Customs Union to provide new opportunities – expert of Kazakhstan Institute for Strategic Studies


Kadyrzhan Smagulov

Customs Union to provide new opportunities - expert of Kazakhstan Institute for Strategic StudiesNew 2010 year marks a new milestone in the development of integration processes on the post-Soviet space – the Customs Union of Kazakhstan, Belarus and Russia has started functioning. This event has caused a wide response not only in these three countries.

Head of the Department for Economic Studies Anar Rakhimzhanova from the Kazakhstan Institute for Strategic Studies under the President of Kazakhstan, tells about the advantages and new opportunities for Kazakhstani people provided by newly established Customs Union.

The Customs Union will start its real activity since July as soon as the borders among the three countries are opened.  Since the beginning of 2010 the major change will be observed in the tariffs of customs clearance: the common customs tariff (CCT) has been approved. In comparison with the previous tariff with its zero rates approved in 2006 the new tariffs have been raised by 5%. In average the import duties will rise by % but we cannot say that economic goods will disappear from market. The situation will be the following: the sellers will have to decrease their extra charges. In this case the competition with Russian goods at the local market will take place and it will happen at the end of this year or a year later.

Agricultural goods, primarily, grain and meat and milk products are one of the export priorities for Kazakhstan to the markets of Russia and Belarus. What can you say about this?

There is a list of goods which are subject to quota allocation for importing to the territory of the Customs Union. Meat and milk products rank the first. The quota has been already fixed and national manufacturers have to compete with partners within the Union. There must be more quality goods or extra-packing, speed of delivery, and etc. The choice of market is of great importance too, for example, not the central regions of Russia, but the Siberian ones where cattle breeding is not developed but the product supply of this sphere is necessary. Besides, Kazakhstan has a direct transport access to these regions.

What other positive moments concerning Kazakhstan’s joining the Customs Union could you point out?

One of the principal purposes of the Customs Union is the creation of the Common Economic Space. Now these three countries entering the common customs territory have a possibility to create joint production facilities that is to develop production cooperation, integration of enterprises as well as creation of full-fledged chains as: extraction of raw materials, production and selling. The advantage of the customs territory is that it is the transit one. Now the Asian manufacturers will be interested in opening of new production facilities in Kazakhstan in order to bring output production to completion and then supply it to Europe as far as it will pass custom clearance only one time.

On this basis can Kazakhstan turn into one of the leading transit points which connect Europe and Asia, North and South?

There is such a definition in logistics as hub. Kazakhstan can become a large hub but certain conditions must be created for this. First and foremost, there must be infrastructure to provide production with necessary volume of products with the participation of our country. In other words, we cannot just give the territory, electric power, but to provide employment of our working population with the use of local raw material in order to increase Kazakhstan’s content as much as possible.

Opening of the boarder between member-states of the Customs Union will lead to safe passage for goods and working power.  How do you think will this cause the overflow of qualified national specialists to Russia?

The outburst of such process can possibly take place but everything depends on how attractive labor conditions in Russia for our professional will be, or otherwise – our labor conditions for Russian and Belarusian working force. If we compare the salary rate for some branches, for example, for the technical ones, we should know the salary rate in our country is higher than in Russia. Concerning the overflow I can only say that it existed long time before and it is another precondition for creation of the Common Economic Space. So, the issues of coordination for tax and budget policy will be considered during 2010, the next stage is the common currency policy whereas the culmination for this process will become the creation of the Common Economic Space with more secure flow of finance, services and human capital.

After the announcement of the Customs Union’s formation Dmitry Medvedev noted that three states delegated the part of their sovereignty to supranational body for the first time on the post-Soviet territory. Could you comment on this?

Actually, when the Customs Union Committee which has become the supreme management body of the Customs Union was created it has already had certain rights and obligations. So, the Committee has a right to regulate customs policy as well as the tariffs rates of three states. The fact they could delegate considerably important part of sovereignty to the supranational body let reach an agreement in December, 2008 that the Common Economic Space will be created during two years. Much more authorities will be handed on the supranational level within the Common Economic Space; in fact it will allow economic authorities of this territory take part in the international trade on higher level.