The draft Customs Code was approved by the Commission, but received a few comments and amendments and is currently being finalized.
In the course of the meetings the scheme of customs payments distribution between national budgets of the member countries was agreed. These will be the payments collected for the goods imported into their common customs territory. Two options were discussed. The first option stipulated the RF Treasury becoming the administrator and the distributor of the payments. The second plan was proposed by Kazakhstan and supported by negotiators from Belarus, it stipulated a certain proportion of distribution the customs payments and other fees among the member countries irrespective of where and in which particular country they were paid. Eventually, the second option was adopted.
The approved scheme will be in effect for 18 months as a pilot one (starting from January 2010 and finishing in June 2011). All this time the member countries will be jointly monitoring collection of import duties by national Customs of Russia, Belarus and Kazakhstan and the procedure of mutual settlements between the countries.
During the meeting of the Supreme Body of the Customs Union which took place in Minsk on November 27, 2009, the presidents of Belarus, Russia and Kazakhstan signed a set of documents authorizing the creation of the Customs Union starting from January 1, 2010. This package of documents comprised 15 agreements, including the Customs Union Agreement, the Standard Customs Tariff Agreement, the Standard Product Mix Agreement and other documents forming the legal framework for interaction between the member countries in the sphere of trade and economics in general. A number of foreign trade regulations were discussed at the meeting, including keeping the statistics, functioning of the uniform system of prohibition and limitation, staged cancellation of economic restrictive measures in the sphere of mutual trade between the three member countries.
RUSSIAN ECONOMY IN trends and outlooks Starting from January 1, 2010, the Standard Customs Tariff for the Customs Union of Russia, Belarus and Kazakhstan came into force. The Standard Customs Tariff (SCT) is the first document for the Customs Union to directly pertain to all the market participants. It lists the categories for all the commodities which may be imported into or exported from the member countries. Each commodity was assigned a certain code being the basis for the Customs to calculate the duty. This document sets the rates for import duties. Export duty rates shall be established separately by other documents.
This is how the SCT import duty rates are different from those in Russia: for household appliances and electronics they were decreased, for big buses and biomedical engineering – decreased, for clothes – increased, for certain types of pearls and diamonds – decreased, for certain types of pipes and scrap metal – changed. Coding was partially changed (SCT codes are different from Foreign Economic Activity Commodity Classification of the RF).
Despite the uniform Customs Code and Standard Customs Tariff, exemptions and exceptions are inevitable for each country.
Due to introduction of the Standard Customs Tariff starting from January 1, 2010, and other instruments for foreign trade regulation within the Customs Union, consultations will be held between the major partners about changing the trading regime.
Foreign trade regulatory function was transferred to the Customs Union Commission starting from January 1, 2010. It will be in charge of changing the import duty rates for the three member countries, as well as for enacting the Standard Product Mix for Foreign Trade, setting tariff privileges and quotas, defining the system of tariff preferences, introducing non-tariff regulatory measures, carrying out specialized protective anti-dumping and compensatory investigations. The Commission resolutions shall apply to the territories of all three countries.
During 2009 the format of Russia and other countries of the Customs Union joining WTO was changed a number of times. Before June 2009 there still were 6 systemic outstanding issues at the negotiations about Russia joining WTO, the key of them being the level of government aid to agricultural enterprises, meat import regime, export duties and the activities of government-owned trading organizations (the pricing commitments were actually squared up with the EU during the St.-Petersburg Forum, at the same time basic resolution pertaining to transparency obligations were agreed with the USA).
On June 17, 2009, during the informal consultations in Geneva Russia, Belarus and Kazakhstan notified the WTO member countries about their inclination to start practical steps for setting up the Customs Union starting from January 1, 2010, and suspended their negotiations on the issue of joining WTO until developing a common position on the format and content of further process of joining WTO.
In accordance with the decisions of the Customs Union Commission of August 12 2009 the single negotiation group was formed to represent Russia, Belarus and Kazakhstan on the issue of joining WTO.
At bilateral and multilateral consultations in Geneva in October 2009 the common position of Russia, Kazakhstan and Belarus was presented, according to which the three countries will be joining WTO subject to agreeing the terms between themselves and completely harmonizing them on the issues that are falling under the Customs Union competence. The Customs Union delegation notified the WTO members that the countries are to continue their accession process in the capacity of sovereign countries, because any other approach might be associated with some major judicial and procedural problems and may significantly delay the negotiations. The representatives of WTO Work Groups for accession of Russia, Kazakhstan and Section The Real Sector Belarus shall be making the decision on resuming the negotiations upon reviewing the data about the Customs Union. In the 4th quarter of 2009 the members of the single negotiation group were having expert consultations with WTO Secretariat and the key partners.
During the recent times WTO has been undergoing a systemic crisis worsened by global economic commotion. The WTO development agenda – DOHA negotiations started in 2001 – is stuck due to the inability to agree the interests of the developed and emerging economies.
The first group would like to maintain their subsidies (mainly in agriculture), while as the second group is not ready to unreasonably open their markets. The 7th WTO ministerial conference in December 2009 did not contribute to breaking this deadlock, though the appeals to finish the DOHA round in 2010 were heard all the time.
The only practical outcome of the conference was signing the agreement between emerging economies stipulating 20% customs tariffs decrease with regards to 70% of imported goods. The key objective of the agreement is to give the impetus to South-South trade relations and to demonstrate the solidarity of emerging economies conventionally referred to as “the southern countries’, while as wealthy “northern” economies are not able to reach any agreement and would not meet halfway.
It’s quite possible that in future WTO will be developing through such regional or group agreements. The Customs Union may then become one of such blocks inside WTO.
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