Review of Significant Changes Regarding Customs Union and Single Economic Area

Dear Sirs,

In this issue we would like to draw your attention to the review of significant changes regarding Customs Union and Single Economic Area.

Agreements signed by the heads of Russia, Kazakhstan and Belorussia came into force on 01 January 2012. They concern the functioning and development of Customs Union and Single Economic Area on competition; trade in goods and services; promotion of both financial and human capital.

In this review we would like to draw your attention to the following issues:

1) Agreement on Legal Status of Migrant Workers and Members of their Families (St. Petersburg, 19 November, 2010) (hereinafter – Agreement on Migrant Workers)

Agreement on Migrant Workers significantly simplifies the requirements of staying for Migrant Workers in the Single Economic Area (hereinafter – SEA) from Russia, Kazakhstan and Belorussia; In this case Migrant workers mean the citizens of SEA countries, working legally in other country of SEA.

The procedural simplification consists of absence of quotas on number of foreign workers and cancellation of special permission from the authorized body on work and employment.Also, the migrant worker has the right to conclude a new employment contract within 15 days, including with another employer in accordance with the law of the state where he is employed.

Furthermore, the worker – a migrant and his family are exempt from registration within 30 days from the date of his entering the territory of SEA country where he is employed. The period of temporary staying of the migrant worker and his family is validity period of his employment contract with employer.

The new procedural simplification does not apply in economic sectors of strategic importance, as well as in public policy, health care and other industries related to national safety.

2) Agreement on Access Regulation to Railway Transport Services, including tariff policy (Moscow, 9 December, 2010) (hereinafter – Railway Transport Agreement)

As a result of adoption of Railway Transport Agreement, SEA countries assumed the following obligations: from 01 January 2013, the SEA countries will use common tariffs for railway transport services for all purposes (export, import and domestic tariffs for cargo transportation), and also, from 01 January 2015, a provision of equal access of SEA countries carriers to Railway Services for transportation in other SEA countries will be implemented.

Nevertheless, the SEA state by consent with Customs Union Commission have a right to set exceptional tariff rates for certain transport directions of special cargos in the case of failure to provide the support to producers in another form.

3) Agreement on Condition Arrangement in Financial Markets for providing of Free Capital Movement (Moscow, 9 December, 2010) (Agreement on free capital movement)

This agreement on free capital movement regulates the relationship in banking sector, foreign exchange market, securities market and insurance sector. For the purposes of implementation of Agreement on free capital movement, SEA countries assumed obligations on law harmonization, approaches to risk management in accordance with international standards and the sharing of information between competent authorities.

This will affect the rules and procedures in setting exchange rates of national currency; activity of professional participants in securities market; procedures regarding securities issue, placement and conversion of foreign securities on the domestic securities market; requirements and approaches to insurance supervision and regulatory of insurance activity; obligatory insurance, reinsurance, agency work upon insurance and etc.

We hope provided information will be useful for you. Should you have any questions, please, contact us.

Information contained in this Client Update is of general nature and cannot be used as legal advice or recommendation. Please seek for a specific advice in relation to any questions. Please note that Kazakhstan and Turkmenistan are emerging economies and their legislation and legal systems are in constant development. Should you have any questions or would like to discuss subjects addressed in this Client Update please contact us.