Ukraine Links Russia Trade Difficulties to Customs Union Discord

Delays experienced by Ukrainian exporters on the border with Russia are linked to disagreements between the two countries over a Russia-led customs union, Ukraine’s Prime Minister Mykola Azarov said.

Russia’s Federal Customs Service has placed Ukrainian exporters in a higher-risk category, subjecting their goods to lengthier checks, Ukraine’s Employers Federation said yesterday. The country’s biggest steel producer Metinvest said its shipments have drawn additional scrutiny for two days.

“There are certain difficulties linked first of all to the setting up of the customs union,” Azarov said today in the eastern city of Luhansk, according to remarks broadcast by private TV channel 5. Russia’s government denied restricting Ukrainian imports, saying delays are down to decisions by customs officials, its press office said today by phone.

Russia wants Ukraine to join a customs union it’s formed with Belarus and Kazakhstan, promising benefits including cheaper natural gas and higher trade. Instead, Ukraine is seeking to sign a free-trade pact with the European Union in November, a move that would rule out customs union membership.

Russia is the top destination for Ukrainian goods exports, with almost a quarter of foreign sales being shipped there in the first six months of the year, according to Ukraine’s state statistics office.

Russia banned imports of sweets produced by Ukraine’s Roshen on July 29, saying consumer regulators had discovered carcinogenic substances. Kazakhstan, Tajikistan and Moldova inspected Roshen products this month and said they found no dangerous ingredients.

To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net; Kateryna Choursina in Kiev at kchoursina@bloomberg.net;

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net; James M. Gomez at jagomez@bloomberg.net

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