Customs Union in Final Stretch

MOSCOW - The creation of a customs union for Russia, Belarus and Kazakhstan has entered the home stretch, with a deal to be signed in late November giving the countries a unified Customs Code, external borders and even import duties on cars.

The three countries' presidents will sign a package of documents creating the customs union in Minsk on Nov. 27, including unified customs rules and one duty for products that fall under restrictions on import and export, said Igor Petrishenko, a Belarussian deputy foreign minister, Interfax reported Wednesday.

Under the plan, the union will begin operating Jan. 1, and customs points will be removed on the Russia-Belarus border. On July 1, 2011, the customs inspections will disappear on Russia's border with Kazakhstan.

Kazakhstan will finish installing customs posts on its southern border by the end of 2010, Kazakh Prime Minister Karim Masimov promised Prime Minister Vladimir Putin. Earlier, two Russian officials involved in the negotiations told Vedomosti that the government was concerned by the lack of demarcation along Kazakhstan's borders.

A source in the Russian government said the main questions about creating the union have been resolved and that they were "working feverishly." On Wednesday, the union's commission has a meeting planned, and "a colossal number of additional decisions need to be approved," he said.

The unified customs rates from 2010 will reduce Russia's annual revenue from tariffs by about 1 percent, said Deputy Economic Development Minister Andrei Slepnev. But there will be no changes on the country's main tariffs, he said. Import tariffs on foreign cars, for example, will be leveled off at the Russian levels.

The fact that Russia was demanding to keep the high import tariffs on light vehicles was also announced by Anatoly Vaskov, chairman of the Eurasian Economic Community's interparliamentary commission. "Tariffs are tariffs, but you need to protect your producers. For Russia that's very important," he said.

Russia's import duty on new cars is currently 30 percent, but not less than 1.2 euros to 2.8 euros per cubic centimeter of engine capacity. For cars that are three to five years old, it is 35 percent but not less than 1.2 euros to 2.8 euros per cubic centimeter. For cars older than five years, the rate is 2.5 euros to 5.8 euros per cubic centimeter.

Belarus and Kazakhstan have lower import duties, Slepnev said, adding that it was possible that there would be a transition phase during which each state would keep its own duties on cars. The current tariffs in Russia will expire in mid-2010, and it is unclear what will happen after, he said.

The creation of the customs union won't have much of an effect on trade ties among Russia, Kazakhstan and Belarus, which already have a free trade zone, said Sergei Prikhodko, managing director of the Institute for the Economy in Transition.

Russia has never particularly placed much value on real integration, political scientist Mikhail Vinogradov said. "Just look at our 'friendly' relations with Belarus lately. Every time the Russian authorities say the latest 'yes' on some matter, it means, in essence, 'no.'"

Maxim Medvedkov, director of the Economic Development Ministry's department for World Trade Organization accession, told Vedomosti that the three countries could announce a restart to entry talks Thursday.



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