries, the share of the EAEU countries during the observed period is at its lowest level before the EAEU Agreement came into effect, and at its highest level after membership. Figure 2 also shows that, on average, the share of the EAEU countries is the largest in Kyrgyzstan’s exports of services, followed by Belarus, Kazakhstan, and Armenia. The share of the EAEU countries is the lowest in Russia’s exports.

Although the EAEU share in Russia’s service exports is the lowest, Russia is the only country in which, in terms of service export structure, the shares of the EAEU countries are more evenly distributed and not concentrated around just one country. At the same time, in the case of other EAEU member states, trade relations are predominantly carried out with one state, the Russian Federation (Figure 3).

Thus, the dynamics of mutual trade between the EAEU countries show that the countries have demonstrated different behaviors during their membership in the Union. For some countries, mutual trade has increased significantly since accession, while for others it has not changed meaningfully. Therefore, it is important to understand whether membership in the union has affected mutual trade in services and to what extent, as well as what are the reasons that have hindered the growth of mutual trade in services.

4. Methodology and Data

Quantitative and qualitative methods have been used in the framework of the research. Within the framework of a quantitative approach, the DiD model has been applied to assess the impact of EAEU membership on mutual exports of services. Qualitative methods include expert surveys among Armenian exporters to identify challenges related to the export of services to the EAEU market. This study uses data on mutual service trade between EAEU countries to estimate the effect of EAEU membership on services trade. The data on service exports is sourced from the OECD, which, based on various estimates, publishes data on the export of services of all countries on a country-by-service basis, including even those countries that do not maintain their statistics on the export of services on a country-by-service basis (OECD, n.d.).

The DiD model has been used to assess the impact of EAEU membership on mutual trade in services. Angrist and Pischke (2009) state that the DiD model evaluates the effect of an intervention on a group that has experienced change over time compared to a control group that has not undergone that change, making it a suitable EAEU for assessing the impact of membership on mutual trade in services. In the absence of a limited control group, the within-group difference-in-differences approach was used, which is accepted in such cases when the effect on the result is evaluated only with the data of the treatment group. The model utilizes data spanning 17 years covering 5 countries (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia) over 2005–2021. The data include all published years before and after membership.

To empirically test the impact of EAEU membership on mutual trade in services, the following hypotheses have been formulated:

H₀: 

EAEU membership has no effect on the given country’s mutual trade in services.

H₁: 

EAEU membership has a statistically significant positive effect on the given country’s mutual trade in services.

The model used to assess the effect of EAEU membership on mutual trade of services is as follows.

Y_it = α + β × Treatment_it + γ_t + δ_i + ε_it
i = 1, 2, …, 5
t = 1, 2, …, 17

where Y_it—the dependent exports variable,

α—intercept of the model;

β × Treatment_it—coefficient of the treatment variable;

γ_t—Year Fixed Effects;

δ_i—Country Fixed Effects;

ε_it—the residual, indicating model inaccuracies.

The model is estimated, and diagnostic tests are conducted using the R statistical programming language. The Breusch–Pagan test has been used to detect heteroscedasticity, robust standard errors have been utilized to enhance precision, and the Durbin–Watson test has been applied to identify autocorrelation issues. Variance Inflation Factor (VIF) has been computed to assess multicollinearity. For the Parallel Trends Assumption in our within-group analysis, pre-treatment trends have been examined for stability, ensuring consistency before the intervention period to support valid inferences. So, the final specified model is the following;

Export_it = α + β1 × Treatment_Armenia_it + β2 × Treatment_Belarus_it + β3 × Treatment_Russia_it + β4 ×
Treatment_Kazakhstan_it + β5 × Treatment_Kyrgyzstan_it + γ × Covid19_t + δ_i + ε_it

where

Export_it—the dependent variable indicating country i’s service exports to other EAEU countries in year t;

α—intercept of the model;

β1, β2, β3, β4, β5—coefficient of the treatment variable, which describes the effect of EAEU membership for each country—Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia;

γ × Covid19t—The COVID-19 variable adjuster for the impact of COVID-19 on exports

δt—Country Fixed Effects to control country-specific effects;

ε_it—the error term.

In addition to the EAEU mutual trade impact assessment model, expert surveys have also been conducted to identify barriers to the export of services included in the EAEU single market. Expert surveys are particularly useful as a research tool when it is impossible or very difficult to measure a concept using other methods (Maestas, 2015). The methodological basis for organizing this expert survey has been the expert surveys conducted so far among exporters by reputable international organizations and companies such as UNCTAD (2011) and KANTAR (2020).

Representatives of service exporters from Armenia to the EAEU in various sectors have been selected as experts. The expert surveys were conducted through individual in-depth interviews, allowing for a detailed exploration of the barriers to service exports. The questionnaire included questions about the specific EAEU countries to which the experts export their services, the obstacles they face in the process, and the necessary reforms to facilitate mutual trade in services. In total, in-depth interviews have been conducted among 12 experts. The composition of experts by sector is presented in

Table 1. Composition of experts participating in the survey by sector.

