Russia, Kazakhstan and Belarus Create Customs Union

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Jul. 9 – Russia, Kazakhstan and Belarus have reached an agreement creating a new Customs Union (CU)  starting this week that will put all three countries under one customs territory.

The new Customs Code will simplify Russian-Kazakhstan border customs registration, though Customs control at the border will be remain until 2011. The three countries have also adopted technical quality and sanitary standards for goods, a measure that allows goods tested and approved by watchdogs in Belarus to be sold in Russia and Kazakhstan without being tested by their agencies.

Russia, Kazakhstan and Belarus began talks of a Customs Union in 1995, but it was only last year that authorities expedited the preparation process. Belarus had refused to ratify the Custom Code for weeks due to the high export duty rates given for crude oil and petroleum products imported from Russia. In response to this claim Moscow clarified that export duties for goods delivery in the Customs Union cannot be canceled until 2012 when the Common Economic Zone is slated to be created.

“If we manage to prepare all agreements on creation of the uniform economic space and to introduce them, we will be able to consider the question of cancellation of export duties earlier,” Minister of Finance of the Russian Federation, Alexey Kudrin said yesterday to Russian information agency RosBusinessConsulting (RBC).

According to an earlier confirmed plan, the economic space will implement the same macroeconomic policy on all member countries. “CU ratification does not mean that Belarus has turn down its claims,” Russian High Scholl of Economics professor Alexey Portansky said to Russian daily Vedomosti. “I think they considered that in this particular moment it will be economically wise to stop arguing,” he said.

“Meanwhile Custom Union might face some other problems,” Portansky warns. “For example, the Custom Code contains many norms which are referring to the national legislation, but in Russia the law on customs regulation is not accepted yet.” During the Eurasian Economic Community summit, where the CU agreement has been signed, leaders of Kyrgyzstan and Tajikistan said their countries were also considering joining the customs union.

“The creation of the Customs Union is the first step to real integration on the post-Soviet territory,” the prime minister of Kazakhstan, Karim Massimov said. “We create the CU taking into account the best world experience. Naturally, the EU has been taken as an example. In the future, we would like to see the Central Asian states – our neighbors, and Ukraine – as our partners in the Customs Union.”

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