While shaping the Customs Union, a major challenge was agreeing upon the Uniform Customs Tariff (UCT) rates, for originally the three countries found only 40% of their rates matching each other. So, they were compelled to launch a long process of unification of rates on nearly 11,000 commodity headings.
However, the parties failed to ensure a 100% consensus across all the tariff rates, primarily because Kazakhstan was not ready to change (increase, actually), nearly 55% of its national customs tariffs. That is why Kazakhstan reserved a list of 400 commodity headings, the customs levies on which should remain on a lower (or zero) level through 2014, including medicines, plastic, cardboard and paper, aluminum manufactures, among others.
Russia, too, substantially modified (mostly lowered) its customs duty rates since 1 January 2010. Specifically, the rates were zeroed on 300 more headings of technological equipment, devices and mechanisms. The rates on meat and dairy products, and ferrous metals were raised insignificantly.
RUSSIAN ECONOMY IN trends and outlooks It is worthwhile noting that the UCT rates are subject to revision. Specifically, duty rates on some commodity headings the Custom Union member states attribute to the group of ‘sensitive’ ones may become subject to modification, provided the three nations have mobilized consensus in this respect. This mostly concerns food stuffs, clothing, wooden manufactures, fabrics, etc.
The pilot project on operating and fine-tuning the information exchange between the three national customs agencies for the sake of controlling of moving of goods and vehicles across the single customs territory (the domestic and international transit control) and running the statistics of mutual trade kicked off on 1 April 2010.
3. The second stage - since 1 July • the Customs Code of the Customs Union implemented and a uniform methodological base developed in its furtherance;
• the exercise of customs clearance of goods and vehicles began with the use of uniform forms of documents by the customs agency of the Union member state whose resident is a participant in foreign economic activity;
• the conduct of statistics of foreign trade and statistics of mutual trade was ensured;
• international treaties relating to indirect taxes and mechanism of information exchange between tax agencies came into effect.
With regard to administering export:
• the Union member states retain the possibility to independently determine export customs duty rates;
• respective amounts of export customs duties are collected to the budget of the Union member state wherefrom the goods originate;
• the Union member states retain the possibility to independently determine and apply nontariff regulation measures in respect to individual kinds of goods (military and dualpurpose manufactures, natural commodities);
• the possibility to pursue an independent policy in the noted areas of export regulation is secured by execution of mutual obligations in the frame of the international treaty framework of the Customs Union.
The bill “On customs regulation in Russian Federation”, which was supposed, once passed, to substitute for the Customs Code of RF, was envisaged to be implemented since 1 July 2010. Its passage was delayed, though: the first draft was developed by FCS under the name “On customs regulation” and the RF Government declined the bill in May, as it seemed to increase the administrative pressure on business. The RF Ministry of Economic Development prepared its own version, but much time was wasted on obtaining other government agencies’ approval. Plus, the bill suffered fairly numerous controversies and comprised some 300 reference provisions which would require creating a plethora of various by-laws. As a result, the law has been under development until November 2010.
4. Third stage (since July 2011) envisages:
• transfer of the agreed upon kinds of state control from the Russian-Kazakh border to external borders of the Republic of Kazakhstan and the Russian Federation. At this point, a transitional period was provided for, during which at customs clearance locations in the territory of the Republic of Kazakhstan where monitoring of the exercise of customs clearance procedures will be carried out, along with a temporary retention of individual forms of customs control along the Russian-Kazakh border;
The Real Sector of the Economy • completion of negotiations with third countries on unification of trade regimes on the basis of earlier reached agreements.
It is envisaged that since 1 July 2011 customs clearance procedures will be abrogated with regard to goods originating from third countries and released for a free circulation in the territory of the Republic of Belarus, Republic of Kazakhstan and the Russian Federation and goods transited within customs territories of the Republic of Belarus, Republic of Kazakhstan and the Russian Federation.
This is the final element of the formation of a single customs territory that secures, within its borders, a free moving of goods originating from therein, as well as goods originating from third countries.
So, the customs regulation of the Customs Union rests upon six blocks of documents that match respective decision making levels:
1) The Customs Code of the Customs Union;
2) International treaties adopted on the basis of CC of CU;
3) Decisions of the Commission of the Customs Union;
4) Customs legislation of the Customs Union member states;
5) Decisions made by national governments of the said states; and 6) Normative and legal acts by their competent government agencies.
The Customs Code of the Customs Union appears substantially different from the RF one.
More specifically, the conceptual framework underwent certain modification:
- The term of ‘customs broker’ was replaced by ‘customs representative’;
- The term of ‘customs regime’ was changed for ‘ customs procedure’;
- A new term, ‘express cargo’, was introduced;
- Such terms as ‘free circulation’, ‘status of goods and vehicles for customs purposes’, ‘customs clearance’ were excised.
The Customs Code of the Customs Union provided for new forms of customs control:
- Account of goods under customs control;
- Examination of the goods accounting and reporting system;
- Customs audit (conducted both in-office and on-site one) instead of customs examination.
The Customs Code of the Customs Union now comprises a chapter that regulates procedures of seizure of goods and respective papers in the course of the exercise of customs control.
Declaring goods at the customs should be made solely in writing and in the electronic form with the use of the customs declaration. The oral and tacit forms of declaring goods are not permitted.
For the sake of encouragement of export of hi-tech goods, the Code provides for a reduced and closed list of documents to be submitted along with the declaration on such goods to make them eligible for the customs export procedure.
