Vladimir Goshin: The Customs Code of the Eurasian Economic Union is the first draft of an international customs agreement on the Eurasian platform developed in collaboration with the business community.
1. Mr. Goshin, this year marked 20 years since the appearance of the idea of creating the Customs Union. And it is this very year that has become the decisive year for the further development of Eurasian integration – on 29 May the Treaty on the Eurasian Economic Union (EEU) was signed in Astana. What impact will this step have on customs integration?
The Eurasian Economic Union – an international organization in the area of regional integration having international legal personality – is being established to strengthen the economies of its member countries, to build “close mutual rapprochement,” and to update and increase the competitive capabilities of the member countries in the global market. The EEU Treaty, which will come into force on January, 1, 2015, provides common customs regulation according to the Customs Code of the Customs Union and the international agreements and acts governing customs legal relations and constituting the law of the Union, as well as the provisions of the EEU Treaty itself.
First of all the level of customs integration depends on the dynamics of the customs regulation modernization. The Customs Code of the Eurasian Economic Union being developed is based on the best practice of customs administration and international customs standards. This is why customs integration within the EEU is expected to result in positive dynamics that will not be long in coming.
Until the Customs Code of the Eurasian Economic Union enters into force in 2016, customs regulation will be carried out in accordance with the Agreement of Customs Code of the Customs Union dated 27 November 2009 and earlier international agreements between Member States governing customs legal relations.
2. The draft of the new Customs Code of the Eurasian Economic Union is entering its final stage of preparation. Please lift the veil: who developed the draft, what principle underlay the improvements of the customs legislation, and what were the challenges that had to be dealt with?
The draft Customs Code of the Eurasian Economic Union was elaborated by a working group formed at the decision of the EEC Board for the improvement of customs legislation. The working group and its related expert group included representatives of state bodies, business communities of the three countries, and EEC specialists. Such a format gave business the opportunity not only to talk about its problems and communicate them to the state bodies, but also to actually work on the document.
The participation of the business representatives of the Republic of Belarus, the Republic of Kazakhstan, and the Russian Federation in the working group on the improvement of the customs legislation is a necessary condition for the elaboration of the draft CC EEC characterizing the EEC attitude towards the establishment of effective interaction between the state bodies of the Customs Union member countries as well as the business community with regard to different issues related to external trade regulation, customs administration, and the development of the foreign trade potential of business entities. Representatives of the Advisory Council on Interaction between the Eurasian Economic Commission and the Belarus–Kazakhstan–Russia Business Dialogue are taking an active part in the process.
In our opinion, engaging experts from the business circles of CU and Single Economic Space Member States in the development of the CC will make it possible to create an effective customs regulation instrument based on the best practice of customs administration, international customs standards, and the balance of interests of CU member countries, society, and business as a whole.
The only problem that we had to face was the approaches applied to elaboration of the code itself that would ensure as far as possible the balance of interests and the consideration of all proposals made by the Parties and business representatives. It is no secret that business aims at the simplification of trading procedures, among other things, through the minimization of customs administration. But one should not forget the obligations resting on the state bodies of the Parties that exercise control functions on the border within the context of international requirements regarding the quality of customs administration. While developing the CC EEC, we managed to find compromise solutions for a wide range of customs regulation issues and avoid fundamental disagreements.
3. Does this mean that the opinion of business was not left unheard? In other words, will the provisions of the new Customs Code make the life easier for bona fide participants in foreign economic activities?
I will repeat and say that the CC EEC is the first draft of an international agreement regulating customs legal relations to be developed jointly by all concerned parties – state bodies, business representatives from the three countries, and Eurasian Economic Commission specialists. Before it, international draft agreements on the Eurasian platform were developed and approved in trilateral format only by representatives of state bodies. Then each state initiated intrastate approval of finished drafts at the national level with the participation of business representatives. This is what caused the unreasonable delays in the process of national draft approval.
