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EEU

Transit of goods. How to break through Kazakhstan?

After joining the Eurasian Economic Union, Kyrgyzstan experienced all the "charms" of the struggle for a place in the EEU sun. Most of the disputes arise with Kazakhstan. One of the greatest challenges - the transit of goods through the neighbors.

Hold at any costs

The transit sphere has many complications - both subjective and objective. One can't solve them yet. But it turns out that problematic are not only exports, but also imports.

Entrepreneur T. Suleymanov since 2015 has been dealing with the delivery of fruit (peaches, oranges, apples) from Chinese Khorgas to Bishkek. He easily worked for a year, but in the beginning of August, the problems with the passage of the goods through Kazakhstan arose.

"My cargo was detained in Almaty on August 5. When I wanted to find out the reason, I was told that now all the goods are documented a transit in Almaty and wouldl pass inspection at the customs post "Almaly." After it the transit will be documented again, but now from Almaty to Bishkek," T. Suleymanov writes in a statement to the prosecutor of Almaty.

However, the entrepreneur failed to pass inspection at once. Officials didn't accept the documents, referring to the fact that the question of who should inspect the goods hasn't been agreed upon yet. But the four wagons were full of fruits, vegetables and melons - perishable product. Cargo stood at "Almaly" post for six days. Conditions for its storage were not provided.

"At the request to register the goods I was offered to wait. Due to the negligence of the State Revenue Department, the Department of Customs and inspection services I suffered considerable losses. Kazakh President in his message instructed state agencies to protect small and medium businesses from illegal additional checks. Why in fact everything is different?" T. Suleymanov outraged.

While officials were deciding who will examine the goods, products have spoiled, and there was nothing to deliver to Kyrgyzstan. Businessman doesn't voice the amount of damages, but the logistics are sure that the damage is estimated at no less than $200,000.

Logistics companies that supply goods from China to Bishkek regularly face with the bureaucratic machine of Kazakhstan. At work, they use warehouses on the territory of the Republic of Kazakhstan and certain fleet vehicles from Kazakhstan. As a result, the lion's share of contractors, customers, executors are residents of Kazakhstan. But this doesn't protect from the problems.

"In early August, we faced with such complexity as additional (internal) transit. State Revenue Committee of Kazakhstan's Finance Ministry ordered to carry out a full customs clearance at checkpoints "Zharkent" and "Kalzhat" of Altynkol customs post during registration of the transit of fruit and vegetables and consumer goods from China to Kyrgyzstan. Both items come under the State Revenue Department of Almaty and Almaty region. We consider this measure as violations of the international agreements on the transit of goods by representatives of state bodies of Kazakhstan," the letter of businessmen said.

Businessmen' dissatisfaction is clear. Additional customs clearance prolongs delivery term. There is no precise indication of how much time is necessary to the State Revenue Department's experts for examination. Another problem is that the State Revenue Department officials also apply a full examination to perishable goods.

Also the cost of logistics increases: an order on inspection forces them to issue transit declaration from Almaty to Bishkek.

Consignee bears the costs for a full inspection and storage of goods, payment to loaders. Drivers of heavy transporters have no money, because they are paid for delivery of the goods to the destination. The sender has to pay extra for customers for idle time and all this time to support drivers (food, accommodation). Total costs of the additional customs clearance is estimated at least 389,000 tenge or 77,800 soms.

Illegal transit 

The authorities of Kazakhstan have own view on the problem. In their opinion, the additional requirements - an attempt to protect the market from smuggling. Conducted by the State Revenue Committee monitoring of the goods movement from China to Kyrgyzstan has showed a significant (87 percent) increase in the volume of transit in the first half of 2016.

The main increase in the volume of transit traffic - road transport. It is not surprising. Until recently, motor transportation was relatively simple and inexpensive way to deliver the goods - as opposed to the railway, which has a higher transit tariff.

Compared with the first half-year the transit of goods from China to Kyrgyzstan increased 52 (!) times. Kazakh authorities believe that this points to the fact of a large flow of contraband.

Kazakhstan quickly found method of combating smuggling. State Revenue Department of Almaty and Almaty region sent a letter, which clearly states that the customs convoy of goods and vehicles with the establishment of the route, affixing stamps and conducting a full customs inspection with photo and video fixation should be strictly applied.

If during the inspection violations of the goods are found, the proceedings will follow. If not - the further movement of goods goes with a customs escort for the transit procedure and the transfer of goods and transport to customs of the KR. The process must go on technology of receiving and transferring accompanied by vehicles, approved by the Committee on Income of the Kazakh Ministry of Finance on October 19, 2015.

It seems everything is clear. But in fact it turns out that Kyrgyzstan hasn't received the promised by Eurasian Economic Union free movement of goods - what exactly the country wanted to achieve by entering the EEU.

The East is a delicate matter

Chairman of the Association of suppliers, producers and distributors Gulnara Uskenbaeva in conversation with 24.kg news agency noted that really there are problems of the transit of goods. Business representatives even asked the government for help - the Vice Prime Minister for Integration Oleg Pankratov. However, it became clear that it is impossible to resolve the issue at the legislative level.

"We can't make claims to Kazakhstan at the country level. They have the right to carry out customs clearance of cargo for contraband, the presence of drugs or other prohibited substances or products," Gulnara Uskenbaeva said.

"In fact the Kazakh side doesn't violate the law. Another question - the abuse and corruption of officials. But here Kazakhstan should examine the matter itself. We don't carry cargo from China, other companies deal with it. Representatives of our association carry goods through Russia, and there we also have problems. The RF toughened requirements to the load on the axles for heavy cars, but suppliers are trying to shift the problem to us. Now we try to resolve the situation somehow," the head of the association said.

Expert on infrastructure development of Central Eurasia, former Assistant of Minister of Energy and Infrastructure of the Eurasian Economic Commission Kubat Rakhimov is sure that one must urgently solve the complexities of relations with neighbors. But don't rely on the fact that we are fraternal countries. The expert is sure that due to problems with Kazakhstan, we can't properly transport our goods.

"It is clear that Russia - our strategic partner and ally. But Kazakhstan separates us from the Russian Federation. It is impossible to trade with Russia, if one can't get through Kazakhstan," Kubat Rakhimov added.

Don't forget that Kazakhstan has hard times now. Country minimizes costs and ensures compliance with the law. To resolve this issue the economist offers officials to travel incognito with entrepreneurs in Kazakhstan, to know exactly where they are "suppressed," and where businessmen cheat themselves. It must be confessed that our entrepreneurs also break the law in order to reduce costs.

EEU for Kyrgyzstan is not a magic wand that will solve all problems. This is just an opportunity to reformat the economy and improve its market position. Don't think that someone waits us there with open arms.

One has to fight  for a place in the market and the right to work in favorable conditions. Including overcoming bureaucratic barriers. Today, the state hardly can do anything to support the business. The negotiations on contentious issues are going with difficulty.

At the same time one should understand: the problem can not be resolved by stamping foot and yelling out curses against neighbors. The East, as they say, is a delicate matter. Conflicts and disputes are possible to solve only by kid-glove diplomacy and negotiation, but the KR, alas, can't boast of it.