Russian Economic Development Ministry Opposes Abolition of Customs Duty and Taxes for CIS

The Russian Economic Development Ministry is opposed to fully abolishing customs duty and tax barriers on trade between CIS countries. This was announced today by Economic Development Minister German Gref at a sitting of the Federation Council.

The minister said that in July 2002, in accordance with agreements with most CIS countries, Russia moved to a new tax regime on all goods except oil, natural gas and gas condensate. Taxes are now levied according to the 'country of destination' principle.

'Abolishing these three restrictions would lead to a shortfall in the federal budget of around USD 1 billion a year,' said German Gref. According to the minister, Russia has agreements with all EurAsEC countries except Turkmenistan on opt-outs from the free trade regime. In 2002 no more than 0.2% of Russia's trade with its neighbouring countries fell under these agreements. The minister said that a timetable for a staged abolition of these opt-outs had been agreed with all CIS countries. German Gref added that export and import policy in the CIS free trade zone is governed by 38 international agreements and treaties. Russia is party to 31 of these treaties, 21 of which have been ratified and 10 of which are in the process of ratification.