Customs Union enhances business

[b]The new association, stretching from China to the European Union — the Customs Union of Belarus, Russia and Kazakhstan, began operations in July. Our three states’ presidents confirmed the single Customs Code in Astana, so we now have a common market of 170 million people, worth $1.5 trillion GDP. Experts are comparing it with such initiatives as the establishment of the European Coal and Steel Community and the Common Market of the South (Mercosur) [/b]The Customs Union (to become the Single Economic Space, as Minsk, Moscow and Astana are striving to create) could become a powerful engine raising the competitiveness of our three states’ national economies and their investment attractiveness. Although the formation of a single Eurasian market is experiencing a few obstacles, supporters of integration believe that contradictions and failures to speak openly won’t affect its long-term success. The Customs Union will allow us to more efficiently utilise the economic potential of the post-Soviet space. Interestingly, at the EurAsEC summit in Astana, the heads of Tajikistan and Kyrgyzstan noted that they are consi-dering joining the Customs Union. Our three member-states could grow to five.
The new association, stretching from China to the European Union — the Customs Union of Belarus, Russia and Kazakhstan, began operations in July. Our three states’ presidents confirmed the single Customs Code in Astana, so we now have a common market of 170 million people, worth $1.5 trillion GDP. Experts are comparing it with such initiatives as the establishment of the European Coal and Steel Community and the Common Market of the South (Mercosur)

The Customs Union (to become the Single Economic Space, as Minsk, Moscow and Astana are striving to create) could become a powerful engine raising the competitiveness of our three states’ national economies and their investment attractiveness. Although the formation of a single Eurasian market is experiencing a few obstacles, supporters of integration believe that contradictions and failures to speak openly won’t affect its long-term success. The Customs Union will allow us to more efficiently utilise the economic potential of the post-Soviet space. Interestingly, at the EurAsEC summit in Astana, the heads of Tajikistan and Kyrgyzstan noted that they are consi-dering joining the Customs Union. Our three member-states could grow to five.

Common and private
Analysts believe the Customs Union could become the first successful geopolitical project within the CIS. Moscow is attributing special significance to the Union, seeing it as a test for its ability to act as the centre of regional integration. President Dmitry Medvedev sees the Customs Union is an absolute priority for Russia, while Prime Minister Vladimir Putin has called it ‘a historical choice for Russia’.
Like Kazakhstan, Belarus has long supported the integration of post-Soviet states. However, Minsk stresses that the Customs Union must be fully-fledged and work without exemptions or limitations (a goal yet to be achieved). With this in mind, President Alexander Lukashenko is cautious in his forecasts about the Union’s future, saying in Astana, “Time will tell.” Despite having launched the integration project, Minsk, Moscow and Astana are yet to achieve their major goal of creating a fully-fledged single customs territory. Russia has failed to abolish import duties on oil and oil products supplied to Belarus but Minsk and Moscow have reached a compromise, notes Belarus’ Deputy Prime Minister, Andrei Kobyakov. He tells us that a protocol adopted in Astana is an important achievement, stipulating terms for abolishing duties. Russia has announced that it will lift its exemptions once Belarus adopts and ratifies a package of documents on the Single Economic Space. “Such legal terms are a serious advance,” admits Mr. Kobyakov. “Of course, we didn’t want to push for this protocol but, as our partners weren’t ready, we had to voice certain conditions.”
In compensation for preserving oil duties, Belarus has managed to defend existing national duties on imported passenger cars. It was previously supposed that, from July, all duties on imported cars would be raised to the Russian level (significantly higher than in Belarus, as Russia is protecting its own car industry). Eventually, it was decided to preserve the existing tariffs for Belarus and Kazakhstan until July 1st, 2011.

Room for compromise
The integration mechanism has been launched but, as experts say, its ‘adjustment’ continues. It’s no wonder, since economic integration is a complicated process, requiring much effort and compromise. We can recall that European states have been forming their present market for decades. All ‘exemptions’ within the Customs Union will be lifted once the Single Economic Space comes into force. In Astana, Alexander Lukashenko, Dmitry Medvedev and Nursultan Nazarbayev ordered their governments to facilitate the preparation of normative acts regarding the Single Economic Space. It was initially planned that the first package of documents would be signed by January 1st, 2011 and the second by July 1st, 2011. In Astana, we agreed that all documents must be ready by the end of 2010. The Single Economic Space will then come into force on January 1st, 2012.
Experts are certain that, on shifting to the Single Economic Space, discussion will continue, as it has done regarding the Customs Union. There are many sensitive positions: Minsk, in particular, is concerned about transitioning to uniform state support of the agrarian-industrial complex. At present, this support is much higher in our country than in Russia. Moscow, in turn, is worried about the transition to equal gas prices. A representative of the Belarusian delegation to Astana notes that Russia would like to implement this norm on its territory no earlier than 2015. Of course, this approach does not satisfy Belarus. Minsk advocates a unified transition to equal profit in the three states. As a result, the formation of the Single Economic Space won’t be easy. However, Mr. Kobyakov is convinced that the prompt preparation and adoption of all necessary documents is possible.

First pluses
Despite shortfalls in the Customs Union’s work, we can already pinpoint certain advantages for Belarus. “Any product imported on the Union’s territory and put into free circulation can pass any border between our three states without control or customs clearance,” explained Mr. Kobyakov. “We can set up assembly facilities and freely sell products throughout the whole Customs Union. Investors coming to our country gain access not just to a 10m market but to a market of 170m people. This should inspire a drastic rise in investment.”
Another advantage is our agreement within the Customs Code to unify laws governing technical, sanitary, veterinary and phyto-sanitary matters. All certificates and protocols of research obtained at Belarusian laboratories are now also valid in Russia and Kazakhstan. This should help Belarusian manufacturers avoid barriers to neighbouring markets. In recent years, there have been cases where milk and meat (acknowledged acceptable in Belarus) were blocked by Russian controllers (perhaps for political reasons). In future, grounds for such misunderstandings will be eradicated.
Minsk sees the new definition of the EurAsEC Court’s status as a step forward, stresses Mr. Nazarbayev. Speaking in Astana, he noted that this new document expands the Court’s authority — reaching over members of the Customs Union and the EurAsEC, in addition to economic entities. It should guarantee the protection of rights and the meeting of obligations by all parti-cipants of integration. Mr. Medvedev believes this shows integration entering its final stage. “A court is needed when real relations exist,” he said.
Belarus is advocating these real relations, based on principles of mutual benefit and respect.

By Vitaly Volyanyuk
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