Double customs duties may vanish next autumn

  • 2001-04-19
  • Aleksei Gunter
TALLINN - Estonia and Russia introduced a project of agreement on commercial and economic cooperation in Moscow on April 11, which is seen as a positive step toward abolition of double customs duties now valid for Estonian goods exported to Russia.

The cooperative agreement has been in progress for seven years and it still must be signed and ratified. Estonia's Foreign Ministry noted, however, that ratification in the Estonian Parliament is not necessary as similar agreements with other countries were signed after approval by the corresponding ministries.

Abolition of double customs duties, introduced by Russia in 1995, will double the revenues of Estonian exporters and the volume of export, predicted the Estonian business daily newspaper Aripaev.

Russia, which hopes to join the World Trade Organization by 2004, is currently revising its customs policies, which is why the agreement is being considered now, according to Aripaev.

Mait Martinson, a trade negotiator at Estonia's Foreign Ministry, and Ivan Galaktionov, deputy head of the Russian Economy Ministry's European department, introduced the text of the agreement and it will now be handed to both countries' responsible bodies (the ministries and the Russian Duma) for confirmation.

Pavel Kuznetsov, the economic adviser to the Russian Embassy in Estonia, said now is the right time to go on with building normal trade relations between Estonia and Russia.

According to the Estonian Embassy in Moscow, the Estonian side hopes the agreement will be approved before the meeting of the intergovernmental commission headed by Prime Minister Mart Laar and Russian Deputy Prime Minister Valentina Matviyenko this June.

"The agreement may be signed even this May," suggested Kuznetsov.

Tonis Nirk, the head of the external economic policy department at Estonia's Foreign Ministry, said Russia could abolish the double fees on its own, without an agreement with Estonia. Nirk added that the Russian Duma will barely manage to revise and approve the agreement by autumn.

According to the ministry, Estonia is one of the few countries in the world that still does not have a most-favored-nation status with Russia and because of this Estonian exporters have to pay double customs duties in comparison with other countries.

The amount of Estonian exports to Russia steadily rose between 1994 and 1998 despite the double fees implemented in 1995. But that was before the 1998 financial crisis in Russia.

In 1997 Estonia sold 7.7 billion kroons ($442.78 million) in exports to Russia, and a year later it decreased by 1.6 billion.

Last year Estonian companies exported 4.2 billion kroons in goods to Russia.

Business people, however, are most interested in when the agreement will become valid.

Koidu Haugas, a board member at the Estonian-Russian Chamber of Businessmen, said several business organizations have been lobbying for the agreement.

"Estonian products will have a certain advantage on the Russian market after the (double) fees disappear. Besides, Estonian entrepreneurs are certainly interested in working as subcontractors in Russia as the labor force there is much cheaper," said Haugas.

But the return to the Russian market could be harder than once thought.

"Those market niches that used to be filled with Estonian goods like milk products or textile are now occupied by the Finns," said Haugas.