In Minsk, Nazarbayev Voices Benefits, Drawbacks of Customs Union

President Nursultan Nazarbayev of Kazakhstan voiced concerns about the process of integration at the meetings of the Supreme Eurasian Economic Council and the Council of Heads of States of the CIS (Commonwealth of Independent States) during his working visit to Minsk from Oct. 24-25. The president noted the importance of the meeting to jointly address emerging issues in the new union.

“We have already noted positive results of our cooperation: trade turnover between our countries is increasing despite the decline in world prices for our main export products. The share of the Customs Union (CU) countries of Kazakhstan’s foreign trade reached 18 percent of the total volume. But we have to speak frankly about the drawbacks, which need revisiting, including problems within the Eurasian Economic Commission (EEC). The free flow of goods has created more competition between Kazakhstan’s producers and enterprises of the CU and the EEC. Foreign trade imbalances are growing. In 2012, compared with 2009, there was a twofold increase of imports of processed goods from the CU. To change this situation may require a number of major joint investment projects,” Nazarbayev said.

The president drew attention to the fact that the share of Kazakhstan’s imports from the EEC has increased from 32 percent of the total volume in 2009 to 40 percent in 2012. At the same time, there remain serious obstacles to Kazakhstan’s products reaching the markets of Russia and Belarus, which use non-tariff and technical barriers, excessive sanitary and phytosanitary standards and measures for certification, licensing and quotas, requirements for unifying technical regulations.

“Kazakhstan meat products are a no-go in Russia at the moment, as they are subject to rules that are not in the sanitary certificates of Kazakhstan. There has also been a decrease of deliveries of Belarusian food products to the Russian market with the introduction of new technical regulations in this area. Expanding the scope of technical regulations in the EEC is contrary to Kazakhstan’s policy of improving the business environment. There are issues in the electric energy sector, as at the conclusion of the relevant EEC agreement a special regime was provided associated with the electric power system of Russia. As a result, there is no free access to consumers and electricity suppliers. Kazakhstan cannot transit electricity it wants to sell to Belarus through the territory of Russia,” Nazarbayev noted.

In addition, Nazarbayev emphasised that participants of foreign trade activities largely criticised the CU Customs Code and said it should be liberalised and customs procedures at the CU borders simplified.

“I believe that the activities of the Eurasian Economic Commission should focus on the elimination of these disparities and barriers to mutual trade among the CU states. The EEC is a supra-national body set up to ensure the conditions for the functioning of the Customs Union and the Common Economic Space (CES), and to develop proposals for the further development of integration. However, there is a clear politicisation and dissipation of resources and efforts in the work of the commission to deepen the integration processes, despite the presence of unresolved issues within the formation of the CU and the CES set by the heads of states. We should not allow violations of CES principles and regulations in commission activity. The Russian members of the CES board participate in meetings of the government of the Russian Federation and get corresponding tasks, though under the treaty on the commission, the members of the board are not accountable and are not subject to national governments,” the Kazakh president said.

Nazarbayev noted that by May 2014, all issues in the fundamental treaty governing the functioning of the Eurasian Economic Union (EEU) should be settled. Nazarbayev stressed that there is no need to develop a cumbersome treaty that would be difficult for ordinary citizens to understand. He also said it was necessary to focus on finalising the activity on agreements already reached in the field of transportation of oil and gas, rail fares, electricity. The president said that the main focus should be on eliminating exemptions and restrictions on goods and services, not expanding the powers of the commission, forming a single financial market and creating new supranational structures that the countries are not ready to discuss at the current stage of integration. Nazarbayev also noted that the expansion of the CU and CES should be made according to rules that apply to all equally. In particular, Kazakhstan welcomes the overtures from Kyrgyzstan and Armenia, he said, but their accession should take place according to agreed-upon procedures fixed in the treaty.

“Prime Minister Recep Tayyip Erdogan of Turkey has requested that the prospects of his country’s accession to the CU and CES be considered. I announced the same position to him,” Nazarbayev said.

In addition, the president raised the issue of Kazakhstan’s accession to the World Trade Organisation (WTO), which requires the harmonisation of the commitments of Kazakhstan and Russia to the member countries of the WTO.

“Kazakhstan plans to join the WTO before the establishment of the Eurasian Economic Union. Otherwise, WTO member states could review previous agreements that would delay our entry for several years. Today, we rely on the support of Russia. A constructive position on this issue would contribute to the speedy accession of Kazakhstan to the WTO, as well as the smooth functioning of the CU and the CES,” Nazarbayev said.

Kazakhstan’s president drew attention to the need for the Kazakh-Russian Joint Commission to conduct negotiations with the European Union and the U.S. on accession to the WTO.

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