Services	Number of Experts
Services for processing material resources belonging to other parties	1
Transport	3
Travel	1
Construction services	1
Financial services	3
Telecommunications, computer and information services	1
Personal, cultural, and recreational services	2

.

The experts who participated in the expert survey were representatives of small enterprises with 10–49, medium enterprises with 50–249, and large enterprises with 250 or more employees.

5. Results and Discussion

In accordance with the purpose of the study, the DiD model was used, which enables us to evaluate the impact of EAEU membership on the trade of mutual services in different countries. The estimated results of the final DiD model are summarized in

Table 2. The DiD model estimation results.

Variables	Estimate	St. Errors	t-Value	Pr(>|t|)
Treatment_Armenia	106.49	184.3	0.5778	0.56516
Treatment_Belarus	724.11 ***	184.3	3.9289	0.00019
Treatment_Russia	1001.7 ***	184.3	5.435	6.722 × 10−7
Treatment_Kazakhstan	382.16 **	184.3	2.0735	0.04160
Treatment_Kyrgyzstan	104.55	190.33	0.5493	0.58444
COVID-19	−240.27	179.4	−1.3393	0.18457
Total Sum of Squares:	16,745,000
Residual Sum of Squares:	10,150,000
R-Squared:	0.39382
Adj. R-Squared:	0.31191
F-statistic:	8.0128 on 6 and 74 DF
p-value:	1.1264 × 10−6

*** p < 0.01; ** p < 0.05.

.

As can be seen from Table 2, the entire model is statistically significant (F-statistic p-value = 1.1264 × 10⁻⁶), indicating that the variables included in the model together significantly explain the impact on mutual trade in services. The R-squared value of 0.39382 indicates that the model can explain about 39% of the variability, which is considered a satisfactory result considering the nature of the socio-economic data analysis. The model also includes a COVID-19 impact variable, which reflects the negative impact of the pandemic on mutual trade, although the effect is not statistically significant (p-value = 0.18457). Adding this variable allows us to control for economic volatility caused by the pandemic, making the model more complete and avoiding potentially distorted estimates.

In case of Russia, Belarus, and Kazakhstan, the H₀ hypothesis is rejected, as the model shows that EAEU membership has a statistically significant positive impact on the services exports of Russia, Belarus, and Kazakhstan, ceteris paribus, contributing to an annual average growth of USD 724.11 million, USD 1001.7 million, and USD 382.16 million, respectively. This indicates that within the framework of the EAEU, these countries have been able to significantly expand their mutual exports of services. Particularly in the case of Russia, the result depicts the highest indicator, which may be attributed not only to the scale and influence of Russia’s economy but also to the fact that Russia has close ties with each of the EAEU countries, unlike the other countries, whose ties within the union are largely with one country—Russia.

Unlike the above-mentioned countries, the impact of membership in the union on Kyrgyzstan’s services exports is not statistically significant (H₀ is not rejected for Kyrgyzstan as p = 0.584). The same result is also in the case of Armenia. Based on the results, the Treatment_Armenia variable, designed to assess the effect on mutual services exports after Armenia’s membership to the EAEU, has a very small and statistically insignificant effect (H₀ is not rejected for Armenia, as p = 0.565).

This may be due to several factors. In particular, the largest portion of Armenia’s service export structure belongs to travel, and even before joining the EAEU, current member countries did not need any visas to visit Armenia, meaning that there were no restrictions here even before membership, and membership in this sector by and large has not brought about any significant changes. The next largest group of services exported from Armenia is telecommunications and information technologies, and services in this sector are exported more to the US, the EU, and several other countries than to the EAEU.

Another factor could be that the liberalization of the services market has occurred gradually—so far, as already noted, 60% of services trade has been liberalized, initially predominantly related to the construction sector. However, the latter holds a relatively small share in Armenia’s services exports. In addition, small economies, such as Armenia and Kyrgyzstan, face a number of challenges within the EAEU that limit their opportunities to export services. Particularly, dependence on specific markets reduces the opportunities for market diversification. In the case of Armenia, this is further exacerbated by transportation isolation due to the lack of direct land connections with EAEU countries.

In general, growth in services exports can occur due to increased competitiveness, for which innovation is a necessary precondition (Tadevosyan, 2023). Armenia demonstrates quite impressive activity with its innovative performance (Tadevosyan, 2021), with the share of services in its export structure increasing due to the growth of IT services exports. Therefore, the decline in the share of exports to EAEU countries alone cannot be considered a competitiveness issue.

Expert surveys have been conducted to identify other reasons for the insignificant change in services exports from the Republic of Armenia as a result of integration.

Regarding the question of which specific EAEU countries they export their services to, the vast majority of experts surveyed, 11 out of 12, indicated that they export exclusively to Russia, and only one transport service representative indicated that they also export to Kazakhstan. Considering that the experts represent almost all service sectors included in the single market, this implies that even within the EAEU framework, effective cooperation in mutual trade in services has not yet been achieved with EAEU countries other than Russia.

In response to the question of what obstacles are encountered during the export of services, the experts mentioned several options, which are grouped by frequency as follows:

• Financial barriers (currency restrictions);
• Logistic barriers (transport difficulties);
• Procedural barriers;
• Legal barriers;
• Lack of market research;
• Technical barriers to market access;
• Cultural issues.

