Russia, Kazakhstan, Belarus form customs union

Yuras Karmanau

Minsk, Belarus - The Associated Press Published on Friday, Nov. 27, 2009 3:11PM EST

Russia signed a deal Friday to form a customs union with former Soviet neighbours Kazakhstan and Belarus.

Russian President Dmitry Medvedev invited other ex-Soviet nations to join the union, hailing it as a "new stage in our co-operation."

The union will come into force on Jan. 1, with the three countries using the same foreign trade tariffs and rules with one another, though it will likely take another six months for all tariffs to be synchronized, officials said.

Russia and Belarus already have an accord calling for close political, economic and military ties. The creation of the customs underscores Moscow's determination to shore up its influence among neighbours.

Analysts said, however, that the new deal could further stall Russia's 16-year-old effort to join the World Trade Organization, even though Moscow has backed off from Prime Minister Vladimir Putin's announcement in June that Russia would scrap individual membership talks and insist on joining together with Belarus and Kazakhstan.

Russia is the largest economy outside the 153-member WTO.

Its prospects for membership are a "big mystery to everyone," said Yevgeny Gavrilenkov, chief economist at Moscow-based Troika Dialog investment bank. He said the new customs union means Russia's WTO entry talks "are likely to get dragged out again."

Friday's deal follows numerous attempts to forge closer economic ties among ex-Soviet nations that have been stymied by deep economic differences and fears of Moscow's domination.

President Alexander Lukashenko of Belarus called it a "big, historic step," and Mr. Medvedev called it "a very important event."

Mr. Gavrilenko said it would change little in practice.

"I don't see any fundamental changes coming from this agreement," he said. The deal "must streamline trade between the three countries somehow, but borders between Russia, Belarus and Kazakhstan are pretty transparent already."


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