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Thursday, March 15, 2018

Kiev is looking for an excuse for a new transit war with Russia

Ukraine is outraged by the new restrictions on the transit of their goods through Russian territory. Now they apply to transit not only in Kazakhstan but also in Kyrgyzstan – and it’s actually little difference in the existing transit mode. What is connected with emotional reaction of Kiev?

In Kiev are afraid of the full stop of transit of Ukrainian goods through Russia. The reason they called the new decree of President Vladimir Putin regarding the transit of goods from Ukraine through Russian territory.

“These changes can temporarily cause a full stop of transit of goods from Ukraine through the territory of the Russian Federation, not only in Kazakhstan and Kyrgyzstan, but also for third countries</blockquote>

“These changes can temporarily cause a full stop of transit of goods through Ukraine to Russia, not only in the Republic of Kazakhstan, Kyrgyzstan, but also for third countries. Please note this information when planning for the supply of goods by the origin from Ukraine by transit through the territory of the Russian Federation to third countries”, – stated in the Ministry of economic development and trade of Ukraine.

On the eve of Putin indeed has made changes in the decree about ensuring of economic security and national interests of Russia, which set the rules for transit traffic from Ukraine to Kazakhstan via Russia.

According to the original text of the decree, since the beginning of this year, such transit should occur only through two checkpoints on the border of Belarus and the Russian Federation on the route. The goods must be sealed and the route needs to be monitored on the basis of the GLONASS system. The transit of goods that fall under the embargo, was completely prohibited. The logic is simple – this scheme allows to better control the flow and avoid “gray” Ukrainian exports, settling in Russia.

From 1 July this year all of these requirements now apply not only to transit cargo to Kazakhstan and Kyrgyzstan. Also introduced a temporary ban on road and rail transport on two types of goods. First, it prohibits the transportation of agricultural products and products that fall under the embargo (which it was). Secondly, it prohibits the passage of goods subjected to customs duties when selling in Russia, established within the framework of the common customs tariff of the EAEU. Restricting the transit of food is extended until 1 January 2017, due to the extension of sanctions against Russia until this same period.

In fact, nothing new, these changes do not contribute. Kyrgyzstan, like Kazakhstan, is included in the EAEC, so it is subject to the same customs regulations. Just Kyrgyzstan does not border with Russia, apparently, so initially did not consider it necessary to introduce the transit constraint in her attitude. But, apparently, Ukrainian unscrupulous providers took advantage of this loophole, declaring the goods to Kyrgyzstan, does not preclude the first Vice-President of “Russian club of financial Directors” Tamara Kasyanova. And now Moscow denies Kiev such loopholes.

Kiev is clearly fanning out of molehills, arguing about the threat of a full stop of transit in this direction. This clearly shows the statistics of trade between Ukraine and Kyrgyzstan. In this direction Ukraine most of all carried goods in Kazakhstan, in respect of which restrictions are well established. So, in January 2015 the volume of Ukrainian export to Kazakhstan amounted to more than 605 million dollars, the Ukrainian carriers made about 80 thousand car trips to Kazakhstan, by rail, there was brought 380 thousand tons of Ukrainian goods.

Notable were exports to Azerbaijan by rail was delivered through Russia 240 tons of Ukrainian goods. Quite a significant customer of its products to Ukraine is China by rail was sent to only 4 thousand tons of Ukrainian goods, the rest – through the sea ports of Ukraine.

The trade turnover of Ukraine with Kyrgyzstan was insignificant – a total of 77,8 million dollars by the end of 2015. Therefore, the statement of Kiev, that the limitation of transit to Kyrgyzstan can completely stop the transit, is clearly exaggerated. This indirectly confirms assumptions about the Ukrainian carriers “Kyrgyz” loophole, which is now blocked.

Prohibitions on the goods are entered for the same reasons – to better control and prevent the importation of Ukrainian goods to be sold in Russia under the guise of transit.

However, Kasyanov does not exclude that in the near future, Kyrgyzstan and Kazakhstan will hold talks with the Russian side that it allowed the transportation of certain goods through Russia, and they, as members of the EAEU, it is unable to obtain such a permit, subject to mutual agreements with Russia.