In addition, it caused business representatives to think that state bodies used this format in order to regulate customs issues with only their own interests in view and prevent business representatives from entering this negotiation platform. In
our opinion, the participation of all concerned parties made it possible to bring together all interests, discuss urgent problems in a broad format, and find compromise solutions for them during the preparation of the draft CC.
Business wants transparent, clear, and unburdensome customs regulation. The draft CC EEC eliminates excessive regulation, reduces terms for customs formalities due to the common use of information technology, and creates conditions for the effective use of customs bodies’ resources. The main goal the developers set before themselves was to strike a balance between the interests of state bodies and business.
We expect that the CC CU innovations will make it possible to increase the level of mutually beneficial cooperation between bona fide participants of foreign economic activities and customs bodies and to simplify trading procedures and, certainly, make the life easier for good faith economic operators.
4. Let us dwell on the innovations in more detail. What global changes did not allow you to simply confine yourselves to a new edition of the existing Customs Code of the Customs Union but caused you to create a new draft?
First of all, I should mention that the appearance of innovations was predetermined by the contemporary state of foreign trade relations and international trade, the level of the development of customs and trade technologies, and the degree of integration of our states in the field of customs administration. No less important was the role played by the instruments for the simplification of trade procedures developed by the international customs community on the platforms of the WCO, the EC, APEC, etc.
Also the reason for modernization of the existing customs legislation lays in the state of the legislation. The current CC CU leaves a number of problematic issues unsolved, such as a significant number of reference norms to national law, the existence of a residence principle that limits the possibility of submitting a customs declaration in the territory of a CU Member State by residents of a different CU member country, the insufficient level of implementation of modern instruments for the simplification of trade procedures (AEO, “single window”, automatic release of goods, customs post audit, etc.),
and the uncertainty of some CC CU terms.
Inaddition to this, in recent years, approaches to the customs regulation in the CU countries have changed so much that mere amendments to the Code could do nothing. It is necessary to completely rebuild the customs legislation, make it state-of-the-art, based on the use of electronic documents, electronic declarations, and information collaboration between customs applicants and customs bodies. We can say now that the draft Customs Code of the Eurasian Economic Union includes all of the best practices of both the EEC and foreign countries.
With the signing of the EEU Treaty, the main instrument of customs regulation has changed. The new Customs Code supersedes the CC CU.
Speaking about the draft Customs Code of the Eurasian Economic Union, I would like to emphasize the most important changes in the customs legislation that it provides for:
– Priority electronic customs declaration and use of written declaration in certain exceptional cases only;
– The possibility of carrying out customs formalities related to the registration of customs declaration and release of goods automatically by customs bodies’ information systems;
– Optimization of data subject to indication in goods and transit declarations;
– The possibility of submitting goods declarations without presenting supporting documents to the customs body;
– The use of the “single window” mechanism to carry out customs operations, including those related to arrival, departure, and the customs declaration of goods;
– Optimization of the preliminary information provision to customs bodies about goods imported into the Union’s customs territory;
– Establishment of a special way for the process of declaration of express cargos transported by an express carrier;
– Term reduction for release of goods to 4 hours from the registration time of the customs declaration, if the customs declaration check does not require supporting documents or customs control related to the inspection of goods;
–Development of the institution of authorized economic operators.
5. In the very near future, the list of the EEC Member States will expand to include two more countries – Armenia and Kyrgyzstan. How are customs relations between the current and prospective EEC countries being built today? And how similar are these countries’ approaches to customs processing and customs administration?
Road maps for the accessions of the Republic of Armenia and the Kyrgyz Republic to the CU and CES have been developed and approved. With due regard to differences in the national laws of the Republic of Armenia and the Kyrgyz Republic in the area of customs regulation, the measures of the road map provide, among other things, for bringing the laws of Kyrgyzstan and Armenia into conformity with the CU and CES legislation. During the implementation of the road map, such acts and regulations in their national laws that are inconsistent with the supranational legislation and need to be amended or cancelled will be identified.
