Negotiations do not work

Trade disputes with Ukraine and Russia create problems for Belarusian economy

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In 2014 external trade of Belarus has become a determination for defining the maturity of the integration entities in the CIS space. Unfortunately, it showed that neither our country nor its closest partners actually are not ready for the implementation of international agreements.

In the first half of the year the Belarusian-Ukrainian conflict became heated. Negative situation in domestic enterprises, the imbalance of imports and exports forced the government to supply constraints in a number of headings from outside the Customs Union. So there decree number 365, 468 and 469 of the Council of Ministers of Belarus appeared. On 1 May the first decree introduced a license for import of beer, on 1 June the second one limited by the single license for the importation of concrete, float glass and glassware, and third decree limited from the same date the import of certain types of pasta, pastry, as well as raw materials for their production.

The validity of these regulations expired after 6 months – respectively from 1 November and 1 December, but nobody noticed the cancellation of licenses because the restrictive documents lost the main force in July – after a strong reaction in Kiev.

 

At the beginning  Belarus forgotten FTA …

That Ukraine has become the “target audience” and mainly affected by the imposition of licensing. First of all, it affected beer and confectionery industry. Mandatory minimum price negotiation with the state authorities of Belarus has made the price of Ukrainian goods disproportionately high, so it makes no sense to deliver them in Belarus. Kiev’s appeals of cancellation, which violate agreement on free trade zone in the CIS for some period, received positive Minsk explanation that licensing wasn’t introduced directly towards Ukraine, but “indefinite number of countries”, besides temporarily to monitor some “negative trends “.

This did not convince our neighbors, and in response “to the discriminatory and unfriendly actions of Belarus’ Ministry of Economic Development of Ukraine has established prohibitive import duties in the amount of 55-60% on the number of Belarusian goods: confectionery and dairy products, beer, tires, light bulbs, fertilizers and refrigeration equipment. It worked, and the Council of Ministers of Belarus backpedaled: canceled the licensing requirement for the supply of goods from member countries of the CIS free trade area agreement. Kiev, on the other hand, abolished duties; however, the final resolution of the conflict was preceded by another series of picks. Mutual trade restrictions were settled only on 19 August.

Belarusian-Ukrainian trade “battle” was lucky enough to do without a political agenda: despite the attendant tragic events in Ukraine bilateral conflict remained bilateral, with no effect on it from Russia. However, the worst predictions on trade and economic consequences of Ukrainian war came true and confrontation between Russia and the West related to this problem.

From the middle of June Federal Service for Veterinary and Phytosanitary Supervision (FSVPS) consistently imposed restrictions on Ukrainian goods: potatoes, beef, dairy products, canned vegetables, juices, soy. And after Ukraine signed an Association agreement with the EU, in Moscow talks about the introduction of import duties on Ukrainian goods have started. Only delaying the creation of a free trade zone between Ukraine and the EU has forced the Kremlin “to relent”.

In respect of Moldova, which has also signed an Association agreement with the EU, the decision to impose import duties (in the amount of the Common Customs Tariff rates of customs union, applicable to the importation of goods from countries in relation to which is applied most favored nation. – red.ref.), put into force on 31 August. However, Moldova now suffers not so much from duties as from the “duty free” prohibition on the supply to Russia of meat, wine, fruit.

 

Then Russia forgot about CU

But who took a pro-Western course, even these countries “slap” were only an inception to a full-scale brawl on the trade market. The collapse of the Malaysian “Boeing” in the Donbass, the subsequent Western sanctions against Russia, and as a reaction – food sanctions against Russia – that lead to the disintegration of the post-Soviet “brotherhood.”

And if the bad relations between Russia and Ukraine and Moldova no one doubted that a deep rift between Moscow and partners in the Customs Union has become an unpleasant discovery.

At first it seemed that the embargo would be introduced as a fun, to save the reputation, and in fact, Russia will turn a blind eye to supply bypassing the prohibition – both legal developed in Belarus from imported raw material products, and possibly smuggled. It turned out that from Belarus and Kazakhstan expect the actual connection to the “Kremlin diet”. And as allies do not want to “fast”, even Belarusian milk cheese from the Lithuanian got the Russian authorities became unbearable, not to mention the Polish apples, crossing the Belarusian border to Kazakhstan, but settling in Russian stores.

What happened next – everybody remembers, as the story continues to this day. In October FSVPS moved to direct action complaints from smuggling and threats to impose restrictions on the supply of Belarus. First, in the Belarusian sausage found in the genome of ASF and therefore prohibited the exports of finished products of 9 meat-preserving plant and raw pork – from across the country. Then he discovered antibiotics and bad bacteria in milk, meat and poultry are 17 enterprises food industry. The embargo imposed on them.

Plus, the Russian restricted transit post sanctions products through its territory in Kazakhstan and other countries by setting access control for trucks on the Belarusian-Russian border. Moreover, Russia has asked Belarus to stop the transit of illicit goods to Russia through its territory. As Alexander Lukashenko said, “Russia has made a violation of our agreements, we have achieved in the Customs Union.”

In response Minsk made it clear that at will it can return the customs control on the border with Russia – special operations SCC RB verification of transport at checkpoints great alarmed Russian media.

All the “attack” in this trade “war” was accompanied by accusations that do not befit the allies on the eve of the transition to a new round of integration. As if coming to its senses, so that the start of the EEU is almost here, in December, the parties began to dismantle “barricades”, constructed on the internal borders of the CU, but it happens slowly and painfully.

In economic confrontation between Russia and the West, which is against the will was involved and Belarus, the loss is borne by all parties. Because of the embargo, European farmers are going bankrupt because of the collapse of the ruble and a rise in prices impoverished Russians, due to prohibitions FSVPS incur losses Belarusian enterprises.

About Ukraine’s better not to remember: But there is another, immaterial, loss of this “war”: lost faith in the fact that the integration agreements within the EEA, and especially within the CIS, have some effect.

Translated from “Belarusy i rynok”