Refusal of Belarus and Kazakhstan was Predicted
Belarus and Kazakhstan refused to support Russia's proposal to limit the import of Ukrainian goods to the entire territory of the Customs Union. Russia submitted for consideration by the Eurasian Economic Commission its proposal on a new regime of export for Ukrainian goods, but it was rejected.
Raising of import duties in trade with Ukraine is not advantageous either to Russia, or Belarus and Kazakhstan or Ukraine itself because higher barriers in mutual trade result in higher prices, lower competition and loss of both efficiency on the markets of the above countries and, as a consequence, their prosperity.
Refusal of Belarus and Kazakhstan was predictable. For Belarus, higher import duties on Ukrainian goods may cause economic damage. For Minsk, the Ukrainian market is more important than that of Belarus to Kiev: in 2013 the trade volume between those two countries has exceeded $6bn which amounts to about 10% and 3%-4% of GDP of Belarus and Ukraine, respectively. So, introduction of a new regime of export for Ukrainian goods may inflict more damage to the economy of Belarus rather than to Ukraine.
As regards Kazakhstan -- apart fr om the fact that it is not expedient in economic terms – support of Russia's proposal to raise the rates of import duties on Ukrainian goods may complicate for Kazakhstan the process of accession to the WTO: as Ukraine is a full member of the WTO wh ere decisions on acceptance of new members are taken by a consensus, Kiev has the right to oppose Kazakhstan's accession which fact Astana is well aware of.
In addition to the above, in its response to introduction of a new regime Kiev may increase import duties on goods from Belarus and Kazakhstan to any desirable level because those countries are not members of the WTO.
Even if Russia succeeds in finding a loophole and introduces unilaterally duties on goods from Ukraine such a move will be in conflict with the spirit and purpose of the Customs Union which is based on the unified principles of the trade policy in respect of third countries, to say nothing about inconsistence with the spirit and purpose of the newly signed agreement on the Eurasian Economic Union in which such a deep integration as common market is declared.
Alexander Knobel, PhD (Economics), Head of the Department of Foreign Economic Affairs