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A cartel or tax minimization?

Which is the lesser evil for the market?
20 December, 00:00
“FRESH FISH” / Photo by Mykhailo MARKIV

The authorities, who are always blamed for their inability to regulate the markets, seem to have overdone it by enforcing overly strict regulations on the market of imported fish products. Moreover, this country learned on Dec. 12 that the protocol on cooperation between the State Customs Service and imported fish market operators is a case of corruption and an attempt to monopolize the market.

At first glance, everything is clear. Market operators voluntarily pledged to oppose reducing the customs value of goods. In other words, whenever a party to the protocol enters Ukraine, it must declare the value of fish products on the basis of prices stipulated in the supplement to this protocol. Should anybody try to bring in fish at lower prices, the State Customs Service will commission protocol signers as experts for setting real prices.

But, as one of the classics once said, only the paper was smooth. “We are going to have a group of people who will take advantage of connections in the government and try to dictate selling prices for certain products,” experts say. In their view, this document runs counter to the Constitution and Ukrainian legislation that standardizes regulatory laws. Accordingly, the above-mentioned memorandum will infringe the rights of some entrepreneurs.

However, according to Larysa Tataryntseva, head of the Cabinet of Minister’s Foreign Economic Relations Board, it was the Association of Fish Importers that spurred the signing of this agreement. She claims it was a mutually advantageous exchange between the state and businesses: customs officers have gained access to entrepreneurs’ primary documentation, while entrepreneurs who have obtained various concessions and privileges from this board have disclosed all the prices and promised not to import “cheap” fish. Tataryntseva says this kind of memorandum is an international requirement that obliges customs houses to join such unions and sign protocols with associations of entrepreneurs who wish to work honestly, paying money right into the budget instead of squandering it in the form of bribes.

The only problem is that this violates the right to fair competition: the companies that signed the protocol have obtained the right to establish prices on the fish market, thus pushing all other traders into the “shadows.” Natalia Petrushova, manager of the Setnik enterprise, says that since her company failed to sign the protocol, it was told to pay a 20%-higher customs duty, and when it refused, the truck loaded with $100,000 worth of goods was detained at the border checkpoint, where it has been standing for almost a month now. The company has applied to the Prosecutor-General’s Office and the Antimonopoly Committee for help in defending its rights. Petrushova adds that up to 60 percent of the market runs the risk of turning illegal because entrepreneurs are simply afraid that their import licenses will be revoked. She defends her standpoint (refusal to sign the memorandum), saying she cannot “declare the prices at which people buy things. This robs people of the right to “fair play.”

Opponents of the customs service say that one of the consequences of the state’s game is the increase in the price of fish on the consumer market. Is the state deliberately boosting inflation? Meanwhile, the Foreign Economic Relations Board is promising to contact (every month) the countries that export fish to Ukraine and monitor the real value of fish. In that case there will be no accusations of a “cartel conspiracy” or customs tax minimization.

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