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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Business vs. Customs

62 percent of international companies still notice a high level of corruption within Ukraine’s “border”
2 August, 2011 - 00:00

The corruption level in the customs service has not improved in the first half of 2011. This view is supported by recently released results of the third wave of the Customs Index, published by the European Business Association (EBA). Thus, 62 percent of companies constantly dealing with customs authorities of Ukraine told the association’s experts that there had been no positive changes in 2011 compared to the last six months of 2010, when about half of the companies noticed the growing corruption of the customs service (see picture “The European Business Association member companies’ opinions on corruption in the Customs Service of Ukraine”), despite all the so-called “efforts” of the government (on June 8, President of Ukraine Viktor Yanukovych signed the Law “On Prevention and Combating Corruption in Ukraine” – Author).

Now it seems reasonable to recall the May statement by the Prime Minister of Ukraine Mykola Azarov, in which he urged businesspeople to assist the government in combating corruption in tax and customs authorities. On that day, the prime minister told the head of the State Customs Service Ihor Kaletnyk that the government pledged to fire and prosecute any customs service administrator whenever his or her integrity would be in doubt. However, as we have just seen, the business community still has its doubts regarding the customs service’s officers’ integrity, but criminal cases against and firings of Ukraine’s high-ranked customs officers are unheard of.

Still, corruption, despite being the greatest problem, is not the only complaint that the international business community has brought against the Ukrainian “border.” As a member of the EBA and marketing director of InMind company Olena Zhytnyk has stressed, during the first half of 2011 Ukrainian businesses still faced problems including delayed arrival of the documents required for customs clearance as well as the complexity and opacity of customs operations and procedures. According to the expert, the Customs Index shows that in the first half of 2011 the number of days spent on customs clearance of a shipment averaged 2.5 days, while in the first half of 2010 this figure was 2.4 days. Zhytnyk noted that respondents who participated in this survey have noted an increase from 6 to 8 percent in the share of goods that had their classification codes modified by the customs authorities.

The association’s experts have still managed, though, to find some positive changes in the operations of Ukraine’s customs authorities. In particular, they pointed out that business community has finally managed to achieve a decrease in the number of goods selected for physical inspection at customs. Thus, by the end of June 2011 their share was 26 percent, while for the respective period of 2010 the figure was 55 percent. Additionally, the experts observed clear progress in spreading use of the modern first method of determining the customs value: in the first half of 2011, the method’s use was refused a lot less often (refusal rate was 27 percent in 2011, but it was as much as 38 percent in 2010). The number of documents required for customs clearance of a shipment has decreased too. The top managers who have responded to the survey indicated that in 2010 they needed 10 to 11 of such “papers,” while in 2011 it was enough to file 9 to 10 of them.

However, a key achievement, as noted by the business community’s representatives, is the beginning of the long-awaited dialogue between businesses and the “border.” They hope that it would be possible to forget all the problems that currently harm the country’s reputation as a reliable participant of the international trade, as soon as the customs authorities and the business community will be able to talk to each other not in the language of bribes, but according to the civilized rules of the game. “The main achievement is that the business community already sees the customs service as a partner with whom one can collaborate through discussions and prompt problem solving. Only those companies whose activities are transparent, open and honest, can comfortably and successfully operate in Ukraine,” Iryna Vukolova, head of REHAU’s Department of Logistics and Procurement, co-chairman of the EBA’s Customs Committee, says.

The EBA notes that reform and modernization of the customs system is currently on the association’s agenda. The EBA’s Executive Director Anna Derevianko assures that the union will continue to conduct its series of studies concerning the efficiency of customs authorities of Ukraine, as the Customs Index, according to the expert, is a powerful practical tool for identifying deficiencies and determining development vectors of the national customs system. Derevianko has stressed that the EBA’s greatest effort is to be directed at combating corruption at the Ukrainian border, and the association already has a certain vision of how this can be done. “The customs system is seen as one of the most corrupt departments in which abuses of office are quite common. To combat such corruption, the most urgent thing to do is to reduce the number of direct contacts between traders and customs officers through the introduction of electronic customs clearance and declaring system. The starting point for an efficient and balanced implementation of customs reform is introducing anti-corruption initiatives and realistic priorities of the service’s operation,” Derevianko said.

By Alla DUBROVYK, The Day