Text b. The customs union among russia, belorussia and kazakhstan

I. Read the article and give English equivalents for the words and phrases in brackets.

Currently, the regulatory and (юридические рамки) of the Customs Union among Russia, Belorussia and Kazakhstan (the “Customs Union”) is in the process of finalization. The creation of the Customs Union will (значительно повлияет) the businesses of many companies engaging in foreign economic activity.

The meaning of the Customs Union

In the Customs Union there is a united customs territory of member-states and customs barriers within the Customs Union are abolished. So far the basis of the regulatory framework for the Customs Union have already been established. Agreements on the common customs tariff of the Customs Union and on common non-tariff regulations took effect on 1 January 2010.

The Customs Code (the “Code”) of the Customs Union, the agreement on customs value and several other documents are effective from 1 July 2010. The new Code will (регулировать) the customs clearance and customs control procedures to be applied on the territory of the Customs Union.

The Code provides for a number of major changes to customs law which may create both advantages and risks for business.

Changes to the customs legislation

First of all, attention should be paid to a number of changes to customs law that will positively affect the foreign economic activity of companies engaging in trade with third countries after the Code enters into force. In particular, these changes are:

The status of a “minimizing economic operator” is introduced: this will enable companies to apply a special simplified customs clearance procedure (e.g., the release of goods before filing a customs declaration). The evaluation the customs value of goods, the Russian customs authorities are now entitled to use information about the value of similar goods imported from third countries into the territory of other Customs Union member-states;

The obligation to make customs payments in respect of conditionally released goods (i.e., goods imported with customs incentives, e.g., as a contribution to the charter capital) will exist for five years. This means that upon (истечение) of the five-year period importers will be able to dispose of such goods without any restrictions.

It is permitted to amend the customs declaration after the release of goods. This may help to deal with any problems arising when the quantity and/or nomenclature of goods in the (отгрузочные документы) do not correspond to the quantity/nomenclature actually imported.

The customs value should include (повлеченные затраты на погрузку товара) upon the import of goods to the territory of the Customs Union, i.e., companies will be able to reduce the customs value by the amount of shipping costs incurred on the territory of the Customs Union.

In accordance with the agreement of the Customs Union member-states, license fees for the right to distribute or resell goods shall not be included in the customs value if such payments represent a condition of sale with respect to goods to be exported to the territory of the Customs Union.

However, the agreement does not define the “sale condition”, which may lead to various interpretations of this provision and hence to ambiguities with respect to the inclusion of license fees to the customs value of imported goods.

The Code also provides for a number of new provisions which may entail various risks for companies, in particular:

Upon the evaluation the customs value of goods, the Russian customs authorities are now entitled to use information about the value of similar goods imported from third countries into the territory of other Customs Union member-states;

The period of customs control after the release of goods is increased from one to three years. In addition, the customs authorities will be entitled to (осуществлять таможенный контроль) not only in respect of the importer but also in respect of any company which possesses imported goods. The process of development of (регулирующие документы) governing customs clearance in the Customs Union have not been finalized, which in practice may create difficulties during the customs clearance.

Apart from the general changes to customs treatment, the creation of the Customs Union should result in streamlining the customs clearance procedure to be applied in trade between the Customs Union member-states. In particular, customs clearance is no longer required with respect to goods (with some exceptions) originating from Customs Union member-states and (растаможивание товаров) for free circulation in these countries. However, a (упрощенная процедура декларирования) is supposed to be maintained for statistical purposes.

Further, given that the new customs law (вступает в силу) on 1 July 2010, for Russia and Kazakhstan a special procedure is established for the application of indirect taxes on goods, works and services. First of all this procedure applies to relations among the Customs Union member-states. The procedure to (взимать косвенные налоги) on operations between Russia and third countries will remain the same.