On the creation of the Customs Union

On 25 September 2009, the Commission of the Customs Union held its meeting in Alma-Ata. After the meeting, the countries-participants – Russia, Belarus and Kazakhstan – announced that the task of coordinating and unifying the single customs rate had been completed.

The decision on creating the Customs Union was adopted by the Presidents of the countries of the Eurasian Economic Community on 6 October 2007. They also approved the plan of action in accordance with which, in the years 2007 – 2010, they were to crate a corresponding normative – legal base.

The formation of a single customs territory envisages the liquidation of customs boundaries between the countries of the Customs Union and the transfer of all kinds of state control to the customs boundaries of the Union. It is planned that controls at the Belarus – Russia frontier will be cancelled as early as 1 July 2010, and on the Russia – Kazakhstan frontier - on 1 July 2011.

The Alma-Ata Meeting approved the draft of the single Customs Code and also the drafts of the treaties which will be presented for consideration and signing to the heads of the states-participants of the Customs Union. At their meeting on 27 November 2009 the leaders of the three states are expected to approve the date of the single customs tariff’s entry into force, 1 January 2010. The Customs Code will be with force from 1 July 2010 onwards.

Also from 1 January 2010 onwards the functions of external trade regulation of the three countries will be handed over to the Commission of the Customs Union. The Commission will be responsible for introducing changes to the import duties rates of the three countries, for the introduction of the commodity classification of foreign economic activity, for the establishment of tariff preferences and quotas, for the introduction of non – tariff regulations, and for the conduct of special protective anti – dumping and compensatory investigations. The Commission’s decisions will be mandatory in the territory of each of the three countries concerned. The decision – taking mechanism will be as follows: in order for a decision to be adopted it will be necessary to obtain three quarters of the votes. At present, Russia has nearly 60 % of votes, while Belarus and Kazakhstan have 20 % each (in proportion to their contributions to the budget of the Customs Union).

The import revenues of the Customs Union will be distributed in accordance with macroeconomic criteria. At present, a discussion is under way as to which criteria are to be applied – GDP, foreign economic activity, the volume of goods turnover etc.

So far as the Customs Union is concerned, the single customs tariff and the single customs code are the documents of paramount importance. However, there are other issues which also require rapid solution, for example, the unification of free trade agreements (Russia has such agreements with Serbia and Montenegro). Also, it is necessary to create a judicial body which will consider appeals against decisions taken by the supranational bodies of the Customs Union. A clear-cut mechanism of export duties distribution will be discussed later, at the second stage of the Union’s creation.

The parties also approved the directives for the joint negotiation team which would negotiate the accession of Russia, Kazakhstan and Belarus to the World Trade Organization (WTO). The parties once again confirmed that they were going to join the WTO simultaneously. At present, it is rather difficult to forecast when the Customs Union will become member of the WTO.

N.P. Volovik – Head of the Department for Foreign Trade