Kazakh business leaders alarmed at proposed Russian e-commerce 'operator'

By Anna Karr

A woman makes a purchase online in Almaty February 25. [Anna Karr/Caravanserai]

A woman makes a purchase online in Almaty February 25. [Anna Karr/Caravanserai]

ALMATY -- Kremlin pressure to have a single "operator" (regulator) dictating e-commerce rules within the Russian-dominated Eurasian Economic Union (EEU) is alarming business leaders in Kazakhstan.

Atameken, the National Chamber of Entrepreneurs of Kazakhstan, has declared that Kazakhstan is not ready for a unified e-commerce operator, but the Eurasian Economic Commission (EEC), the regulatory body of the EEU, is in a hurry to create one.

The e-commerce operator is meant to simplify the work of the EEU member states' custom agencies, and help develop cross-border online commerce and customs warehouses, according to the EEC.

If it comes into being, its duties will include formulating electronic customs declarations for individuals who buy goods on foreign e-commerce sites, calculating and paying customs duties for such goods, and passing on foreign e-commerce sites' information about merchandise to the EEU member states' customs agencies.

A dealership selling Russian cars is shown in Almaty in February 2020. GAZ, a Russian vehicle manufacturer, has been exploiting EEU trade preferences in an attempt to monopolise the Kazakh market. [Kanat Altynbayev]

A dealership selling Russian cars is shown in Almaty in February 2020. GAZ, a Russian vehicle manufacturer, has been exploiting EEU trade preferences in an attempt to monopolise the Kazakh market. [Kanat Altynbayev]

Rashly charging ahead

Atameken has repeatedly expressed alarm at the EEC's willingness to go forward on creating an e-commerce operator without clearly understanding the project's goals, Atameken said in a statement posted online February 22.

The EEC still has not decided whether to have a single e-commerce operator for the entire trading bloc or to have several, or how many personnel or what kind of personnel will staff the operator.

"The desire to prepare and enact [EEU] regulations before performing pilot projects and analysing the results is alarming," reads the announcement on Atameken's website.

This is the first time in EEU history that the EEC is preparing to amend its Customs Code without preparing key approaches and strategies, said Atameken.

The EEC intends to approve the creation of a central e-commerce operator in the first half of this year.

Lobbying for Russian interests

In its decisions, the EEC depends on the union's main member, Russia. The majority of members of any EEU body, such as this possible e-commerce operator, will consist of Russians who will push Moscow's policy, economist Andrey Chebotarev of Nur-Sultan said.

"The EEU is not an equal union. The union has one big player, Russia, who imposes general decisions and the rules of life on the countries of the [EEU]," he said.

"The [EEU's] rules are not adopted through negotiations and consensus, where everyone compromises for the common good, but rather are dictated by the Kremlin's vision," he said.

Chebotarev sees in the EEU something reminiscent of Soviet days, where member states, except for Russia, lacked economic freedom. Even though the Soviet Union ostensibly was a general confederation of republics, he said, Moscow imposed economic policy.

"Now we are all independent countries, but the desire to force everyone to live under one country [Russia] is present in every EEU decision," the economist concluded.

Prioritising Russian producers

Discussions for creating a single e-commerce operator in the EEU began two years ago, but the idea was hazy and ill formed, said Konstantin Gorozhankin, president of the Kazakhstan Business Association of Internet and Mobile Commerce.

"There are currently no barriers to trade that need to be removed and that require an entire international body. Therefore, to me, as a businessman, it is not clear why the Russians need a unified government agency," he said.

"No one has discussed nor is discussing this initiative with us [the Internet Business Association]," Gorozhankin said.

In the past few years, the Kazakh government has paid close attention to growing online commerce and has already adopted several state programmes to this end, said Daulet Bayzhigitov of Shymkent, owner of the Dresscode online store.

The latest programme developed for 2021-2025 includes the creation of a unified system for monitoring and analysing trade development and the refinement of statistical accounting and of research on e-commerce.

"This programme accounts for all the needs of Kazakh businesses and customers. In other words, no outside operator is actually needed," Bayzhigitov said.

"But if you look at the idea from a political point of view, then everything becomes clear. As the successor to the USSR, Russia dreams of how to take power into its own hands in the unified [post-Soviet] space," he added.

Once a central structure takes shape, it will begin to establish rules for the entire business community and will not care how the businesspeople of Kazakhstan or Kyrgyzstan are faring, he said.

The Kremlin will take care of Russian producers first, predicted Bayzhigitov.

"For example, it will increase customs duties on goods from Amazon or other foreign e-commerce sites, thus forcing people to buy goods from Russian manufacturers directly," he said.

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They are talking about the control of declared customs value - [customs officers] always intentionally undervalue it. Also, about [corrupt Kazakh customs officers'] being in charge of smuggling into Kazakhstan. It's about transparency, registration, and order. "Solving" a problem with the customs service is a tradition in Kazakhstan; it's the major reason why it frowns on computer technologies.


We should leave this Customs Union