Customs Union - what is it? States of the Customs Union

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

The Customs Union is formed to create a single territory, and customs taxes and economic restrictions apply within it. The exception is compensatory, protective and anti-dumping measures. The customs union implies the use of a single customs tariff and other measures designed to regulate trade in goods with third countries.

Definition

The Customs Union is an association of several member states that carry out joint activities in the field of customs policy. Customs fees and borders between participants are also abolished, and a single customs tariff is introduced for other states.

History

The first such union arose in the nineteenth century, to which France and Monaco became participants.

At the beginning of the twentieth century, those who concluded the Customs Union were Switzerland and the Principality of Liechtenstein. One can also cite as an example the conclusion in the twentieth century of the General Agreement on Tariffs andtrade, in 1957 the European Economic Community was established, which eliminated all restrictions on trade between members, and a common customs tariff was created for trade with third countries. In 1960, the European Free Trade Association was formed, which abolished customs taxes and quantitative restrictions on the trade of members of the association.

In the EEC and EFTA countries there are still differences in customs rules and there are no common duties in trade, in the socialist countries there is no Customs Union, but agreements have been concluded that involve cooperation and mutual assistance on customs issues.

Single documents, methods and forms for clearance of both exhibition and fair cargo were introduced. Agreements were signed to simplify their clearance at customs. These agreements speed up the movement of goods, strengthen the global market and prevent all kinds of violations.

In 2010, a single Customs Union was created, which included Russia, Kazakhstan and the Republic of Belarus. This implies the creation of a single customs territory and provides for all control functions.

This year Kyrgyzstan joined the Customs Union, while Russia is strengthening its position.

Acceptance of the Customs Union

On October 6, 2007, an Agreement was signed between the Russian Federation, the Republics of Belarus and Kazakhstan on the transition to a single Customs Union.

From July 1, 2010, in accordance with the customs code, a single customs territory began to functionthree participating countries.

Eliminated declaration and customs clearance at the borders of these three states. Goods can be moved without registration, which eliminates the occurrence of costs. They move much easier and reduce shipping costs.

In the future, the Common Economic Space (CES) will emerge on the territory of the union with a functioning single market for services, which, in addition to trade, includes services and many other areas of activity.

2015 the year of the Customs Union was marked by a new event. The entry of another member of the organization introduces some changes in geopolitics. And the new composition of the Customs Union organization (Kyrgyzstan, Russia, Kazakhstan and others) will expand trade relations in the CU countries.

General information

The Customs Union is an association aimed at raising the economic level in the member states. The created market has more than 180 million people with a cash turnover of 900 billion dollars.

The conclusion of the Customs Union allowed goods to move freely throughout the territory with universal control.

If the fact of export is documented, then there is no need to pay excises, and the VAT rate is zero.

When goods are imported into Russia from Kazakhstan and Belarus, the Russian tax authorities levy excises and VAT. The customs union is an easy and profitable form of interaction.

Composition

Membersorganizations of the Customs Union (Customs Union):

- Russia and Kazakhstan (since 2010-01-07).

- Belarus (from 2010-06-07).

- Armenia (from 10.10.2014).

- Kyrgyzstan (from 2015-08-05).

Candidates to join:

- Tajikistan.

- Syria.

- Tunisia.

Accession to the Customs Union of candidate countries is being considered in the very near future. The expansion of the organization can improve the global market. The entry of candidate countries into the Customs Union (Tajikistan, Syria, Tunisia) is a prospect for more developed countries by expanding their positions.

Governing Bodies

The supreme governing body is the International Council of Heads of State and Government. Also, according to the agreement, the Commission of the Customs Union was established, which is a permanent regulatory body.

The supreme bodies of the institution in 2009 carried out comprehensive measures that made it possible to consolidate the contractual and legal basis of the Customs Union.

By decision of the presidents of the member states of the union, an economic commission was established as a permanent regulatory body of supranational governance, which is subordinate to the Supreme Eurasian Economic Council.

Key Benefits

The main advantages of the Customs Union for business entities in comparison with the free trade zone are:

• In the territories of the Customs Union, the costs of creating, processing and moving goods have significantly decreased.
• Expense of time and finances,arising from administrative barriers have decreased markedly.
• The number of customs procedures required for importing goods from third countries has decreased.
• New markets have become available.
• Unification of customs legislation led to its simplification.

