To solve strategic problems, modern states often create free (special) economic zones on their territory. SEZs (SEZs) can be located within and under the jurisdiction of one or more countries that are part of the union. However, they have a special status, since they provide facilitation of entrepreneurial activity for foreign as well as national entities. In world practice, a free customs zone is one of the widely used procedures. Within the FCZ, foreign goods can be located for a certain period of time without levying duties and taxes, as well as without applying non-tariff regulation measures to them.
Introduction
The functioning of free zones is regulated by international law, in particular the 1979 Kyoto Convention. The Customs Code of the EurAsEC CU reflected some elements of its new edition. The latter entered into force on February 3, 2006. For example, Article 202 of the TC of the EurAsEC Customs Union secures such types of procedures as STZ and free warehouse. In the Russian Federation there are special economic zones created on the basis of federal laws. SEZs are parts of the territory of Russia that differ in their legal status and preferential terms of doing business. In some of them, the STZ procedure may apply.
Main goals and types
In world practice, the main task of creating special zones is to solve general economic, foreign trade, social and scientific-technical problems. Article 3 of the Federal Law “On SEZ in the Russian Federation” is dedicated to the goals of the SEZ. Among them: the development of manufacturing, high-tech industries, tourism, transport infrastructure, the commercialization of scientific results and the production of new types of goods.
Various procedures can be applied to products in the territory of the SEZ. Among them is a free customs zone. This is a procedure in which foreign products are not taxed for a certain period of time.
In world practice, the following goals of creating a SEZ are distinguished:
- Attracting foreign investment and advanced technology.
- Job creation, especially for highly qualified personnel.
- Testing new methods of labor organization.
- Cost minimization.
- Improving access to infrastructure.
- Lower costs for hiring workers.
- Reducing the number of administrative barriers.
- The development of regions and the approximation of production to the consumer.
There are several classifications of the SEZ. The main grouping is considered by type of economic activity. This classification distinguishes trade, industrial, technical-innovative, service and comprehensive SEZs.
Customs regime of the free customs zone: regulatory framework
Within the state border of Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan, a common TC of the EurAsEC CU operates. Also, the issue under consideration is regulated by the “Agreement on the Issues of Free (Special, Special) Economic Zones in the Customs Territory of the Customs Union and the Customs Procedure of STZ”. The concept of SEZ is identical to the term SEZ previously adopted in the Russian Federation. However, the term of existence of the latter could not be extended.
Customs territory
This concept is central to topics related to international trade and investment, as they involve the crossing of goods, services and capital of state borders. The customs territory represents the entire land, air and water space of the country. It may also include artificial islands, structures and installations. According to the TC of the EurAsEC Customs Union, the customs territory includes the land, air and water areas of Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan. It also includes all artificial islands, structures, installations, for which these states have exclusive jurisdiction.
In the legislation of the Russian Federation
The Customs Code of the Customs Union of the Eurasian Economic Community (Article 202) includes the FCZ in the system of procedures used in Russia. There are seventeen in all. A special customs procedure concludes the list. Legal relations regarding the functioning of special (special) economic zones are regulated by the federal law “On SEZ in the Russian Federation” and “Agreement on SEZ”. A free customs zone is a separate procedure. It cannot be used in some types of free economic zones. The movement of goods from and to STZ is made with the permission of the customs authorities. Products may be located here throughout the entire life of the SEZ.
Three earlier adopted laws have not lost their relevance:
- "On the SEZ in the Kaliningrad region."
- “On special economic zones in the Russian Federation”.
- "On the SEZ in the Magadan Region."
Operations with goods
As we have already said, a free customs zone is a separate procedure in the framework of the SEZ. Its regulation is contained in the regulatory framework of the EurAsEC CU. Importing goods into the warehouse is possible only after the resident has provided information about them in writing. On the territory of the STZ, you can inspect and measure goods, as well as take all necessary actions to ensure their safety. Subject to the availability of an agreement on the implementation of activities in the SEZ, authorized persons regarding the products may carry out product processing, assembly, preparation for transportation and further sale. In respect of goods, transactions may be concluded that provide for the transfer of ownership of them.
Importance for the domestic economy
In developing countries, a free customs zone is primarily a source of growth. It helps the national economy enter a new stage of industrialization of industry, and allows manufactured goods to be sold abroad. In developed countries, the customs code may prioritize the creation of the FCZ to strengthen individual regions and industries. That is, they consider this regime as a way to balance the economy.
The customs procedure "free customs zone" in the Russian Federation has its own characteristics. In the past, experts often noted the politicized use of STZ to the detriment of their economic nature, inconsistency and lack of a clear strategy for their creation. Therefore, sometimes in Russia one could even talk about the negative impact of some free customs zones on the development of regions. Local goods were simply unable to compete with cheap duty-free imported products.
In order for the FCZ to benefit the economy, the state must have prepared the components of infrastructure, production capacities and legal framework. Foreign practice of applying the procedure allows us to talk about the need to develop clear goals and objectives for creating such zones. You need to understand that thoughtless copying of foreign models is unacceptable. The conditions and problems in each state are different, so the templates are ineffective and may even discredit the very idea of creating an STZ.
Problems
Analyzing world experience, several errors can be identified in the creation of STZ. Among them:
- Lack of a clear study of the goals and objectives of the functioning of the FCZ.
- A mixture of foreign economic and investment aspects.
- The absence of a separate state power structure that would regulate the import of goods into the territory of the STZ.
- Overstated land allocation for the creation of free customs zones.
- Lack of a preparatory period during which the economic infrastructure is being established in the region, and of the financial and economic justification for the creation of the FCZ in a specific region.
Difficult moments in the Russian Federation
In addition, in Russia there are a number of internal problems that hinder the successful functioning of free customs zones for the good of the country. The most important among them are the following:
- In Russia, comfortable conditions for the work of foreign specialists have not yet been created.
- High risk when investing.
- Much longer payback periods of projects compared to developed countries.
- Insufficiency of guarantees of return on investment.
- The problem of processing products that are export-oriented.
- Inefficient transport links with remote regions, which makes the products of the latter uncompetitive.
- Demographic problems.
Prospects for the development of the regime in the Russian Federation
The experience of foreign countries shows that the main problem in creating a SEZ is the wrong choice of the location of the zone, inefficient institutional ties between government agencies involved in the operation of preferential regimes, and the underdevelopment of basic infrastructure elements (transport, electricity, telecommunications). It must be understood that the region itself will not begin to develop after the application of the STZ procedure begins. Zones of the social plan must be allocated separately. It is also important to reduce the number of administrative barriers. Paperwork and bureaucracy never contribute to the successful functioning of free customs zones. The sequence of the state’s political course is also important, as evidenced by the duration of the benefits. World practice shows that when creating STZ you need to be guided by the following principles:
- revitalization of entrepreneurship;
- return on investment;
- competitiveness of business in comparison with other territories due to modern forms and methods of organizing activities;
- unity of entrepreneurial and managerial initiative, compliance of the SEZ structure with real economic conditions;
- the presence of a well-developed legislative framework.
