Two Summits
The two summits ended in Kazakhstan on September 15. Despite expectations of an emphasis on the fight against terrorism, economic issues predominated. During the meeting of SES heads of state, Presidents Vladimir Putin of Russia, Nursultan Nazarbaiev of Kazakhstan, Leonid Kuchma of Ukraine, and Aleksandr Lukashenko of Belarus considered the progress on agreements reached during the May 24 meeting of SES presidents in Yalta and reviewed the list of international legal documents to be harmonized and signed by SES member states in the first place. The parties discussed a transition to common principles of VAT collection in multilateral trade and ways to simplify the border crossing procedure for those traveling within the SES.
These documents are designed to unify mechanisms of customs and tariff regulation. They envision a unified procedure of export duty collection, unified rules for establishing trade quotas, licensing, and using protective measures in multilateral trade. According to President Leonid Kuchma, Ukraine hopes that by year’s end the parties will prepare drafts of international legal documents that will lay the legislative groundwork of the SES. He spoke highly of Russia’s decision to switch to a zero VAT rate in its oil, natural gas, and condensate exports to CIS member states. He proceeded to emphasize that this issue should not be considered from the financial angle alone, adding: “The gradual elimination of multilateral trade barriers will increase commodity turnover and help solve these problems.”
President Kuchma also expressed his approval of the decision to consider ways to simplify the border crossing procedure within the SES, adding that the standing procedure is “an obstacle to the development of our trade relations.” He also proposed to temporarily suspend additional tariff and non- tariff restrictions and new additional exemptions in multilateral trade among SES partners. “We have jointly established the overriding goal of moving toward a free trade zone without exemptions or restrictions. Therefore, additional exemptions, if any, can be introduced only as part of joint consultations,” Kuchma said. He also spoke of the need to strengthen cooperation in the space industry, in particular by forming a joint rocket and space corporation. “We have every opportunity to create a single, powerful, transnational corporation that would compete on a par with similar international organizations.”
President Kuchma also named integration of the transport systems of SES member states as another promising direction in the cooperation within the SES. “I do not mean a unified tariff. I mean that we must jointly find a way to make rational use of our transport systems,” he said, adding that the Danube-Black Sea canal has helped Ukraine to significantly cut cargo transportation costs. As he put it, it has also enabled Russia to cut its costs. The president further called on the SES nations to pool their resources to develop the transport sphere of member states.
Ukraine’s Prime Minister Viktor Yanukovych signed 23 documents at the meeting of government heads, particularly the following key economic mechanisms: “On ways to solve problems that adversely affect multilateral trade and economic cooperation within the CIS,” “On the delegation of powers to the CIS Economic Council to make final decisions on individual draft documents on behalf of heads of CIS governments,” the concept of interregional and cross-border cooperation among CIS nations, as well as the concept of a coordinated transport policy for CIS member states until 2010. The latter document stipulates that it is effective on Ukrainian territory only to the extent of Ukrainian legislation. Moreover, Ukraine has signed a document to begin drafting a plan of joint actions by CIS member states to commemorate the twentieth anniversary of the Chornobyl tragedy.
However, the summit participants differed on some key issues. Ukraine did not sign the concept of cooperation and coordination of activities by CIS member states on currency issues, an agreement to create a reserve of resources and effectively use them to ensure the uninterrupted operation of CIS energy systems, and an agreement to form a council of permanent and plenipotentiary representatives of CIS member states. Ukraine did not sign documents relating to military-economic cooperation among CIS nations.
The meeting of government heads began with traditional criticism of the CIS, which has failed to become an effective mechanism for ensuring mutually advantageous cooperation among its member states. Current CIS President, Moldova’s Prime Minister Vasyl Tarliev, pointed to “inadequate implementation of agreements to form a free trade zone within the CIS, harmonize economic laws, and coordinate efforts in other spheres of the economy.” As he put it, CIS government heads have repeatedly called for joining efforts to gradually eliminate barriers in multilateral trade, create an effective system of payments, draft adequate legislation that would make it possible to ensure fair competition in CIS markets, taking into account internationally accepted norms, including those of the WTO.
Viktor Yanukovych showed more optimism than his Moldavian counterpart. He told a joint news conference of CIS government heads in Astana that it is possible to create a free trade zone within the CIS already by 2005. As he put it, Russia’s decision not to collect VAT in the country of destination is creating significant prospects for the creation of a free trade zone in the immediate future. Meanwhile, discernible trends toward stronger regional cooperation, coupled with rapidly expanding economies of CIS nations, are creating completely new conditions. Yanukovych called upon his colleagues to work to create real mechanisms for such cooperation.
