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. Last Updated: 07/27/2016

New Customs Body May Oversee Union

A customs union between Russia, Belarus and Kazakhstan is looking to create a single body that would replace the three countries' customs services, but a dispute is brewing over the distribution of customs duties, First Deputy Prime Minister Igor Shuvalov said Wednesday.

The new body will either "swallow" the three countries' customs services or control them as a watchdog, Shuvalov told Prime Minister Vladimir Putin as the Customs Union Commission held its first meeting after an agreement on the customs union came into force Jan. 1.

"Earlier consultations resulted in the need to discuss the creation of additional supranational bodies — a customs body that will act on the territory of the customs union," Shuvalov said, according to a transcript published on the government's web site.

But talks are continuing about how to distribute customs duties collected on the three countries' territory, Shuvalov said.

According to the current formula, Russia will get not less than 90 percent of the import duties collected at the territory of the customs union, Kazakhstan will get 6 percent to 7 percent, while Belarus' share will amount to 3 percent to 4 percent.

The formula will be used as a test version starting from April and may be changed in the second half of this year if needed, Shuvalov said.

Shuvalov also said the Customs Union Commission was considering the establishment of a supranational treasury "that operates within the customs union."

An organization representing Russian importers assailed the plan to create a new customs body as an unnecessary additional layer of bureaucracy.

"I don't see a special need for a supranational body. Since there's a single customs tariff and a customs code, there's no need for additional regulation," said Boris Fantayev, executive director of the Russian Union of Producers and Importers.

He said each country's own customs service should be allowed to continue regulating shipments.

It would be easier and cheaper to leave the three countries' customs services intact and to create a supranational body that would regulate and organize their work, said Marina Lyakisheva, a customs law adviser at DLA Piper.

President Dmitry Medvedev and his counterparts Alexander Lukashenko of Belarus and Nursultan Nazarbayev of Kazakhstan agreed in November to the creation of a unified customs tariff, which started Jan. 1, and a unified customs code, which will go into effect July 1.

Also Wednesday, Shuvalov complained to Putin that the United States had not taken any steps to solve the problem of Russia's accession to the World Trade Organization.

Medvedev has repeatedly said creation of the customs union would not affect Russia's WTO membership bid, while WTO member states have said Russia might face problems.