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DECISION OF ECONOMIC COUNCIL OF COMMONWEALTH OF INDEPENDENT STATES

of September 13, 2019

About realization of provisions of the Agreement on the free trade area of October 18, 2011

Having considered Information on realization of provisions of the Agreement on the free trade area of October 18, 2011 it (is applied),

Economic council of the Commonwealth of Independent States

solved:

1. Note that in all State Parties of the CIS which signed the Agreement increased foreign trade turnover goods and mutual trade, the sizes of rates of export customs duties on number of goods are reduced.

2. Consider further elimination of trade barriers between Agreement parties the most important condition of economic growth of the State Parties of the Agreement and development of mutual trade.

3. Consider expedient:

continue work on preparation of the draft agreement on free trade as services;

use mechanisms of permission of matters of argument, stipulated in Article 19 Agreements, for elimination of the arising barriers in mutual trade;

continue project development of the Agreement on technical barriers in mutual trade of the State Parties of the CIS.

4. Ask the Government of the Republic of Tajikistan to accelerate the completion of the interstate procedures necessary for entry into force of the Protocol on application of the Agreement on the free trade area of October 18, 2011 between its Parties and the Republic of Uzbekistan of May 31, 2013 and the Protocol between the State Parties of the Agreement on the free trade area of October 18, 2011 about rules and procedures of regulation of public procurements of June 7, 2016.

From the Azerbaijan Republic

--------

From the Russian Federation

Deputy Prime Minister

M. Akimov

From the Republic of Armenia

Vice-Prime Minister M. Grigoryan

From the Republic of Tajikistan

First Deputy Prime Minister D. Said

From the Republic of Belarus

Deputy prime minister I. Petrishenko

From Turkmenistan

--------

From the Republic of Kazakhstan

Plenipotentiary of the Republic of Kazakhstan in the Commission on economic problems in case of CIS Economic Council E.Zhanayev

From the Republic of Uzbekistan

Adviser to the Prime Minister N. Otazhonov

From the Kyrgyz Republic

Plenipotentiary of the Kyrgyz Republic in the Commission on economic problems in case of CIS Economic Council Z.Asankozhoyeva

From Ukraine

From the Republic of Moldova

--------

 

 

About realization of provisions of the Agreement on the free trade area of October 18, 2011

I. General provisions

Information on realization of provisions of the Agreement on the free trade area of October 18, 2011 is prepared on the basis of the data provided by the State Parties of the CIS, and also reviews of trade policy and business climate of the State Parties of the CIS considered by CIS Economic Council, including for the period 2018 - the first half of 2019.

1.1. Trade in goods

The agreement on the free trade area (further - the Agreement) signed by heads of governments of the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Moldova, the Russian Federation, the Republic of Tajikistan and Ukraine on October 18, 2011 is based on the principles and agreements of the World Trade Organization (WTO) and is aimed at providing free trade between the State Parties of the Agreement.

The agreement became effective for all State Parties of the Agreement.

The protocol on application of the Agreement on the free trade area of October 18, 2011 between its Parties and the Republic of Uzbekistan is signed at meeting of Council of CIS Heads of Government on May 31, 2013. For the Republic of Belarus, the Russian Federation and the Republic of Uzbekistan the Protocol became effective since May 16, 2014, for the Republic of Kazakhstan - since June 20, 2014, for the Republic of Moldova - since December 18, 2015, for Ukraine - since March 27, 2016, for the Republic of Armenia - since July 28, 2016, for the Kyrgyz Republic - since April 13, 2017. The Republic of Tajikistan did not complete this process so far.

The protocol provides non-use of import duties in mutual trade between the State Parties of the Agreement and Uzbekistan, and also conditions of application of other provisions of the Agreement in the relations between Agreement parties and the Republic of Uzbekistan are determined.

According to item 4 of article 6 of the Agreement the draft of the Protocol between the State Parties of the Agreement on the free trade area of October 18, 2011 about rules and procedures of regulation of public procurements was developed. Following the results of negotiations the Protocol is signed by five State Parties of the Agreement on June 7, 2016 (The Republic of Armenia, the Republic of Belarus, the Kyrgyz Republic, the Russian Federation and the Republic of Tajikistan).