Kiev threatens to mirror the sanctions and of claim to the WTO

Kiev could not take advantage of transit “the reason” in order to once again remind about the “aggressiveness” of Russia. New restrictions on Russia are unjustified and discriminatory, they violate the commitments undertaken in the framework of the World trade organization and the Agreement on free trade zone, said the Ukrainian Ministry. This refers to the violation of WTO rules and free trade zone of the CIS.

In addition, Kiev has promised that additional restrictions on the transit fit into your upcoming request to the WTO to initiate a dispute with Russia. “We are now dovnosit changes to a draft request for initiation of a dispute in the WTO on the limitation of transit in the circumstances that have developed, and will submit this request in the near future”, – said Deputy Minister of economy – trade representative of Ukraine Natalia Mykolskiy. Kiev will require to cancel these measures.

The arbitrators in the WTO court may take the side of Ukraine, as partially WTO rules allow us to pick on Russia. Meanwhile themselves WTO rules that are referenced in Kyiv, is a vivid example of double standards of the West, which became infected and the Ukraine, previously wrote the newspaper VIEW.

Besides, Russia itself has plenty of reasons to start similar courts against Ukraine. Sanctions imposed against Russia by several countries, to which Ukraine voluntarily joined, are also a violation of WTO rules. Blame the same response embargo Russia is at least strange. With regard to the free trade zone of the CIS, it has ceased to operate exactly at the moment when launched the free trade area between Ukraine and the EU in the framework of the Association agreement. That will be so, Kiev was known initially. Thus the appeals of Moscow to find a compromise solution to the two areas “not in conflict” with each other, Ukraine repudiated was not on the contract.

In order not to lose face, Kiev has also promised to introduce the mirror sanctions against Russia. According to the Vice Prime Minister of Ukraine Stepan Kubiv, the government will submit to Parliament a bill to limit the transit through Ukraine of Russian goods, reports TASS.

However, once on the roads of Ukraine this year began to wield radical groups, stopping the Russian trucks among Russians wishing to carry goods to Europe through Ukraine, and so greatly diminished. In addition, the Ukrainian route and to the conflict were not particularly popular with drivers of long-haul trucks. More often Russians are driven by machines export goods through Poland, Belarus or Ust-Luga. Therefore, the Ukrainian mirror of sanctions once again only a political step, which will suffer the Kiev than Moscow.

In 11 months of 2015, Russia supplied the EU and 8.6 million tons of cargo, which is almost 20% more than the same period in 2014. “However, road transport in total volume of exports to the EU take up little space. Not to mention the fact that they are not only through Ukraine, but through Belarus and Poland, and the Baltic ports. So Russia is nothing to worry about. In addition, Russia has many economic levers of influence on Ukraine if it persists in creating various “reflex action” – according to Kasyanov.

Ukraine loses more

For Ukraine, the restrictions of Russia on transit has had serious negative consequences. In General, Ukraine had previously exported to Central Asian countries and Mongolia goods to $ 1 billion. This year, according to Nikolskoi, Ukraine will lose 450-600 million dollars from transit restrictions. That is, in Kiev, waiting for the drop in exports to the countries of Central Asia and Mongolia two times or even more because of the new rules of transit to Kazakhstan through the Russian Federation.

According to official data, this prediction comes true. So, in the first quarter of Ukraine’s exports to Kazakhstan fell by 49%, to other countries of the region (Turkmenistan, Uzbekistan, Azerbaijan, Georgia, Armenia, Kyrgyzstan and Tajikistan) is 48%, according to the statement of Ukraine to the Council of trade in goods of the world trade organization of 15 April. Moreover, the export of perishable agricultural products in the new conditions of transit, most likely, is reduced to zero.

The main articles of Ukrainian imports to the countries of Central Asia is agricultural and food products, in particular finished products of grain, sugar and confectionery, the second export is the products of metallurgy and engineering.

The countries of Central Asia, Xinjiang Uyghur Autonomous region of China and Mongolia was the second after Russia on volume of the market of finished food products from Ukraine, previously recognized, trade representative of Ukraine, Natalia Mykolskiy. According to the data for 10 months in 2015, exports of food products to the countries of Central Asia and Mongolia amounted to about $ 300 million (almost 30% of total exports), about half was accounted for by the export of Ukrainian sweets.

* Organization in respect of which the court accepted entered into legal force decision on liquidation or ban the activities on the grounds stipulated by the Federal law “On countering extremist activity”

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