Belarus Plays Down Customs Union Fears

By Aaron Mulvihill

Belarus on Friday downplayed fears that a new customs union with Russia and Kazakhstan will lead to widespread duty hikes but said an agreement on oil tariffs remains a sticking point in negotiations.

"Significant changes to customs tariff regulation in Belarus, in connection with the introduction of the single customs tariff on Jan. 1, 2010, are not expected," Belarussian Deputy Prime Minister Andrei Kobyakov told the country's parliament, Interfax reported.

The unified tariff system will affect only 34.1 percent of the total volume of goods imported into Belarus, he said.

Only 6.7 percent of the country's tariffs are expected to be increased, Kobyakov said, adding that there would be few changes because Belarus has already harmonized 95 percent of its customs tariffs with Russia.

Negotiations on the harmonization of oil tariffs among the three countries are ongoing, Kobyakov said, and a deal has yet to be struck on the delivery of Russian oil to Belarus in 2010.

"[The oil tariffs] issue must be resolved before July 1, 2010," he said.

Energy Minister Sergei Shmatko said Wednesday that the continuation of favorable oil contracts with Belarus would hinge on Belarus granting Russian investors access to its oil infrastructure. Government sources told Interfax that the proposition amounted to "blackmail."

Kobyakov said Deputy Prime Minister Igor Sechin would soon visit Minsk to discuss the privatization plans. "At the moment, a working group led by [Belarussian First Deputy Prime Minister] Vladimir Semashko and Igor Sechin is carrying out active consultations."

Negotiations are meanwhile underway between Belarussian and Russian companies to increase oil transit volumes through Belarus.

Parts of Central and Eastern Europe suffered energy shortages in January 2007 during a dispute between Belarus and Russia over transit fees. "There is enough time, I think, to reach a deal," said Kobyakov. "The heads of government are willing to negotiate."

The most difficult stage of customs union negotiations concerned automotive tariffs, Kobyakov said. Belarus agreed to increase tariffs for dealers to match Russian levels. For Belarussians, this will mean a considerable hike in the price of foreign-made cars.

Russian dealers have expressed concerns that opening the borders could lead to a flood of used cars from Belarus in the first half of 2010, as individuals will not be subject to the same tariffs as companies over the period. The unification of duties for private individuals will need to be agreed to under a separate deal by July 1, 2010.

In return for Belarus' tariff hike, Russia will raise duties on trucks, combine harvesters, machinery and electric motors. The three sides are scheduled to meet in St. Petersburg on Friday to discuss technical and health regulations for the customs union.


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