Customs Union and WTO

In the process of creating the Customs Union, many concerns were raised about the conflict of CU rules with WTO rules.

In 2011, the organization brought all its rules to full compliance with WTO rules. In the event that the states of the Customs Union join the WTO, WTO rules will be considered a priority.

In 2012, Russia joined the WTO, which led to the updating of the Common Customs Tariff for the countries of the Customs Union in accordance with the requirements of the WTO. The level of 90 percent of import duties remained the same.

Internal conflicts

In November 2014, the import of meat from Belarus to Russia was banned. The volume was about 400 thousand tons. At the same time, the Russian side took measures to tighten control of goods that cross the border of Belarus, which is contrary to the simplified rules for the transportation of goods in force on the territory of the Customs Union.

Observers noted a good combination of the Customs Union mechanism and the mechanism for re-exporting banned European goods to Russia. For example, imports of landlocked fish from Belarus to Russia increased by 98 percent.

BelarusianPresident A. G. Lukashenka was outraged by the prohibitions of the Russian side and accused Russia of violating the rules of the Customs Union and disregarding the norms of international law.

According to observers, the rules contain a clause according to which, in the event of restrictions imposed by Russia on trade and transportation of goods, the Belarusian side has the right not to comply with the terms of the agreement.

In 2015, Belarus returned border control to the Russian border, thereby violating the terms of the EAEU agreement. It was also announced that the ruble was likely to be abandoned as the settlement currency and settlements in US dollars would be returned. Russian experts believe that in such a situation, regional integration is at risk.

Criticism

In 2010, opposition forces attempted to organize a referendum for the denunciation of the agreements. Kazakhstan made a claim about the infringement of sovereign rights.

The Customs Union also made critical comments on the following points:

• The terms of trade and product certification are poorly developed.
• The terms of the WTO were imposed by Russia on Kazakhstan and Belarus, which are not members of the above organization.
• Revenues and revenues allegedly unfairly distributed among member countries.
• Customs union is unprofitable as a project for current and potential participants.

Meanwhile, studies indicate that for a number of ideological reasons, the Customs Union is beneficial to its members to varying degrees.

The opinion was also expressed that the Customs Union is a phantom, it is not viable as an artificial political entity.

Public opinion

In 2012, the Center for Integration Studies at the Eurasian Development Bank conducted a sociological survey. The CIS countries and Georgia participated in the survey. The question was asked: "How do you feel about the fact that the economies of Belarus, Kazakhstan and Russia have united?" The following responses were received from countries that are members of and claim to join the customs union:

- Tajikistan: “positive” 76%, “indifferent” 17%, “negative” 2%.

- Kazakhstan: positive 80%, indifferent 10%, negative 5%.

- Russia: positive 72%, indifferent 17%, negative 4%.

- Uzbekistan: “positive” 67%, “indifferent” 14%, “negative” 2%.

- Kyrgyzstan: “positive” 67%, “indifferent” 15%, “negative” 8%.

- Moldova: “positive” 65%, “indifferent” 20%, “negative” 7%.

- Armenia: “positive” 61%, “indifferent” 26%, “negative” 6%.

- Belarus: “positive” 60%, “indifferent” 28%, “negative” 6%.

- Ukraine: positive 57%, indifferent 31%, negative 6%.

- Azerbaijan: “positive” 38%, “indifferent” 46%, “negative” 11%.

- Georgia: positive 30%, indifferent 39%, negative 6%.

Expert opinions

According to the Secretary of the Commission of the Customs Union Sergey Glazyev, the Customs Union is beneficial both in terms of geopolitics and in terms ofeconomy. This is an important achievement that brings many undeniable benefits to participating States.

According to Andrey Belyaninov, head of the FTF of Russia, at a conference in 2009, the Customs Union will create problems for business and customs authorities at the beginning of its functioning, but this is nothing more than a transitional period.

President of the Republic of Belarus Alexander Lukashenko defines the Customs Union as the next step towards creating a common economic space, which will be the correct form of economic relations between the participating countries.