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19-11-2009 12:36 Belarus

Customs Union and WTO: priorities are determined by the time

On November 27, 2009 during the regular session of the EAEC Intergovernmental Council the Presidents of Belarus, Russia and Kazakhstan are expected to sign the extensive package of documents meaning the completion of the Customs Union regulatory and legal framework formation. In particular, the Customs Code, common customs tariff and other basic mechanisms enabling the stated international community to function from January 1, 2010 are planned to be adopted. The Customs Committee, its supreme authority, is to start operating from this particular moment. It is granted full authorization in the area of foreign trade regulation, and all the decisions taken by the Committee shall be subject to compulsory implementation in the member states of the Customs Union.

 All the decisions concerning the Customs Union formation comply with foreign trade guidelines and the WTO regulations. By the way, the Customs Union members specified also their approaches to the WTO accession. Belarus, Russia and Kazakhstan are determined to enter into the WTO simultaneously and on coordinated terms. It is a principled position of the three countries. What is the final goal of the new international organization formation? What advantages do its member states enjoy? Does the Customs Union formation hamper the economic relations development with other countries? The answers to these questions were given during the roundtable discussion “Customs Union and WTO. Priorities” held in the framework of the Belarusian Investment and Economic Forum on November 12, 2009 in Minsk.

The main goal of the efforts made by the three countries is the formation of new economic territory, free circulation of goods, works and services on the territory of the three countries.

There was always a tangible need for maximum favorable conditions for mutual trade in the FSU. “We have been raising the question of the Customs Union formation with two or three member states for 17 years after the Soviet Union breakdown,” Sergey Glaziev, Executive Secretary of the Customs Committee of the Customs Union of Belarus, Russia and Kazakhstan, noted in his address during the roundtable discussion. Quoting his words, bilateral free trade agreements laid the foundation for the present work. Unfortunately “we did not manage to implement the idea of a multilateral free trade zone agreement signed 15 years ago. It still hasn’t been brought into effect,” Sergey Glaziev stated. It is no secret that current bilateral free trade agreements do not cover a substantial list of the so called “sensitive items”. The common customs tariff of the Customs Union stipulating common customs duties for over 11 thousand commodity items in trade with third countries, and common Customs Code providing free circulation of goods in the framework of the Union and common rules of foreign trade outside its borders will eliminate this gap. “Therefore the establishment of the Customs Union of the three countries is, undoubtedly, a considered step ahead meeting the development goals,” the Executive Secretary of the Customs Committee of the Customs Union noted. He supposes it will contribute to the growth of the economies’ competitive capability, government regulation transparency, as well as the entrepreneurial climate improvement in the Union member states.

Moreover, the Customs Union establishment will enable to reject all forms of state control on the Belarus-Russian border as from July 1, 2010. Starting from this moment the Customs Union members are eager to unify tariff and non-tariff regulations, mechanisms of sanitary, phytosanitary and veterinary regulations adherence. Next year will see mutual recognition of     authorization documents in the sphere of such control, and subsequently unified forms are to be adopted. Within 2010 the unified procedure of license issue for all goods falling within quantitative restrictions will be implemented. As a result “the elimination of barriers hampering trade as well as transfer to the common system of economic regulation and common economic partnership in the framework of the Customs Union will enable the member states to gain 15 per cent of the GDP equaling to $0.5 tln annually by 2015,” Sergey Glaziev said.

The key factor for such goals achievement will be promotion of industrial cooperation and business activity growth of legal entities in the three countries what is especially important for the Belarusian part. Quoting Sergey Glaziev, Belarusian manufacturers enjoying tight cooperation links with Russian suppliers of spare parts and raw materials have to get over customs borders repeatedly and bear additional financial losses. In their turn, Russian exporters did not pay special heed to it as oil and metals sales do not need close cooperation. However, “Belarus stands up successfully to the global crisis impact and competes on the market of complicated technical products. This experience must be employed in the Customs Union and by our partner abroad,” the Executive Secretary of the Customs Committee supposes. Therefore, the Customs Union establishment is a significant stage in competitive ability growth and innovative economies formation in the Customs Union member states. All the decisions regarding the Customs Union formation comply with the WTO regulations. For example, the Customs Code is in compliance with international regulations, its authors endeavored to avoid double meaning and terms confusion, and to make it easy to implement. Therefore the formation of the Customs Union of Belarus, Russia and Kazakhstan cannot hamper the accession to the WTO of these countries and will contribute to the cooperation with the EU, as Sergey Glaziev supposes.

However, there are some complications. In spite of the fact that the accession to the WTO as a “triple alliance” (the Customs Union of Belarus, Russia and Kazakhstan) is theoretically possible, there are no such cases on record. In this regard there are technical complications connected with such procedure carrying out; there are two ways of the WTO accession. However, in any case the Customs Union members intend to entry into the WTO as a single block.

“We have decided to carry out negotiations together under general conditions. We cannot act in a different way. In case when three countries agreed to launch a customs union with common customs tariff there can be no separate negotiations by definition. The process of the common customs tariff formation has been brought to the supranational level. And I find it strange that some of our partners (the EU countries) do not understand it. It is impartial logic of the process, and our partners were notified of it”.

In his turn, Maxim Medvedkov, Director of the Department of Trade Negotiations of the Ministry of Russia’s Economic

Development and Chief Negotiator for Russia's accession to the WTO, noted that at present this issue had been under discussion with representatives of 80 countries of the world. According to his words, “our partners’ opinions in Geneva are quite divided. The minority expressed some misunderstanding of what was going on”. Thereupon, there is an agreement reached that the following months will be devoted to the explanation of the essence of the Customs Union of the three states. Early 2010 is expected to be the period of the negotiation process activation. However in general “I have no impression that Brussels misunderstands the change in trade conditions between the EU and the Customs Union states,” noted Maxim Medvedkov.

In any case, as the Russians assure nobody is determined to make integration processes that influence the competitive ability of Russia, Belarus and Kazakhstan economies dependent on opinions expressed in Washington or any other capital of the world. As “such processes of common economic territory formation and the Customs Union establishment are vital for us. We decided to form the union in compliance with the WTO regulations. In this regard we have no unsolved problems, as the WTO welcomes the Customs Union formation,” assured Sergey Glaziev the participants of the roundtable discussion.

At the same time one shall note that Russia has been trying to access the WTO for 17 years already. But yet these single attempts have not become a success. Belarus and Kazakhstan started negotiations with the WTO in the mid 1990s. There is also no result yet. That is why as a natural result the three countries fixed their intention to form the new format of interaction under the name of The Customs Union, which will contribute to the growth of economies’ competitiveness and improvement of enterprising climate, as soon as possible. “We consider the Customs Union as inevitable but transit stage of integration, - Andrey Evdochenko, the Deputy Minister of Foreign Affairs, representing our country mentioned during the meeting. - The Customs Union must not and cannot be regarded as a way to get closed from our other trade partners. On the contrary, it is both the expansion of possibilities and invitation to cooperate.” According to Andrey Evdochenko, the creation of the Customs Union will allow both to maintain current high level of Belarus, Russia and Kazakhstan economic cooperation and to create the base for further integration. On the other hand, our republic received the EU’s invitation to participate in The Eastern Partnership project. “We put high hopes on it as an instrument which gives us new opportunities for achieving the next, more important level of Belarus-EU economic cooperation,”- Andrey Evdochenko announced the perspectives of participation in it.

As Genrikh Litvin, the Extraordinary and Plenipotentiary Ambassador of Poland to the Republic of Belarus, pointed out, “technically the Customs Union and the Eastern Partnership neither exclude nor supplement each other, but leave a huge field of action for other projects implementation. The Customs Union is related to economic trade sphere while the Eastern Partnership is aimed at implementation of definite projects connected with more particular fields of action. Of course, economic cooperation and its promotion are the elements of European project. But it is not its purpose but only the instrument of realization. One can be quite certain that there is no confrontation between the Eastern Partnership project and integration actions taken by Belarus within the CIS”.

Ukraine also “keeps an eye on the creation of the Customs Union by the three countries, which play an important role in our economy,”- added Igor Likhovyj, the Extraordinary and Plenipotentiary Ambassador of this country to Belarus. According to his words, “today a lot of Ukrainians wonder what benefits they will have after the creation of such a powerful partner as the Customs Union. In any case we are geared up for bilateral negotiations and establishment of mutually beneficial trade and economic relations with its members”.

It should be mentioned that the answers to some questions raised by the Ukrainian diplomat can be already found in his comments. The Customs Union of Belarus, Russia and Kazakhstan as an international organization which corresponds to the WTO in its form and spirit can become a powerful economic formation able to influence commodity flows and the direction of mutual trade development on the European continent, and as a result change the economy of its members. “The Customs Union is a new organization which is really accessible, open and transparent. I think that this project will work for the extension of mutual commodity circulation and increase of each country’s economic growth,”- Anatoliy Smirnov, the Extraordinary and Plenipotentiary Ambassador of Kazakhstan to Belarus, summarized the discussion. It is obvious that power players will have to reckon with such an organization.

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