The protocol is ratified by the states which signed it, except the Republic of Tajikistan which carries out the interstate procedures necessary for its entry into force.

Information on implementation of the Protocol was considered on commission session on economic problems under CIS Economic Council on December 19, 2018. In September, 2019 further review by the Commission of the specified question is planned.

The Procedure for determination of amount of remuneration of members and the commission chairman of experts, the expenses refunded to them, ensuring payment of remuneration and the expenses provided by appendix 4 to the Agreement is developed and approved by Council of CIS Heads of Government on May 26, 2017.

According to the Decision of Council of CIS Heads of Government of November 20, 2013 Executive committee of the CIS jointly with Agreement parties it was developed and the Decision of CIS Economic Council of March 14, 2014 approves the Procedure for opening and use of the target account for settlings with members and the commission chairman of experts in the dispute resolution of Agreement parties about the free trade area of October 18, 2011, and on May 21, 2014 such target account was opened by Interstate bank. The list of experts of Agreement parties created in 2014 and posted on the website of Executive committee by the CIS in the commission on the dispute resolution into which 20 people enter now is staticized.

1.2. Trade in services

In case of agreement signature by Council of CIS Heads of Government the decision on feasibility of preparation by the governments of the interested State Parties of the CIS of the draft agreement on free trade was made by services (further - the draft agreement).

More than a half of gross product of the State Parties of the CIS falls to the share of services. The amount of cross-border trade in services on space of the CIS grows. In view of the size of the market of trade in services on Commonwealth space, it is possible to tell with confidence that signing of such Agreement will provide real possibility of sustainable economic development of the parties. Besides, trade in services is much less sensitive to impact of external factors, than trade in goods.

Negotiations on the draft agreement began in November, 2012 with participation of the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Republic of Moldova, the Russian Federation, the Republic of Tajikistan and Ukraine.

So far 23 meetings of the Working group took place. The parties were generally determined with structure of the document and confirmed intentions to come as a result to the WTO + format.

From the second half of the year 2014 Ukraine does not participate in negotiations, and from the second half of the year 2017 the Republic of Moldova is present at negotiations as the observer. Besides, the Executive committee of the CIS receives on May 14, 2019 note of the Ministry of Foreign Affairs of the Republic of Moldova about inexpediency of its further participation in discussion of the draft document at this stage because the line item of the Moldavian side about exception of the document of the provisions regulating the sphere of investments is not considered.

Since 2019 the Republic of Uzbekistan which so far also did not determine the final line item concerning availability of head of "Investment" in the draft agreement participates in negotiations.

At the same time the head of "Investment" was included in the draft agreement as significantly the new element which is not covered by the WTO and at the same time having great practical interest. This question was discussed on April 27, 2018 at meeting of the Working group of high level created according to the Decision of CIS Economic Council of March 2, 2018 and also during exchange of opinions in narrow format at meetings of the supreme bodies of the CIS. During such discussion at meeting of Council of CIS Heads of Government on November 2, 2018 the Prime Minister of the Republic of Belarus suggested to make the basic decision on inclusion in the draft agreement of head of "Investment".

The executive committee of the CIS addressed to the governments of the State Parties of the CIS (of 07.11.2018 No. 5-2/01216 and No. 5-2/01219) with request to inform letters on the line item on need of inclusion of head of "Investment" into the draft agreement.

On the basis of the acquired information at meeting of CIS Economic Council the decision to proceed from need of inclusion of head of "Investment" into the draft agreement is made on December 7, 2018. This line item was confirmed as well in the Decision of CIS Economic Council of March 15, 2019 (both decisions are not signed by Moldova and Uzbekistan). Besides, it was noted that negotiations according to the draft agreement shall be conducted with attraction of the maximum number of the interested State Parties of the CIS. However active part in negotiations is taken only by state members of the Eurasian Economic Union (EEU).

On February 5-6, 2019 the meeting of the Working group of experts in project development of the Agreement took place. It should be noted active role of representatives of the Republic of Uzbekistan who for the first time took part in negotiations. Following the results of discussion disagreements by many provisions of the draft agreement were removed.

At the same time the Republic of Uzbekistan reserved line item according to Chapters "Organization and activities" and "Investments", considering to resolve expedient these issues within bilateral agreements.

With respect thereto the Executive committee of the CIS sent to the Republic of Uzbekistan and other additional materials interested the State Parties of the CIS containing the detailed comparative analysis of the provisions of the draft agreement concerning Chapters "Organization and activities", "Investment" and relevant provisions of bilateral agreements.

In the specified materials it is shown that the draft agreement much in more detail and more accurately taking into account the best world practices protects both the rights of investors, and interests of the state, than it is made in two-way deals of 1997-2003, and provides thus the favorable investment climate in the State Parties of the CIS.

It is necessary to emphasize once again that without the head of "Investment" the Agreement actually loses sense.

After the final decision of question of inclusion of head of "Investment" into the draft agreement it will be possible to pass to discussion of the appendices to the draft agreement containing conditions of mutual access to the market of services.

At the same time it is necessary to make such negotiations the most transparent and flexible, that the parties of negotiations which are members of the WTO open access to the market on conditions not worse, than their obligations within the WTO, and the parties which are not members of the WTO, - on the conditions not worse existing.

At the last meeting of the Working group which took place in Executive committee of the CIS on April 18-19, 2019 representatives of Moldova, Tajikistan and Uzbekistan did not take part. Any materials with statement of their line item by draft agreement provisions also were not received from these states to meeting.

The question of the course of negotiation process according to the draft agreement is considered at meeting of CIS Economic Council on June 21, 2019.

The decision to consider expedient continuation of discussion of the draft agreement in case of interest and activity of all State Parties of negotiation process is made.

With respect thereto the request is stated to the governments of the State Parties of negotiation process till August 1, 2019 to provide line item about procedure for conducting further work on the draft agreement within its structure determined by the Decision of CIS Economic Council of March 15, 2019 and to staticize structure of the Working group of high level, and to render Executive committee of the CIS assistance in the organization and holding meetings of the Working group of high level on project development of the Agreement and group at the expert level. The regular meeting of the Working group is held on August 15-16, 2019.

II. The customs duties applied in mutual trade

According to the Agreement of the Party do not apply in mutual trade the customs duties and other payments equivalent to customs duties, to the commodity export intended for customs area of other Party, and (or) the commodity import happening from customs area of other Party, except as specified, provided by appendices 1 and 6 to the Agreement. Concerning 1 goods specified in appendix the level of rates of import duties will not increase and specific terms of their cancellation are determined.

With entry into force of the Agreement the number of withdrawals when importing was significantly reduced and now makes only two goods items: white sugar and other sugar.

Duties when exporting extend generally to goods of fuel and energy complex, waste and scrap of metals, mineral raw materials, fertilizers, raw leather, seeds of crops and the live cattle.

Rates of the import customs duties applied to goods, imported on customs area of EEU from the third countries are established by the Common customs tariff of EEU approved by the Decision of Council of the Eurasian Economic Commission (EEC) of July 16, 2012 No. 54 (in edition of March 19, 2019).

The list of the customs duties applied by the Parties is provided in table 1 of Reference information about measures of tariff and non-tariff regulation in mutual trade of the State Parties of the Agreement on the free trade area of October 18, 2011 (further - Reference information *).

The situation regarding application of customs duties in the State Parties of the Agreement looks as follows.

The Republic of Armenia does not apply export and import customs duties. Thus, Armenia realizes free trade regime in full.

In the Republic of Belarus the single withdrawal on import duties regarding the sugar imported from Ukraine is effective.

In case of commodity exportation from the territory of the Republic of Belarus out of limits of customs area of EEU the rates of export customs duties established by the following presidential decrees of the Republic of Belarus are applied to separate types of goods:

of May 21, 2010 No. 272 (in edition of July 28, 2014) "About establishment of rate of export customs duty on colza seeds" - concerning colza seeds;

of October 9, 2010 No. 522 (in edition of June 29, 2017) "About establishment of rates of export customs duties on forest products" - concerning forest products;

of December 31, 2010 No. 716 (in edition of February 9, 2015) "About rates of export customs duties" - concerning oil and oil products;

of February 1, 2011 No. 40 "About establishment of rates of export customs duties on rawhide" - concerning rawhide;

of September 5, 2013 No. 400 "About establishment of rate of export customs duty on potash fertilizers and introduction of amendments and changes in presidential decrees of the Republic of Belarus of October 3, 2011 No. 442 and of January 17, 2012 No. 37" - concerning potash fertilizers.

