Belarus maximizes benefits from the Customs Union

In Q1 2013, Belarus had a net surplus over RUR 1.1 billion under the agreement on the distribution of import duties in the Customs Union.

Belarus skillfully benefits from the participation in the Customs Union, and uses Russia’s accession to the WTO as yet another pressure factor to generate additional economic benefits. Belarus will continue benefiting from favorable agreements, while postponing real economic integration as long as it can under various pretexts.

Belarus’ participation in the Customs Union has brought clear economic benefits. Under the agreement on the distribution of import duties alone, in Q1 2013 Belarus received payments surplus RUR 1.1 billion. Russia and Kazakhstan had a deficit of payments under the agreement. Belarusian producers have no restrictions and pay no fees for delivery of goods to the Russian market, which enables Belarus to expand exports for a number of goods. Unlike before the CU agreements came into effect, the oversupply of the agreed goods volumes does not entail consequences, for instance, restrictions by Rosselkhoznadzor for the dairy products or sugar supplies. In 2012, Belarus supplied 243.6 thousand tons of sugar, while the agreed annual volume of supply was 200 thousand tons, and over-deliveries were not followed by restrictive measures.

Energy is the most important import for Belarus. Following the sale of Beltransgaz, Belarus not only has reduced the price of imported gas to USD 165 per 1000 m3, but also actively lobbies the construction of the second line of the Yamal-Europe pipeline. Moreover, the transit capacity of Nord Stream is used by less than one half, while Belarusian transit capacity is used intensively. Quarterly coordination of oil supplies to Belarusian refineries is successful. Attempts to limit the oil supply volume to Belarusian refineries by Russia encounter arguments, that there should be free movement of resources within the CU, and the decision is made in Belarus’ favour. The agreed volume of mutual deliveries of petroleum products in compliance with the quarterly agreements on crude oil supply volumes are not implemented, but Russia did not file complaints about the short supply, and signed the Q2 oil supply balance, improving the conditions for the oil supply through the increase in the pipeline supply.

Russia’s WTO accession increased Belarus’ activity in terms of attempts to limit the presence of imported products in the Russian market. Belarus initiated higher customs duties on certain types of television equipment – 16% from 10% and 15%. Protective measures have been taken with regard to other important export items for Belarus, i.e. agriculture harvester combines. Reduced duties for a significant range of goods following Russia’s WTO accession due to the absence of borders within the CU, de facto apply to Belarus, regardless of the higher national protective barriers. Belarus refers to this factor and, using administrative measures limits imports to the country.

Thus, Belarus maximizes benefits from the CU to address domestic financial problems. Currently ensuring for her the most favoured foreign trade inside the CU, Belarus will continue benefiting from favorable agreements, while postponing real economic integration as long as it can under various pretexts.