Belarus-Russia-Kazakhstan Customs Union on the path of continued integration

Russian daily “Kommersant” reports that the customs officials from Belarus, Kazakhstan and Russia passed through the M-1 road last week (Moscow-Smolensk-Minsk-Brest), which handles approximately 30 percent of all imports entering the Russian Federation by road. One of the department heads of the Russian Customs Authority stated that the advance notification of the goods prior to their reaching an entry point of the Customs Union will remain an issue at least until 2015, as the customs authorities of the three countries currently require different forms of notification and the work on the single customs portal will not begin for another two years.

Transit confirmation is another practical issue that requires attention, as it is required for the exporter to receive a VAT refund. Transit confirmation for the goods being transited through the Russian Federation alone is issued much faster than that for the goods transited through the entire three-country Customs Union, incurring costs for businesses. This is primarily true for Kazakhstan, as the exchange of information with the customs authority of that country has not been fully automated. Russia’s Deputy Minister of Transport, Mr. Sergei Aristov, noted another practical problem affecting the full integration of the customs union. In the period from January to October 2012, the Russian Customs Authority found that 33 percent of freight vehicles entering the Customs Union through Belarus had some sort of deficiency, such as a lack of transport license, excessive load, etc.

Customs officials addressed the “residency principle”, requiring that the unloading of the goods imported into the customs union can be made only in the country of the importer’s residence. Businesses, however, would like to have the possibility of importing goods into any of the three countries within the Customs Union, regardless of their residency – so that a Russian company, for example, could import and unload goods in Kazakhstan. Such is the situation in the European Union, where an importer can register and unload the imported goods in any of the EU member countries. Belarus is in favor of such a move, as it is already negotiating a similar agreement with the EU that would lead to mutual recognition of authorized customs operators. Russian officials are not in favor of removing the residence requirement before certain aspects of tax, foreign currency and other legal standards have been harmonized. The Governments of the three countries have been informed of these issues and are expected to resolve them before the foundation of the Euro-Asian Economic Union, a broader economic integration of the three countries, in 2015.

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