According to the Agreement between the Republic of Belarus and the Russian Federation of December 9, 2010 export duties are collected when exporting from the territory of the Republic of Belarus out of limits of customs area of EEU of crude oil and the separate types of goods developed from oil.

The resolution of Council of Ministers of the Republic of Belarus of December 28, 2018 No. 960 makes changes to appendix to the resolution of Council of Ministers of the Republic of Belarus of December 31, 2010 No. 1932 "About establishment of rates of export customs duties concerning the crude oil and separate types of goods developed from oil, and recognition voided some resolutions of Council of Ministers of the Republic of Belarus".

In the Republic of Kazakhstan withdrawal on import duties concerning import of sugar from Ukraine is effective.

The Republic of Kazakhstan applies export customs duties to the State Parties of the Contract, not being members of EEU, for the following goods: oil, oil products, skins, wool, waste and scrap of ferrous and non-ferrous metals, products from ferrous and non-ferrous metals, parts of railway locomotives or motor cars. Rates of duties are determined by the order of the Minister of national economy of February 17, 2016 No. 81 (in edition of December 28, 2018 No. 106).

According to the Russian Federation, according to the order of the Government of the Republic of Kazakhstan of December 29, 2018 No. 917 is renewed from August 3, 2018 to January 1, 2020 prefential treatment of import of white foreign sugar (code of the CN FEA EEU 1701 99) as a part of finished goods on customs area of EEU the separate companies of the confectionery and nonalcoholic industry of Kazakhstan registered in prefential customs regime of free warehouse.

Renewal of action in Kazakhstan of privilege on duty-free import of foreign sugar as a part of finished goods on the territory of EEU violates the agreements on cancellation of privileges reached early, leads to renewal of import of sugar from the third countries on dumping prices (due to cancellation of import customs duty) and significantly limits export of the Russian sugar to the Republic of Kazakhstan.

In the Kyrgyz Republic import duties in trade with Agreement parties are not applied.

Due to the lack of enough raw materials in the domestic market for uninterrupted ensuring requirements of the domestic enterprises using the regenerated paper, cardboard and waste paper (the Commodity Nomenclature of Foreign Economic Activity code 4707), the Kyrgyz Republic applies the export duties on these secondary raw materials provided by the Agreement in the amount of 10 som/kg (the order of the Government of the Kyrgyz Republic of September 30, 2009 No. 610 with changes in edition of June 9, 2015 No. 350) which is exported out of limits of customs area of EEU.

The Republic of Moldova does not apply export customs duties to the goods which are exported from the territory of the Republic of Moldova.

The Republic of Moldova applies withdrawals from free trade regime only on import of sugar from Ukraine.

According to the Agreement action of import duty shall be performed in amounts of the approved duty-free quotas. Now there is no information on approval of amount of duty-free quotas. In 2018 import of the Ukrainian sugar to Moldova constituted 30 thousand tons.

Concerning other goods coming from the State Parties of the CIS in case of presentation of the certificate of origin the customs duty is not levied.

The Russian Federation informs that according to the order of the Government of the Republic of Moldova of February 10, 2009 No. 134 (as of April 17, 2018) import volumes of sugar and products from sugar (quota), and also the import period in prefential treatment are established quarterly by the Ministry of Agriculture and the food industry together with the Union of sakharoproizvoditel of the Republic of Moldova.

For the purpose of determination of type of raw materials from which sugar is made customs authorities of the Republic of Moldova accept certificates of origin of goods and the act of establishment of the manufacturing country issued by the laboratories accredited in the European Union (one in England and two in Germany).

Restriction is also the refusal of the Moldavian side to accept the certificates of the ST-1 form on the imported sugar applied in mutual trade between the State Parties of the CIS which confirm its origin.

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