The Custom Union of Russia, Belarus and Kazakhstan

Description

The Customs Union (hereinafter – CU) was established between Belarus, Kazakhstan and Russia on the basis of the Eurasian economic community (EurAsEC) and is based on  a system of treaties between or with participation of  CU members which have been concluded since mid 90-s.
In order to reach this aim the following major tasks were to be fulfilled:
•         adoption of common external tariff and common system of non-tariff regulation of foreign trade;
•         adoption of common rules of determination of country of origin, customs valuation, trade data methodology and customs rules and procedures;
•         formation of executive bodies of customs union which will execute their powers as determined by the CU members.
 
The legal basis of  CU consists at present of more than 50 international agreements concluded by CU members.
 
Decision-making
Decisions with respect of activities within the CU  are taken in accordance with CU agreements by the following CU bodies:
·         the board of heads of states, which meets once a year;
·         the board of heads of governments, which meets twice a year; 
·         the commission of customs union, which consists of the deputy heads of the governments and meets monthly.
 
The commission of the Customs Union was established by the heads of the states of CU-members in 2007, in order to ensure functioning and development of the customs union. The commission has to:
•         take regulatory decisions in areas assigned to it by the treaties (from 1 January 2010 – the Common external tariff and the Common system of non-tariff measures);
•         ensure execution of decisions taken by the boards of heads of states and heads of governments;
•         supervise  implementation of commitments under international treaties within the CU;
•         cooperate with the executive bodies of CU members within the scope of its (commission’s) powers determined by member-countries;
•         provide support of the  dispute settlement procedures  between CU members;
•         provide recommendations to the boards of heads of states and heads of governments on issues concerning functioning and development of the customs union.
 
The issues brought to the commission are to be resolved through voting procedure. The votes are distributed in the following way: Russia - 57%, Kazakhstan - 21,5%, Belarus - 21,5%. Depending on the nature of the issue the decision can be taken by 2/3 votes (qualified majority) or by consensus. If qualified majority or consensus (if required) is not established, the commission has the right to propose the issue to be dealt with by the board of heads of governments or heads of states.
 
The secretariat of the commission is in charge of organization of functioning of the commission and technical support. The Secretariat is headed by executive secretary and counts for around 70 persons of stuff.
 
The common external tariff is established by the decision of the commission. It is based on 2007 HS nomenclature and contains 11 147 tariff lines. The common external tariff includes 9 248 ad valorem, 157 combined and 1742 specific rates of duties.
 
The 0% rates are applied in the following HS groups:
•         01 – live animals (lines 0101 10 100 0, 0102 10 100 0, 0105 1 110 0, 0105 19 900 0)
•         08 –  edible fruits and edible nuts; peel of citrus fruits or melons (lines 0802 11 100 0, 0802 22 000 0, 0809 30 100 0);
•         26 – ores, slag and ash  (lines 2614 00 900 0, 2615 90 100 0);
•         84 –  nuclear reactors, boilers, machinery and mechanical appliances thereof (lines 8407 90 500 0, 8411 82 200 1, 8412 90 400 3, 8413 70 210 0, 8415 20 000 1);
 
The highest rates are applied in the following groups:
•         02 – meat and edible meat offal (lines 0201 10 000 9 – 50%, but not less than 0,2 EURO per kg, 0203 19 110 9 – 75%, but not less than 1,5 EURO per kg, 0207 14 700 9 – 80%, but not less than 0,7 EURO per kg); 
•         21 – miscellaneous food products (line 2102 10 100 0 – 30%, but not less than 0,25 EURO per kg);
•         24 – tobacco and manufactured tobacco substitutes  (line 2402 10 000 0 – 30%, but not less than 3 EURO per 1000 units) .
 
 
Russia:
Russia has increased import tariffs in the format of the CU on about 14% of its import tariff lines: certain meat products, finished preserved meat products, yeast, certain articles of apparel and clothing accessories
Russia has decreased import tariffs on approx. 4% of its import tariff lines: exotic fruit concentrates, materials for photography, wool and fabrics, pharmaceutical substances, parts of footwear, electro-mechanical appliances.
The majority of its tariff lines (about 82%) have not been changed.
 
Belarus:

Belarus has increased import tariffs on about 7 % of its tariff lines: certain meat products, finished preserved meat products, certain positions for metals, motor cars.
Belarus has decreased import tariffs on approx. 18% of its tariff lines: articles of apparel, carpets, footwear of leather and textile, machinery and mechanical appliances, pharmaceutical substances
About 75% of the tariff lines were not changed.
 
Kazakhstan:

The most significant import tariff changes happened in Kazakhstan.
Kazakhstan has increased import tariffs on about 10% of its tariff lines: group for means of transport (including vehicles), wood, refrigerating equipment, pharmaceutical preparations, electro-mechanical domestic appliances, footwear and the articles of apparel
Kazakhstan has decreased import tariffs on approx. 45% of its tariff lines: several agricultural products , hides and skins, optical medical or surgical instruments and appliances.
Only about 45 % of Kazakh import tariff lines were not changed.
 
The stages of the CU formation:
•         by January 1, 2010 the common external tariff, common system of non-tariff measures are to be enforced;
•         by July 1, 2010 the customs code of the customs union is to be enforced; customs clearance of goods circulating between the territories of CU members is to be abolished; all the tariff and non-tariff measures implemented between country - members are to be abolished;
•         by July 1, 2011 all kinds of control are to be abolished on the borders between country - members.
 
Russia used the creation of the Customs Union with Belarus and Kazakhstan to consolidate most of the temporary duty increases introduced during the economic crisis. Those unilateral increases are now a part of the Single Customs Tariff of the Customs Union. Moreover,  the Customs Union has not only consolidated these tariff rates but has also widened the scope of these trade restrictions to the other two partners (Belarus and Kazakhstan). The Customs Union and its further implementation leaves many questions open as to the future functioning of the new trade regime, including the scope of export duties, technical regulations (TBT) and sanitary and phytosanitary requirements (SPS) and trade defence instruments.

"This (the Customs Union) remains by far the most striking example of entrenching the crisis-related measures in the permanent trade environment, with long-term implications for the resumption of trade flows with Russia." ("EU calls on trading partners to remove protectionist barriers", Reference: IP/10/632   Date: 28/05/2010)
 
 

Source:

The official website of the Customs Union - http://www.tsouz.ru/Docs/IntAgrmnts/Pages/Perechen_MDTS.aspx
the Single Customs Tariff of the Customs Union (27 November 2009):
http://www.tsouz.ru/Docs/Kodeks/Pages/default.aspx

Government Response: