Andrei Karunos

    As is expected, a new customs code will be adopted in Russia. But nobody can say for sure yet, when it is going to happen. It has been three years already since the draft legislation passed its first reading in the previous State Duma. At the hearings on �WTO and customs regulations� in March 2002 member of the Duma’s committee on property Igor Lysinenko mentioned January 1, 2003 as the date of its enactment. So as to complete their work by that date deputies should have held two more readings before the summer recess and sent the bill to the Federation Council, the Parliament’s upper house. It did not happen. Why? Speaking in the most general terms the answer to this question seems clear: Russia’s new customs code is a political document rather than an economic one.
The original draft of a new customs code was worked out by the State Customs Committee (SCC) jointly with a group of the Duma’s deputies. Later, when preparations for the second reading (introducing amendments) got underway, two versions of the future code emerged: the government variant (the same as the one of SCC) and the so-called initiating (liberal) version. There was also a possibility that the third one would surface: the Ministry of economics was categorically against SCC’ proposals and got ready to put forward an alternative bill. But vice premier Alexei Kudrin did not approve this initiative.
All differences indicated the following. SCC’ version would provide customs officials with broad authority practically at each and every stage of the customs procedure, make the decision-making system secret and abuses possible. That is the opinion of the Ministry of economics. The same view also prevails in the Duma’s subcommittee on customs and tariff policy chaired by Valery Draganov, the former head of Russian customs House. Now Draganov is in charge of the Experts’ council on the new code established by the State Duma. In his opinion, the proposed draft legislation is fraught with upsetting the balance of interests between the State and business community.
In his analytical message to the government the deputy draws attention to «shortcomings of the existing customs laws», which might be inherited by a new customs code as well. These deficiencies manifest themselves in «the absence of distinction between public and private rights». Since the law does not set limits to authority of customs agencies, they are free to determine standards themselves. «There are about 3,500 statutory and legal acts of the Customs Committee being in effect in Russia now» and this, in the opinion of Valery Draganov, often creates «an insurmountable administrative barrier» and «causes a considerable damage to the national economy».
As far as major differences between the government and initiating versions are concerned, they are as follows. Liberals are proposing to define in detail rights and responsibilities of individuals, mechanisms for their legal protection as well as to clearly determine authority of customs agencies and rule out extrajudicial decisions. They think it necessary to establish a continuous customs and tax monitoring of goods’ movement: from the moment of border crossing to their arrival on the domestic market. Customs control by the government and SCC accordingly is to be autonomous and closed to other bodies.
The uncertainty with problems of customs tariffs is also mentioned among shortcomings of the government version. But tariffs and ways of setting them affect not only national business. They directly concern nonresidents as well.
Liberal deputies believe that a customs tariff (code of import duty rates) should be set by the Russian government, incorporated in federal budget and approved by the Federal Assembly. Rates of export duties and a list of goods, which are liable to their imposition, are to be determined once a year by the Russian government in accordance with maximum rates of export duties as provided for by the draft of a customs code. In Valery Draganov’s words, this procedure is adopted by most countries with developed market economies and it ensures stable conditions for conducting business. However, under the existing code Russian government can change tariff rates any time.
The deputies’ draft stipulates a possibility of flexibly regulating import and export of goods: the Russian government is given the right to introduce seasonal duties. These duties are to be effective no longer than half a year. Besides, use of special, anti-dumping and compensatory duties is permitted. The way they have to be levied should be regulated by laws on protecting Russia’s economic interests. The draft assumes that according to Russia’s international treaties goods made and imported from individual countries can be given trade preferences (exemptions).
Customs officials do not agree with these approaches. Galina Balandina, an adviser to SCC’ chairman, said that the policy toward «openness of Russian market to foreign goods» lacks «mechanism of protecting interests of the national economy». In her opinion, the liberal version of the law «contains provisions contradicting the GATT and WTO; it proposes revolutionary changes in the system of customs agencies and infrastructure while ignoring state of activity in foreign trade and dynamics of its development». If such a law is passed, «an economic crisis» will ensue.
The government version of a new customs code has got even more opponents. They include metal producers, who think that SCC disregards the opinion of big business. A statement on this score was made in July 2002 by a representative of Severstal JSC at the session of the advisory board of Russian business on WTO-related problems held in the Chamber of Commerce and Industry of the Russian Federation.
A new round of negotiations on Russia’s accession to WTO will start in September. Problems of customs regulations are of no secondary importance in this process. As an official from the Ministry of industry confirmed, it will continue to insist on raising import duties on furniture and used cars. The first deputy minister of agriculture Sergei Dankvert said that Russia should correct its position of farm production quotas and increase a number of products being imported under quotas as much as possible.
It is worth to note the position of Alexander Abramov, the president of Russia’s largest steel company EvrazHolding. Addressing the problem of protective duties on shipments of steel rolled products from Ukraine and Kazakhstan he said: «It was not Russia that originally initiated introduction of protective duties. Everybody knows perfectly well, which country started using these duties first. And I want to stress that, although restricting import of metal products from CIS member-countries might be criticized from the liberal economic viewpoint, however, as far as Russia is concerned, it is a retaliatory measure only. We do not have the right to give our market as a present to anyone».
Detailed information on the size of customs duties for the next year will be available only after the federal budget is adopted. In any case the level of customs barriers will mirror the actual competitiveness of Russian industry during the «transition» period of joining the WTO.