Russia, Kazakhstan, Belarus Customs Union Opens Borders

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Jul. 4 – The last customs offices between Russia and Kazakhstan were closed on July 1, 2011, as a new international free-trade zone comes to fruition. The customs union (CU), which includes Russia, Kazakhstan and Belarus, removed the last internal customs controls at their borders on Friday.

Customs control on the inner borders of the three countries will be abolished; veterinary, phytosanitary and transport control will be moved to the CU’s external borders. As of Jan. 1, 2011, there are unified forms and instructions on declaring goods.

The majority of customs inspections have been taking place on the external borders of the customs union as of last year, but customs officers still checked some cargo occasionally when they travel from one member country to another.

“Transportation will now speed up,” Galina Dontsova, chief of the customs and foreign trade practice at Ernst & Young in Moscow, said to The Moscow Times.

To defeat corruption, Russia and Kazakhstan agreed to practice an interexchange program, according to which Russian custom officers will work on the Kazakhstan-Chinese border, while their counterparts will join Russian colleagues in one of the country’s outer boundaries.

About 60 percent of people living in the former Soviet Union are residents of the customs union. Russia and Kazakhstan are relatively well off, while Belarus is going through a financial crisis.

Member-countries agreed to apply unified import and export duties with multiple exceptions, starting in January 2010. In the latest progress toward more unity, Kazakhstan recently dropped 321 exceptions.

Foreign companies based in Russia also hope that the closure of the customs offices would enable them to increase sales to other customs union members.

“We are looking at this date with a cautious optimism,” Vladimir Kobzev, chief lawyer at the Russian-German Foreign Trade Chamber said.

At the same time, chamber members were concerned about the possibility of more counterfeit consumer goods making their way from China, and taking market share from more expensive German equivalents of higher quality.

Some experts consider internal customs control elimination as a too quick measure.

“There is the risk of contraband and imports of infected food,” said Alexei Portansky, a trade policy professor at the Higher School of Economics. The European Union member countries watched their borders for some 30 years after forming the organization, he said.

“There are still unsolved problems connected with the functioning of the unified customs territory,” consider Mikhail Kozlov, Deputy Director of Operative Department on Customs Services AsstrA Associated Traffic AG.

Belarus and Russia have not yet solved the problem of guaranteeing transportation of goods through the territory of Belarus to Russia by the Belarussian Chamber of Commerce and Industry.

In the field of tariff regulations there are no unified trade rules of procedure and impressments of country-members of the CU with third countries.

In Kazakhstan there are still transitional rates of customs duties by 400 commodity items, different from the rates of the CU customs duties. In customs services of the CU, the indicatives for application of additional measures of documental control by determination of customs prices of goods differ.

In the field of non-tariff regulations there is the burning issue of developing unified technical rules of procedure for technical regulation. Belarus and Kazakhstan are against the transfer of veterinary control functions to the customs bodies at the border, which comes into force in Russia from July 1, 2011.

As of September 2010, the three union members have collected customs duties into a single bank account and divided the money. Russia is getting 87.97 percent of the funds, while Kazakhstan gets 7.33 percent and Belarus 4.7 percent.

As the next integration measure, the countries plan to inaugurate a Unified Economic Space from January 2012 that will open the way for the free movement of capital, services and work force.

They also plan to unify railway rates, natural gas prices, agree on agricultural subsidies and inflation rate boundaries, the Russian Cabinet official said.

The members also plan to set up a customs union commercial court for any disputes that might occur among them, the source said. That court would be based in Minsk, Belarus.

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