New landmark for Customs Union as internal customs control abolished


New landmark for Customs Union as internal customs control abolishedOn July 1, the development of the Customs Union has reached its next landmark, the actual formation of the unified customs territory which starts operating from 1 July 2011. That means that customs control on the inner borders of the three countries will be abolished, while veterinary, phytosanitary, and transport control will be moved to the Union’s external borders, the press service of the Kazakh MFA reports.

Kazakhstan, Russia, and Belarus, accelerated their longstanding talks over joining together to form a Customs Union, with the aim to connect the 170 million people of the region together into a single market economy.

The Customs Union between the three states materialised in July 2010, when the countries ratified the Customs Code introducing a single standard for the goods of the Customs Union member states, allowing free movement of goods throughout the territory of the three founding countries.

The union has gotten off to a good start with trade volumes doubling year-on-year between Kazakhstan, Russia and Belarus and customs procedures between them have become more tangible and transparent. Only one year after the formation the Union has proved many pessimist predictions wrong where the exports and imports of all the members have shown very impressive results.

In the first quarter of this year, Kazakh imports from the CU grew by 46.7 percent, reaching US$ 3.2 billion, while Kazakhstan’s trade with Russia soared by 57 percent compared with the same period in 2010. Exports totalled US$1.9 billion during that time. In addition, the CU has also already confirmed Kazakhstan’s success in attracting investment from companies in other countries that would take advantage of Kazakhstan’s favourable business climate to use it as a base to sell their products in Russia.

The three CU states have a total combined annual trade volume of US$ 900 billion. The overall gross domestic product of Kazakhstan, Russia, and Belarus makes US$ 2 trillion per year, with combined annual industrial output of US$ 600 billion.  The oil reserves of the three states amount to 90 billion barrels and total annual agricultural output is US$ 112 billion. Together the CU members produce 12 percent of the world’s annual production of wheat and 17 percent of annual global wheat exports.

In addition, on July 1, Kazakhstan and China open a major transit centre for trade at Horgos, in China’s Xinjiang province near the two countries’ common border, giving Chinese exporters an easy way into Central Asia and on to Europe, as well as Kazakh exporters, at the same time, a road into Asia. So thanks to the CU, Horgos will essentially also become China’s gateway into the Russian market. Furthermore, Kazakhstan intends to set up a 6,000 hectare Special Economic Zone at Horgos, drawing industry and manufacturers to create a larger market of “Made in Kazakhstan” products for export.

The creation of a Single Economic Space with the free movement of goods, services and labour in January 2012 is billed as the next stage of the three countries’ integration process.