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UPDATE 1-Russia, Belarus, Kazakhstan create customs union

Published 11/27/2009, 08:12 AM
Updated 11/27/2009, 08:18 AM

* Russia, Kazakhstan and Belarus agree on customs union

* Does not alter Russia's WTO ambitions

(Adds background, details)

By Andrei Makhovsky and Denis Dyomkin

MINSK, Nov 27 (Reuters) - The presidents of Russia, Kazakhstan and Belarus reached an agreement on Friday to create a new customs union from July 1, 2010, creating common external tariffs and a single market for 165 million people.

Russia has said it wants to join the World Trade Organisation (WTO) quickly but that it will coordinate its trade talks with both Belarus and Kazakhstan. Russia remains the largest economy outside the 153-member organisation.

At a meeting of the Eurasian Economic Community, which aims to create a single economic space for ex-Soviet countries, Belarussian President Alexander Lukashenko said: "We found compromises and agreements... We agreed that from July 1, we will have a single customs territory."

Moscow's own WTO talks have often stalled on various disputes. Before joining the WTO -- through the customs union or on its own -- Russia must resolve several trade and tariff issues.

Leaders of WTO countries say accession would allow Russia to trim import tariffs while remaining competitive, and have urged it to increase its efforts to join.

But Russia has stiffened restrictions on a series of imports, including a 30-percent duty on new foreign cars, to protect domestic industries during a recession that wiped out a tenth of the country's economy in the first half of the year.

(Reporting by Andrei Makhovsky and Denis Dyomkin, Writing by Amie Ferris-Rotman, editing by Mark Trevelyan) ((amie.ferris-rotman@reuters.com, +7 495 775 12 42, Reuters Messaging: amie.ferris-rotman.com@reuters.net))

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