The Customs Code also provides for a possibility to identify supranational areas of risks which may prove sensitive to all the Union member states. Such areas will be identified by the Commission of the Customs Union.
When compared with the Tax Code of RF, timelines of customs authorities’ various operations underwent modification. For instance, they were reduced with regard to the following operations:
RUSSIAN ECONOMY IN trends and outlooks - Release of goods – from 3 days to 2 days, while as to goods exported from the Customs Union’s territory and exempt from export customs duties, the timeline now is 4 hours;
- Registration by the customs agency of the transit declaration – from 2 hours to 1 hour;
- The maximum term of extension of release of goods was reduced to 10 days from the date following the date of registration of the customs declaration; the document also unequivocally set conditions of such an extension - namely, the need to exercise or complete a form of customs control.
- The following timelines were extended:
- Submission of goods to the customs office under the procedure of their declaring in advance – from 15 to 30 days;
- Processing of goods in the customs territory – from 2 to 3 years;
- The term allowing to place under the customs procedure of re-export the goods earlier placed under the customs procedure of release for the domestic consumption – from months to 1 year.
The document also set timelines with regard to processes for which timelines had not earlier existed:
- The timeline of organization of customs escort by the customs office (within 24 hours from the moment the decision was made);
- The timeline of registration or refusal of registration of the customs declaration (no more than 2 hours from the moment it was submitted; in Russia’s Customs Code, the respective timeline was the day of receipt of the customs declaration by the customs agency);
- The timeline of completion by the parties concerned of operations relating to placement of goods under temporary storage or their declaring at the customs (3 hours from the moment of presentation of goods).
As well, changes affected matters associated with the enforcement of customs procedures.
For instance, the procedure of the internal customs transit was excised, and the goods transited across the customs territory, including those shipped from one domestic customs authority to another one, will be placed under the customs transit regime (procedure). Presently the shipment of goods starts right at the Customs Union’s external border and extends through its recipient’s location, regardless of his state of residence. Meanwhile, transport operators, including customs ones, enjoy the right to move across the whole territory of the Customs Union without being subject to the intra-state control in the territory of each of the Customs Union member states. At the same time, the railroad operator in the peremptory order is exempt from depositing a shipment guarantee.
Yet another peculiarity of the Customs Code of the Customs Union lies in the possibility for a concurrent placement of goods under two customs procedures– that is, customs transit and re-export (provided the obligatoriness of exportation of the goods in question) or customs transit and re-export (in the cases set forth by the CC of CU).
Substantial changes occurred with regard to activities relating to running registers. The customs authorities of each Union member state maintain registers of entities that carry out operations in the customs business area. The Commission of the Customs Union forms common registers of such entities at the supranational level. That said, the customs authorities were not tasked to conduct registers of banks, credit organizations and insurance companies.
The conditions of inclusion of entities in the registries were modified too. For instance, there appeared requirements on the absence, as of the date of addressing the customs agency, Section 4.
The Real Sector of the Economy of unredeemed arrears with regard to customs payments and fines, and facts of imposition of administrative sanctions for abuses in the customs business area within 1 year from the date of the previous addressing the customs agency. Meanwhile, the insurance contract against torts liability risks was crossed out from the list of conditions under which entities can be included in the register of customs transport operators.
Another novelty became a possibility for establishment by the national law of instances and procedures of suspension and renewal of legal entities’ operations in the capacity of customs representatives, owners of a temporary storage warehouse (TSW), customs warehouse and duty-free stores, and authorized economic operators.
The Customs Union law introduces a new model – namely, the Institution of the authorized economic operator (AEO), which is supposed to simplify relationships between bona fide participants in foreign trade and customs authorities. Specifically, a procedure of release of goods prior to submission of the customs declaration and temporary storage of goods in-door, outdoor and in other AEO’s territories without including the AEO in the register of owners of TSWs is provided for AEOs. The Institution of AEO rests upon principles stipulated in the 1973 International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention), and it has already been long practiced in the EU countries.
The applicant for the AEO status should meet certain criteria and comply with strictly set rules. Specifically, to become an AEO, a firm should: pledge a Euro 1 mln.- orth collateral with regard to payment of customs duties and taxes (for production companies and (or) exporters whose products are exempt from export customs duties, the respective amount is Euro 150,000 ); have at least 1-year long record of operations in the foreign trade area; have no outstanding liability on customs payments, tax arrears or facts of being brought to responsibility for abusing customs rules (eg. unveracious declaring) for 1 year.
Not only did changes affect the conduct of the register of customs business operators, but the one of intellectual property objects. In addition to national registers, the Union member states provided for conduct of a single customs register of intellectual property objects (in addition to national ones).
The adoption of the new, common, customs law does not mean liquidation of the national ones. Thus, on 29 December 2010, the Act ‘On customs regulation in Russian Federation’ came into force. The Act became a part of the Customs Union law and comprises provisions and requirements of the Union’s Customs Code.
The Act ‘On customs regulation in Russian Federation’ was designed with account of modern trends of development of customs operations, in particular those associated with simplification of export of hi-tech goods and optimization of customs operations. Behind the adoption of the Act lies the fact that the Customs Code of the Customs Union and the Union member states’ international agreements comprise over 200 references to the three states’ national law, while the Act includes a maximal number of provisions of direct force, while reference provisions are used mostly with regard to technological matters associated with completion of customs operations.