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Russia, Belarus and Kazakstan form customs union

Seija Lainela BOFIT senior economist 2010/08/03

Seldom in history has there been such a swift achievement of economic integration as the new customs union comprising Russia, Belarus and Kazakhstan. Planning of the union began in 2007 and detailed preparations commenced in 2009. In the summer of 2009 Russia’s Prime Minister, Vladimir Putin, announced that the three countries would form a customs union in 2010. The short timetable for realization of the customs union came as a big surprise.

Political leaders and officials in Russia, Belarus and Kazakhstan had about a year’s time to agree on the practical operations of the customs union. Not-withstanding the official launch of the union, it is not yet fully operational but is restricted in scope by a large number of transitional rules.

 

Multi-phased start-up

 

The customs union was established at the start of 2010 when a set of uniform import rules and, interalia, a licensing system entered into force. Russian officials however failed to put in place the necessary administrative rules on time, nor did the companies engaging in foreign trade have advance information on the operating procedures. For this reason, the flow of goods imports into Russia saw frequent interruptions in early 2010.

The actual start-up of the customs union occurred on 6 July when the member states signed a customs code defining the operational procedures of the union. Problems are sure to arise in the early stages because Russia’s national legislation for completing the customs code is still in progress. The Russian parliament is slated to approve the new customs legislation in the autumn, and in the interim both the customs union’s own code and a part of Russia’s old customs legislation are in effect. 

 

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