With the signing of the agreements on accession to the integration association, the countries that are to become new union members will automatically accede to the international agreements constituting the law of the Eurasian Economic Union, including to the Customs Code of the Eurasian Economic Union that will, upon signature and entry into force, form an integral part of the law. Furthermore, if new countries join the EEU before the Customs Code of the Eurasian Economic Union is signed, this international agreement will be concluded between all EEC member countries at the time of its signing rather than in trilateral format.
6. Business representatives often refer to the Kyoto Convention when assessing the draft Customs Code. Is this a reasonable comparison?
The draft Customs Code of the Union, as well as the current Customs Code of the Customs Union, are based, first of all, on the standards of the International Convention on the Simplification and Harmonization of Customs Procedures dated 18 May 1973 (Kyoto Convention), which was elaborated and adopted for the purposes of harmonizing and simplifying customs procedures, fostering the development of world trade, and introducing the customs principles stated in the General Agreement on Tariffs and Trade 1994 (GATT) and customs related WTO agreements.
At present, all members of the Customs Union are parties to the Kyoto Convention, as is Armenia, which will be joining the Eurasian Economic Union on 1 January 2015. It should be noted that even if the regulations of the draft Customs Code of the Union do not exactly mirror the corresponding provisions of the Kyoto Convention, it was used as the main guide for the development of this draft.
The conceptual framework of the draft Customs Code is adapted to the definitions of the Kyoto Convention, which make it possible to ensure the unambiguous interpretation and uniform application of legal provisions.
The regulatory provisions of the draft Customs Code, based on the provisions of the Kyoto Convention, create conditions for the application of up-to-date and effective methods for customs administration that ensure customs bodies fulfill the tasks facing them.
Nevertheless, in view of existing realities as well as level of development of the information systems and technologies applied by customs bodies, it is important to recall not only the standards of the Kyoto Convention but also the up-to-date tools of customs administration being elaborated by the international customs community on the platform of the World Customs Organization (WCO). Such a conclusion is based on Eurasian Economic Commission consultations with experts of this organization.
Thus, at present, the WCO and other international organizations have developed about 40 instruments for customs administration and the simplification of trade procedures. These are conventions, recommendations and standards, specific manuals on institutions of customs law, overviews of the best practices of customs administration, compendiums, and glossaries. Serious consideration is paid to such instruments as preliminary provision of information, risk management system, post customs audit, institution of authorized economic operator, “single window,” and institutional construction. These are accommodated to the fullest extent in the draft Customs Code of the Union.
7. How will the adoption of the new Customs Code reflect in the dynamics of DoingBusiness rankings?
Let’s consider the following example. According to the DoingBusiness 2014 rating, the Republic of Kazakhstan’s position was downgraded by 26 points as compared to 2013. At the same time, this figure increased by 28 points for the Russian Federation. Does this mean that the quality of customs regulation in Kazakhstan deteriorated in 2014 if the same customs regulation was in force in Belarus, Kazakhstan, and Russia? The answer is obvious – no.
This points to the fact that DoingBusiness’s methods can only be used very indirectly for analyzing the effectiveness of customs regulation or customs control in particular. Today, the majority of experts rightly raise questions about the applicability of these methods for assessing the effectiveness of customs administration on the basis of only 3-4 indicators: number of export (import) documents, export (import) time, and export (import) costs per container.
I can add that due to the insufficient development of scientific and methodological approaches towards the improvement and assessment of customs regulation effectiveness, methods for the simplification of trade procedures very often replace methods for improvement of customs administration. And this is just such a case.
As the draft Customs Code regulates customs legal relations, it is not correct in methodological terms to associate the draft under development with methods that have no connection with customs regulation. It is clear that up-to-date methods
should be developed at the scientific level for evaluating customs regulation and the effects of introducing into customs legislation certain instruments for the improvement of customs legislation or the simplification of trade procedures.
The scheduled set of actions for the implementation of regulations included in the draft Customs Code of the Union, as well as the Principal Directions for the Development of the “Single Window” Mechanism in Foreign Trade Activities, will create the conditions for the significant simplification of procedures during trans-border movement of goods and, therefore, ensure higher positions for our countries in the international ratings.