Friday, August 16, 2013

Delays to Freight as Customs Union Row Heightens while Truck Queues Build on Russian Border

Political Shenanigans Cause Delays as Vehicles Stripped of Import Cargo
Shipping News Feature

RUSSIA – UKRAINE – Despite local press reports earlier this week that the country’s Customs had decided to delay new procedures planned for the 14th August until the same date in September, chaos reigned today at border posts with hundreds of trucks held up on the border crossings where Ukrainian vehicles transit. Our story on the 8th August outlined the problems likely to be incurred by road haulage freight entering the country, but it seems these current problems are political rather than documental and targeted at Ukrainian exporters.

With Ukraine’s relations with the bear next door already strained, disputes over gas prices and payments have proved a constant source of complaint from both sides, and the country continues to reject Russian solicitations to join a Customs Union led by the larger neighbour. Ukraine has aspirations of joining the EU which would isolate Russia further from another former colony yet integrate Ukraine into the larger trading group which, in theory at least, recognises its members’ as equal partners. 

This latest action may be Russia’s attempt to pressure Ukraine into a cooperation which would see the two countries, together with neighbours Belarus and Kazakhstan, form a free trade group for Customs purposes, a plan seemingly rejected by the country’s President Viktor Yanukovych when he cancelled a diplomatic visit to Moscow last December, saying subsequently that he could not compromise international relations with the EU.

Gas prices are used as a carrot by Russia to persuade Ukraine to abandon its plans for European integration with favourable energy rates apparently already available to Belarus for complying in the Union. There is however an inherent reluctance in Ukraine to join any perceived neo Soviet bloc, but gas is essential to the country’s current energy needs. Joining the proposed Union would mean constitutional changes and, with the country on the brink of agreeing terms for EU membership (there is a summit in Vilnius in November which should see the first formalising of terms with the larger trading bloc) Ukrainian exporters are apparently now finding unwarranted delays to their goods as the pressure builds.

On Wednesday the Confederation of Employers of Ukraine, whose members are responsible for around 70% of the country’s export goods, issued a statement to the press saying ‘Russia is blocking Ukrainian export traffic with a complete embargo on exports which could potentially cost the country up to two and a half billion dollars for the latter half of 2013’. Political interference is denied by Moscow which says the border problems are a Customs matter brought on by Ukraine’s non membership of the new Customs Union.

Although hard to establish the full facts, hidden as they are behind the usual political rhetoric from both sides, we have reports that indicate many Ukrainian vehicles are suffering extreme delays, often with all trucks stopped initially for documentary checks and subsequently completely unloaded before being reloaded and allowed to proceed. Russia cites all manner of problems with the imports, including quality and health matters, yet, as both countries are now World Trade Organization (WTO) members (Russia joined a year ago this month), this would seemingly infringe the current free trade agreement in place between the two, although no formal complaint by either side seems to have been lodged with the WTO as yet.