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Sparks fly at Customs Union summit

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The presidents of Russia, Kazakhstan and Belarus sat down on October 24 in Minsk to grapple with the thorny problems facing their free trade zone – from trade barriers to confusion over Customs Union expansion. It was a tense meeting.

President Nursultan Nazarbayev of Kazakhstan – usually a staunch Russian ally – was in a combative mood, accusing Moscow and Minsk of erecting unfair barriers to trade, describing the Customs Union’s Russian-dominated regulatory body as politicized, and urging caution in Moscow’s efforts to welcome new members.

Nazarbayev told Vladimir Putin and Aleksandr Lukashenka that he noted “positive results” from the Customs Union but urged an open dialogue on “shortcomings,” including “foreign trade disproportions” and “serious difficulties” for Kazakhstan to access Russian and Belarusian markets.

As reported this month, there is strong opposition to Customs Union membership in some quarters in Kazakhstan. Upon accession in 2010, increased trade was touted as the chief benefit, but so far the result has been a flood of imports into Kazakhstan from Russia, plus a derailed bid to join the World Trade Organization.

Putin was conciliatory but vague, describing it as “necessary, of course, to work on eliminating all exemptions and all mutual preferences” and “necessary to create equal conditions.”

Nazarbayev’s office later quoted him as saying that summit had agreed to remove trade barriers, but gave no details.

There was no news of any deal on a major row brewing for months over duties on oil products, which Lukashenka has hinted could force Belarus to pull out of the union.

Obstacles to trade were not the only sore points: Nazarbayev accused the Customs Union’s Russian-dominated regulatory body, the Eurasian Economic Commission, of “clear politicization,” and called for the abolition of a separate regional trade forum, the Eurasian Economic Community, which he described as a superfluous parallel organization. Putin agreed that “something must be done” but warned that the Customs Union’s legal foundations rested on the Eurasian Economic Community, which was set up first.

That community consists of the three Customs Union member states plus Armenia, Kyrgyzstan, Moldova, Tajikistan, Ukraine, and Uzbekistan – some of which are now aspirant members of the Customs Union. Kyrgyzstan and Armenia have confirmed they wish to join; Tajikistan and Ukraine have expressed interest.

But amid suspicions that Russia is pursuing expansion for geopolitical rather than economic reasons, welcoming new members is another controversial topic. Nazarbayev called for caution and said new members must join on the same rules, while Putin warned Ukraine (an observer state at the talks) that it had to choose between integration with the European Union or the Customs Union.

Talk of expansion is not limited to former Soviet states joining, and some of the suggestions about which countries could join have raised eyebrows. During the summit, Nazarbayev appeared to encourage suggestions that Turkey and even war-torn Syria could join the Customs Union; Putin responded that India was interested in a free trade pact with member states.

Troubled times seem ahead as the Customs Union eyes expansion while it remains beset by so many unresolved internal difficulties.


October 25 2013, 15:42

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