The establishment of the Common economic space of the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation and its implications for Russia’s global integration, including WTO accession

Deputy Ministerfor economic developmentof the Russian Federation

ALEXEY LIKHACHEVWashington, D.C. - May 23, 2011

THE MINISTRY FOR ECONOMIC DEVELOPMENT OF THE RUSSIAN FEDERATION

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The main goalsof the Customs Union

Formation of the Common Customs Tariff and the systemof non-tariff regulation

Launching the common Customs code

Transfer of customs control to the external

borders

Formation of the common trade regulations with the

third countries

Creation of the framework of enrollment and allotment of

customs duties, taxes and fees

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01.07.2010 01.07.201101.01.2010

Launching the common customs tariff and non-tariff regulation

Launching the Customs code of the Customs Union

Transfer of customs control to the external borders of Belarus

Launching the framework of enrollment and allotment of import customs duties

Transfer of customs control to the external borders of Kazakhstan

Abolishment of customs clearance procedure of the goods in the mutual trade within Belarus, Kazakhstan and Russia

Common tariff territory(stages)

Launching theCommon economic space

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Common Customs Tariff

14% 4%

82%

45%

45%

10%

Not changed Decreased Increased

For RussiaFor Belorussia For Kazakhstan

Increased:►individual meat items►ready-made canned meat►individual metal items►passenger cars

Decreased:►clothing►carpets►leather and textile footwear►electrical machinery and equipment ►pharmaceutical substances

Increased:►mutton, horsemeat, goat meat►ready-made canned meat►yeast►individual items and clothing accessories

Decreased:►exotic fruit juice concentrates ►food for baby feeding►materials for photographic purposes ►wool and fabric►pharmaceutical substances►parts for shoes►electric equipment

Increased:►transport group (including cars) ►wood►refrigeration equipment►pharmaceuticals►household appliances►clothing and footwear

Decreased:►certain types of agricultural products►skins►optical, medical instruments and devices

75%

7% 18%

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Determination of strategy and the main directions of

development of the Customs Union

(solutions - consensus)

Regulating authority of the Customs Union

(solutions - 2/3 majority or consensus )

Execution of decisions

Supranational institutions

The highest authority of the Customs Union

at the level of heads of state and heads of government

CourtCourtof the EEC*of the EEC*

State executive authorities

Secretariat of the Commission

of the Customs Union Commission of the

Customs Uniondeputy heads of government

Dispute resolution

Russia – 57%

Kazakhstan – 21,5%

Belarus – 21,5%

Distribution of votes

Organizing the activities of the Commission

*Eurasian Economic Community

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Implementation of "four freedoms“ (free movement of goods, services, capital and labour force)

Harmonization and unification of the standards of economic regulation in the key areas (competition, subsidies, public procurement, technical regulation, natural monopolies,

intellectual property, etc.)

Formation of integrated markets

Coordinated macroeconomic and currency policies

Common economic space of Belarus, Kazakhstan and Russia

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20 million km2 (15% of the

earth surface)

4% of world GDP (PPP)

9% of world proved reserves

of oil

11% of world exports of raw

materials

13% of world exports of energy

resources

80% of foreign trade turnover

of CIS* countries

70% of mutual trade volume

of CIS countries

CES

25% of world proved reserves

of natural gas

80% of GDP of CIS

countries

170 million population

*Commonwealth of Independent States

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Macroeconomy

CES agreements

Free movementof labour force

Free movementof goods and services

Natural monopolies

Competition

Industrial subsidies

Agricultural subsidies

Intellectual property

Currency policy

Financial markets

Electric energy

Railway transport

Gas transportation

Markets of oil, oil products

Illegal migration

Status of migrant workers

Technical regulation

Trade in services + investments

Public procurement

Common market of CES

Energy, transport

Free movementof capital

Common economypolicy

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Technicalregulation

Migrationpolicy

Industrialsubsidies

Agriculture

Key CES provisions

•common list of products in respect of whichcommon technical regulations of the Customs Union are adopted

•simplified procedure for residence and labour activity•coordinated policy against illegal migration

November 18, 2010

August-September 2011

August-September 2011 •grants in accordance with WTO rules

August-September 2011 •state aid not exceeding 10% of agricultural production

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Trade in services and investmentactivity

Competition

Intellectualproperty

Macroeconomicstabilityrates

August-September 2011•national treatment and MFN•favourable conditions for expansion of mutual trade in services and investment activities

Key CES provisions

2012-2013

January 1, 2012

January 1, 2013

•common principles and rules•protection against unfair competition•prohibition on abuse of dominance

•national treatment in the field of conservation and protection of intellectual property rights • common international legislation (obligatory international treaties: the Singapore Treaty in 2006, the Rome Convention 1961)

•budget deficit not exceeding 3% of GDP•public debt not exceeding 50% of GDP•inflation not more than 5 percent points above inflation in the CES country with the lowest price growth

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Key CES provisions

Railwaytransport

Currency andfinancial markets

Publicprocurement

January 1, 2013

December 31, 2013

July 1, 2014

•unified tariff for the transportation of goods by different types of communication: export, import and domestic

•harmonization of legislation in accordance withinternational standards in:-the banking field;-the foreign exchange market;-the equity market;-the field of insurance.

•equal access to procurement in electronic format

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New Zealand

Commonwealth of Independent States(Free trade area)

European Free Trade Association

Common EconomicSpace