The Customs Union is an association of sovereign states for joint activities in the field of customs policy. Within the established 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 member countries of a single customs tariff and other measures designed to regulate trade with third countries. As part of the association, customs duties and borders between participants are abolished.
The formation of the customs union is aimed at raising the economic level in the member states. Thanks to such a space, goods can move freely throughout the territory of the union with universal control. If the fact of export is confirmed by documents, then excise taxes need not be paid.
History of the Customs Union
The first customs union appeared in the XIX century, its participants were France and Monaco. At the beginning of the 20th 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 have concluded agreements implying cooperation and mutual assistance in customs matters. At that time, uniform methods, documents and forms of registration of goods were introduced. The association signs agreements to simplify customs clearance. Thanks to this, the advancement of goods is accelerated, the world market economy is strengthened.
Acceptance 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 contract. At the borders of the three states, the declaration and customs clearance was eliminated. A simpler movement of goods without clearance eliminates the cost. In addition, shipping costs are reduced.
In the future, a single economic space with a functioning services market will be formed in the customs territory. In addition to trade, the market includes services from many other areas of activity.
In 2014 and 2015, the Customs Union expanded due to the entry of new countries - Armenia and Kyrgyzstan. The emergence of new members of the organization made some important changes in the geopolitics of the region. In its new composition, the Customs Union allows increasing 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:
- Since July 1, 2010, Russia and Kazakhstan.
- Since July 6, 2010 Belarus.
- from 10.10.2014, Armenia.
- from 05/08/2015, Kyrgyzstan.
Candidates for joining the organization are Syria, Tajikistan, Tunisia, the 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 their positions will open economic prospects to more developed participating countries.
The main governing body in the CU is the International Council of Heads of State of the participating countries. A special commission of the Customs Union was also established as a permanent regulatory body.
In 2009, the organization’s governing structures conducted comprehensive measures to consolidate the legal and contractual basis of the Customs Union.
By the decision of the presidents of the participating states, an economic commission has been created that functions as a permanent regulatory body of 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, expenses on the creation, movement and processing of goods have significantly decreased.
- The costs of time and finances arising from bureaucratic procedures have decreased markedly.
- The number of mandatory customs procedures for importing goods from third countries has decreased.
- Enterprises of the participating countries have opened new markets for goods.
- 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 a refund of the amount of excise taxes paid in the presence of documentary evidence of export.
When goods are imported into the Russian Federation from Belarus or Kazakhstan, excise taxes and VAT are levied by Russian tax authorities.
When rendering services in 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, defined the Customs Union as another step towards creating a single economic space, which is the right form of economic relations between the participating states.
Within the framework of the Customs Union, the following are transferred from the amounts of import customs duties to the budget of 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 certification procedures for goods. A number of countries note that income and income are allegedly unfairly distributed among 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 infringement of its sovereign rights.
However, expert studies indicate that, for a number of reasons, the Customs Union is beneficial to its members to varying degrees.