It should be noted that logistic obstacles have been mentioned primarily by experts from transport (freight) companies, as well as construction representatives. The experts particularly highlight the importance of the Lars checkpoint, which is frequently closed and opened throughout the year due to weather and other reasons, causing truck congestion, which, according to experts, causes a serious problem for their operations. In this context, it is important to emphasize that Armenia is the only EAEU member country that does not share a common border with any of the member countries.

Almost all experts have addressed currency restrictions as an obstacle in recent years. The reason for this is that the main export market among the EAEU countries is Russia, and problems arise with transfers due to sanctions.

All experts also mentioned procedural obstacles. The majority of experts addressed the lack of research on markets other than Russia in the EAEU and the lack of business connections as obstacles. Cultural barriers are mainly mentioned by representatives of the personal, cultural, and recreational services. Experts particularly point out that, apart from Russia, almost no tourists come to Armenia from other EAEU countries. Also, there is no exchange of students related to educational services, even with Russian universities, which, according to experts, is not due to legal or procedural obstacles, because there are no such obstacles, but simply due to cultural and mentality issues.

In addition to the above, the experts also addressed legal obstacles, regarding which they again identified several issues, in particular:

• Licensing difficulties;
• Contractual differences;
• Differences in VAT refund rules between countries;
• Prohibition of cash payments.

It is worth noting that the last two options were mentioned only by representatives of transport (freight) companies. Specifically, the experts noted that while VAT refunds are legally permitted, in practice, obstacles are created through other means, such as the imposition of fines. The ban on cash settlements has been noted as a challenge to business development by experts in the construction, financial, and tourism sectors. Nearly all the experts identified contractual differences as a problem.

In response to the question of what reforms are needed to eliminate barriers in the services sector and increase mutual trade, the experts made the following recommendations:

• Introduce common technical standards;
• Ensure equal conditions for resident and non-resident organizations;
• Neutralize the impact of foreign political tensions on trade;
• Increase the level of awareness of customs officers in the sector;
• Accelerate the VAT refund process, which will contribute to the growth of turnover;
• Allow cash settlement of trade in the EAEU;
• Do not impede the VAT refund;
• Support small businesses, prohibit verification up to 5 years from the opening of a business;
• Organize support or warning for work correction before opening judicial and pre-trial processes.

The proposed reforms are based on expert assessments that indicate current obstacles to the export of services. In particular, financial and legal barriers, as well as logistical difficulties, were presented as key issues, the solution of which could stimulate trade in services between EAEU member states. These reforms can be implemented by the EAEU structures, in particular the EAEU Economic Commission, as well as individual state bodies of the member states. For example, reducing logistical barriers requires infrastructure development, which may be a priority for the transport ministries of the EAEU member states, and reforms in tax and financial regulations require the intervention of the financial and tax authorities of the EAEU.

6. Conclusions

This paper seeks to answer the question of whether membership in the EAEU has contributed to the economic development of its member states. In contrast to previous studies, this paper focuses on services trade between member states, as the deepening of services trade between member states may affect not only economic growth but also the future of regional cooperation.

The study highlights the important issue that, from the perspective of services exports, membership in the EAEU has had an uneven impact on member countries. In the case of Russia and Belarus, the impact of membership is highly significant. In the case of Kazakhstan, this effect is less significant. However, membership has not had a significant impact on Kyrgyzstan’s and Armenia’s exports of services. Mutual trade in services within the Union is centered on Russia, which means that member states trade mainly with Russia, while the share of other countries in mutual trade with each other is insignificant.

The paper reveals that small economies, such as Armenia and Kyrgyzstan, face a number of challenges within the EAEU that limit their opportunities to export services. Particularly, dependence on specific markets reduces the opportunities for market diversification. In the case of Armenia, this is further exacerbated by transportation isolation due to the lack of direct land connections with EAEU countries.

According to expert surveys, there are some legal, cultural, financial, and logistical obstacles to the export of services from Armenia to the EAEU. In particular, service exporting companies have identified differences in licensing requirements, technical obstacles related to VAT refunds, difficulties with financial transfers due to sanctions against Russia, logistical obstacles (for freight forwarding companies), and a lack of research into markets other than Russia as obstacles. From an economic policy perspective, it is necessary to develop policies that will help reduce these barriers, such as the introduction of common technical standards, the adaptation of licensing and tax administration, as well as the creation of more predictable mechanisms for financial transfers.

In addition, for the growth of mutual trade within the EAEU, it is necessary to introduce common technical standards and ensure equal opportunities for resident and non-resident organizations. Except for Russia, the growth of trade between other EAEU countries requires, primarily, the development of political relations between these countries.

The results of this study can be useful for government agencies, policymakers, and the business community to improve cooperation within the EAEU. It complements existing research on EAEU trade in services by highlighting factors that may hinder or facilitate mutual trade between member states. Future studies could provide a more detailed analysis of the barriers to trade in services among EAEU countries by conducting surveys with a larger pool of experts from different member states or by employing alternative methods to develop policy recommendations.