Russia, Belarus, Kazakhstan customs talks fail

By Darya Korsunskaya

ST. PETERSBURG, Russia, May 21 (Reuters) - Russia and neighbouring Belarus and Kazakhstan have failed to reach agreement on some aspects of their joint customs union, their leaders said on Friday.

"We couldn't agree on all the issues," Russian Prime Minister Vladimir Putin said in a statement issued to reporters in Russia's second city of St. Petersburg, where they met to discuss the union.

"There are sensitive questions for the economies of Russia, Belarus and Kazakhstan... For the next two weeks we will continue to agree our positions at an expert level," Putin said.

The ex-Soviet nations agreed earlier this year to establish the union to boost trade and investment. From July 1, the trio was meant to adopt a common external tariff, finalise rules and start redistributing the duties they collect.

Putin said duties within the auto and aviation industries held great importance for Russia, and were stumbling blocks in the talks.

"If we give up our position that we took in previous years then we will inflict a lot of damage on our car industry," Putin said in the statement.

Putin's Belarussian counterpart, Sergei Sidorsky, said in a statement oil duties were holding the union back.

A Russian delegation source, who spoke on condition of anonymity, told reporters there was a chance finalising the union could be delayed beyond July 1.

Sidorsky said that duties on oil and oil products were the issues they could not agree on -- nodding at January's protracted row between Moscow and Minsk over a new supply deal.

"We could not close the gap in their positions," he said.

Russia has refused to abolish export duties on oil it sells to Belarus, something analysts say Minsk had expected and seen as the key reason to join the pact.

Instead, Moscow has offered Belarus only limited duty-free supplies.

At the beginning of the year Russia and Belarus were involved in a month-long oil supply row that had threatened to disrupt oil flows to European Union members Germany and Poland.

(Reporting by Darya Korsunskaya and Gleb Bryanski, writing by Amie Ferris-Rotman, editing by Michael Roddy)


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