The Customs Union is an association of sovereign states for joint activities in the field of customs policy. Within the formed single territory, uniform customs taxes and economic restrictions apply, with the exception of protective, countervailing and anti-dumping measures.
The customs union implies the application by the member states of a single customs tariff and other measures designed to regulate trade with third countries. Within the framework of the association, customs duties and borders between the participants are abolished.
The formation of a customs union is aimed at raising the economic level in the member states. Thanks to this space, goods can move freely throughout the territory of the union with the effect of universal control. If the fact of export is documented, then excise taxes do not need to be paid.
History of the Customs Union
The first customs union appeared in the 19th century, France and Monaco were its participants. At the beginning of the twentieth century, Switzerland and the Principality of Liechtenstein agreed on a similar unification. In 1960, the European Free Trade Association was formed, abolishing customs taxes and trade restrictions between its members.
The EFTA member states entered into agreements implying cooperation and mutual assistance on customs issues. At that time, uniform methods, documents and forms of goods registration were introduced. The Association signs agreements to simplify customs clearance procedures. Thanks to this, the movement of goods is accelerated, the economy of the world market is strengthened.
Adoption of the Customs Union in the post-Soviet space
The decision to form a single Customs Union in the post-Soviet space was made on October 6, 2007 by the Russian Federation and the Republics of Kazakhstan and Belarus.
However, the customs territory of the participating countries began to function on July 1, 2010 in accordance with the customs code prescribed in the agreement. Declaration and customs clearance were eliminated at the borders of the three states. Easier movement of goods without registration eliminates costs. In addition, the cost of delivery of goods is reduced.
In the future, a Common Economic Space with a functioning market for services will be formed on the customs territory. In addition to trading, the market includes services from many other areas of activity.
In 2014 and 2015, the Customs Union expanded with the entry of new countries - Armenia and Kyrgyzstan. The emergence of new members of the organization brought about some important changes in the geopolitics of the region. In its new composition, the Customs Union makes it possible to increase the turnover of trade relations in the member states.
Composition of the Customs Union and governing bodies
Members of the Customs Union in the post-Soviet space:
- from 01.07.2010 Russia and Kazakhstan.
- since 06.07.2010 Belarus.
- from 10.10.2014 Armenia.
- since 08.05.2015 Kyrgyzstan.
Syria, Tajikistan, Tunisia are candidates for joining the organization, this issue will be considered in the near future. The expansion of the Customs Union will have a beneficial effect on the world market. In addition, the introduction of new countries by expanding positions will open up economic prospects for the more developed member countries.
The main governing body of the CU is the International Council of Heads of State of the member states. A special commission of the Customs Union was also established as a permanent regulatory body.
In 2009, the governing structures of the organization carried out comprehensive measures that made it possible to consolidate the legal and contractual basis of the Customs Union.
By the decision of the presidents of the participating states, an economic commission was created that performs the functions of a permanent regulatory body for supranational governance. In turn, this body is subordinate to the Supreme Eurasian Economic Council.
Advantages and disadvantages of the Customs Union
For business entities, among the main advantages of the Customs Union in comparison with the free trade zone are the following:
- Within the borders of the Customs Union, the costs of creating, moving and processing goods have been significantly reduced.
- The time and financial costs incurred due to bureaucratic procedures have significantly decreased.
- The number of mandatory customs procedures when importing goods from third countries has decreased.
- New markets for goods have opened up for the enterprises of the participating countries.
- There was a simplification of customs legislation in connection with its unification.
It is also worth noting that when exporting goods, a zero VAT rate is used and the amount of excise taxes paid is refunded if there is documentary evidence of export.
When importing goods into the Russian Federation from Belarus or Kazakhstan, excise taxes and VAT are levied by Russian tax authorities.
When providing services on the territory of the Russian Federation, the rates, tax base, collection procedure and tax benefits are determined in accordance with the current legislation of the Russian Federation.
Alexander Lukashenko, President of the Republic of Belarus, identified the Customs Union as another step towards the creation of a single economic space, which is the correct form of economic relations between the participating states.
Within the framework of the Customs Union, from the amounts of import customs duties, the following is transferred to the budget of the countries:
- RF - 85, 33%,
- Belarus - 4.55%,
- Kyrgyzstan - 1.9%,
- Kazakhstan - 7, 11%,
- Armenia - 1, 11%.
However, at the same time, the disadvantages of the Customs Union include poorly developed terms of trade and procedures for certification of goods. A number of countries note that income and income are allegedly unfairly distributed among the members of the union.
There was an opinion that the Customs Union is disadvantageous to the participants as a project and in general is a phantom, not viable as an artificial political entity. In particular, Kazakhstan made a claim about the infringement of its sovereign rights.
However, expert studies show that for a number of reasons, the Customs Union is beneficial to its members to varying degrees.
Internal conflicts
For a number of reasons, internal conflicts are ripening in the Customs Union. So, at the end of 2014, the import of meat from Belarus to Russia from Belarus of about 400 thousand tons was banned. The Russian side has introduced measures to tighten control of goods imported across the border of Belarus. Moreover, the latter contradicts the simplified rules for the movement of goods in the territory of the Customs Union.
Observers note the well-coordinated work of the Customs Union mechanism and the mechanism for re-exporting banned European goods to Russia. For example, the import of sea fish from Belarus, which does not catch it itself, increased to Russia by 98%.
The Belarusian president was outraged by such bans and accused the Russian authorities of violating the rules of the Customs Union, as well as of disregard for international rights.
According to the experts' conclusions, the rules of the agreement contain a clause according to which, if any restrictions are imposed on trade and transportation of goods by Russia, Belarus has the right to refuse to comply with the terms of the agreement.
As a result of internal contradictions in 2015, the Belarusian side returned border control to the Russian border, thereby violating the terms of the Customs Union agreement. Moreover, the authorities of the republic announced the possible abandonment of the ruble as a settlement currency and the resumption of settlements in US dollars. According to Russian experts, in such a situation, the entire regional integration is under attack.
