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Moscow explains reasons for customs porblems with Ukraine

August 19, 2013, 9:56 UTC+3

According to Russian presidential adviser on economic issues Sergei Glazyev, these are "preventive measures" in order not to let Ukraine sign the association agreement with EU

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Moscow has explained the reasons for customs war with Ukraine. It has happened because of Kiev’s desire to achieve actually free trade with the EU. These are one-time preventive measures so far, but if Ukraine signs the (free trade) agreement, the measures will become permanent, the Vedomosti newspaper is certain.

According to the newspaper, Russian presidential adviser on economic issues Sergei Glazyev said that the customs inspections are a warning to Kiev against entering into a “suicidal” association agreement with the EU.

It turns out that Glazyev with the approval from higher authorities is threatening the neighbors with a trade war, the newspaper concludes. The attempt to play a power game may seem justified: more than a quarter of the total volume of Ukrainian exports goes to Russia.

Kiev, according to Ukrainian experts, is now likely to make concessions to Moscow due to the difficult economic situation. However, it is doubtful that Ukraine would agree to a full-scale entry into the Customs Union.

The tactical victory - a temporary slowdown of Kiev’s drift to Europe - in the medium term is fraught with its tougher stance after joining the EU, the newspaper warns in an editorial opinion. However, for Ukraine it is enough just to promise not to do it - and its products will again be of high quality for Russian inspectors.

“Ukraine will not restrict imports from Russia,” Ukrainian Minister of Economic Development and Trade Igor Prasolov told the newspaper. “But if the problem solving is delayed, Kiev could complain to the WTO.”

Formally, Russia is acting within the WTO rules, Professor at the New Economic School (NES) Natalya Volchkova told the Vedomosti daily.

A complaint to the WTO requires a very serious substantiation, Professor at the Higher School of Economics (HSE) Alexei Portansky stated in a commentary to the newspaper: “It is unlikely that the Ukrainian side will dare use the WTO mechanisms.”

Kiev will decide today what it should do in a situation of trade blockade imposed by Russia and the Customs Union (CU), the Nezavisimaya Gazeta newspaper writes. The problem arose in late July and reached a peak last week, when the whole export of Ukraine was actually blocked on the Russian border. The heads of the customs services of Ukraine and Russia will discuss the ways out at a meeting in Moscow on Monday. And in Kiev, the government will think over the strategy, because in three months, when the EU and Ukraine are expected to sign the agreement on association and a free trade zone, the curtain on the borders of the Customs Union may become permanent.

On Friday, Ukrainian and Russian Presidents Viktor Yanukovich and Vladimir Putin discussed the problem in a telephone conversation. On Sunday, the two countries’ Prime Ministers - Nikolai Azarov and Dmitry Medvedev, also held telephone talks.

Ukrainian Minister of Economic Development and Trade Igor Prasolov has pledged that the sides have reached mutual understanding: the issue was discussed at a meeting of the Council of the Eurasian Economic Commission in Suzdal. According to him, the parties agreed to use the following mechanism: “Russia recognizes up to five Ukrainian laboratories (whose certificates of products’ quality will not require checks and confirmations in Russia). If they issue a certificate of quality for a product, this product crosses the Ukrainian-Russian border and is accepted and sold by Russian stores.”

But the main question - concerning enhanced customs inspections of Ukrainian goods - is not yet settled. Ukrainian MP from the Party of Regions Oleg Tsaryov, who opposes the country’s European integration course, has supported the actions of the Russian Customs: “Their goal is to make sure that the exports are not Chinese and Turkish consumer goods, Polish meat, etc., which are brought into the territory of the Customs Union state duty-free, under the guise of goods produced in Ukraine.”

Deputy Head of the Institute of the CIS Countries Vladimir Zharikhin is of the same view: “Kiev’s entry into a free trade zone with the EU means the removal of customs barriers (from the Ukrainian side) for many items of goods. And considering that the Russian-Ukrainian border is virtually transparent, Moscow in this situation simply has to build a fence to protect not only itself, but also partners in the CU.”

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