Generalized Preferential System of Customs Union between Belarus, Kazakhstan and Russia

The Generalized System of Preferences, based on the agreement reached at United Nations Conference on Trade and Development (UNCTAD), aims at contributing to the economic improvement of developing and least-developed countries. The GSP provides benefits for developing countries by enabling qualified products to enter the markets of developed countries on preferential terms – at reduced or free rates of customs duty.

Russian Generalized System of Preferences in favour of developing and least developed countries was implemented in 1992 as a part of governmental effort to expand import to Russia. The non-reciprocal preferential treatment of Russia granted tariff preferences to some products imported to Russia from 147 countries and territories (beneficiaries).

Since the implementation in 1992, the GSP scheme of Russia has been revised several times. The changes to GSP scheme of Russia cover the list of preferential products, the list of beneficiaries, the Rules of Origin² and the rates of preferential customs duties. The GSP of Russia was subsequently renewed and expanded in 2000. The GSP of Russia had been used by the end of 2009.

On 27 November 2009 the Intergovernmental Council EurAsEC and the Customs Union Commission resolved to approve some fundamental documents enabling practical functioning of the Customs Union between Belarus, Kazakhstan and Russia (hereinafter – CU).

One of these approved documents was Protocol on the Common System of Tariff Preferences in the CU of 12 December 2008, which came into force on 1 January 2010.

At present Russia, Belarus and Kazakhstan grant preferential tariff treatment under the GSP scheme to 103 developing countries and 49least-developed counties. Only beneficiary countries determined as least developed countries (LDCs) in the General Assembly of the United Nations are eligible for duty-free preferential treatment. The List of Beneficiaries of GSP was approved by Decision of CU Commission № 130 of 27 November 2009.(See List of beneficiaries of GSP).

Russia, Belarus and Kazakhstangive identical preferential tariff regime as to the list of preferential goods of GSP CU. It is unified both for developing and for the least developed beneficiaries. CU approved the list of approximately 2800 goods (10-digit HS Code) originating from developing and LDCs countries in respect of which preferential tariffs shall be granted for their importation into the customs territory of CU. (See GSP product coverage list).

Tariff reductions on the most favoured nation (MFN) rate under the GSP of CU depend on the origin of preferential products. All products covered by the scheme and originated in the least developed countries are granted duty-free access to the united market of Russia, Belarus and Kazakhstan. Preferential products from developing counties have a 25 % discount on the MFN duty.

In 2009, the average preferential margin given to exporters from the developing countries under theGSP of Russia was 2.6 % of the MFN duty rate. As to the average preferential margin for the LDCs, it was significantly bigger - 9% of the MFN duty rate in 2009.

In order for goods exported from a preference-receiving country to be eligible for the preferential tariff treatment, they must be recognized as originatingin that country under the origin criteria of the GSP scheme, and directly transported to Russia, Belarus or Kazakhstan. The GSP scheme of CU requires the Certificate of Origin (combined declaration and certificate) Form A as documentary evidence. The format of Form A has been agreed internationally and foreign exporters can get the Certificates of OriginForm A from the customs authorities or other competent authorities of the preference-receiving country, such as chambers of commerce, which are registered as the issuers by the Russian Federal Customs Service (To get in contact with Federal Customs Service of Russia visit the website: http://eng.customs.ru/). For goods to receive preferential tariff treatment under the GSP, a Certificate of OriginForm A must be submitted to the customs authorities upon importation of the goods into CU.

The Generalized Preferential System of CU is simple in use and not ascomplicated as in other preference-giving countries. In 2010, annual export to Russia from beneficiaries under the GSP was more than 12.5 billion US dollars. The major beneficiaries of Russia under the GSP are Brazil, China, Turkey, Ecuador, Argentina, South Korea, Iran and India.

The preferential trade treatments of CU are to be modernized in the near future and I do hope that this modernization could bring additional export promotion opportunities for overseas traders from preference-receiving countries³.