Belarus Agrees to End ‘Solvents’ Export Scheme

MINSK, December 18 (RIA Novosti) – Belarus has agreed to end duty-free exports of gasoline and other oil products refined from Russian crude under the guise of “solvents,” a scheme that reduces the customs duties it must pay to Russia, a source in the Belarusian government told the Prime news agency on Tuesday.

Belarus has agreed to make amendments to the Code of the Customs Union between the ex-Soviet republics of Russia, Belarus and Kazakhstan that will put an end to the practice, the source said.

“The amendments to the Customs Union Code were initiated by the Russian side,” the source said.

Belarus, as a member of the Moscow-led customs union, does not pay customs duties on oil supplies from Russia, but it must pay the customs duties it collects on exports of fuel and petroleum products refined from Russian crude.

Russia has repeatedly expressed concern about Belarus exporting oil products to Europe under the guise of solvents and thinners to evade additional tax payments to the Russian budget. Moscow has said the volume of crude supplied to Belarus next year would be tied to resolution of the issue.

According to Belarus’ Statistical Agency Belstat, Belarus exported 244,000 tons of “solvents” in 2010, a figure that rose to 2.1 million tons in 2011 and to 2.9 million tons in the first half of 2012. Latvia was the main buyer, importing 1.5 million tons.

Russia previously suggested that Belarus should compensate Russia for $1.5 billion in losses resulting from the “solvents business.”

Belarus began exporting petroleum products described in cross-customs documents as “complex organic solvents” in an apparent move to boost its foreign currency earnings. Under the current customs union regulations, solvents can be exported to world markets duty-free.

The new amendments will label various mixtures of oil products and alcohol, which were used to produce solvents and thinners and lubricants, as petroleum products and will be subject to export duties.


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