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Russia: Customs To Tighten The Squeeze

Moscow, 25 June 1998 (RFE/RL) -- Russia's State Customs Committee (G.T.K. is the Russian acronym) is facing a tight squeeze for collections this year. So tight, foreign traders believe, that the burden of increased charges might fall on those who are already law-abiding, while corruption and smuggling across Russia's borders continues to flourish.

A first-ever conference on Russian customs and excise regulation, organized in Moscow by Euroforum and Price Waterhouse, was told yesterday the G.T.K. has a policy of "providing advantages and incentives to law-abiding traders." Eduard Devuchkin, deputy head of the Customs' Payments Department, said his agency has authorized its regional divisions and posts to allow importers to pay by installments, instead of lump sums at the time of clearance. He also said that G.T.K. is now ready to accept guarantees of payment from reliable trading firms and brokers, and might agree to clearance of goods in advance of receiving cash payment.

Devuchkin was encouraged to give his assurance by skepticism from one of the participants in the conference that the Russian customs agency means to implement its promise of a "soft approach" for legal trade.

Anatoly Lissov, the advisor to the chairman of the G.T.K., tells RFE/RL that, because his agency contributes "every fourth ruble" in the Russian budget, there is intense pressure to raise collections. In 1997, according to Lissov, the G.T.K. delivered $1.1 million to the Russian treasury. "This was the actual cash," Lissov noted. "The projected payment total was much lower." He estimates the gain in cash revenues collected by G.T.K. between 1996 and 1997 at 60 percent.

Last year's result was achieved on the back of a 28 percent growth of imports over the year, as measured by price. This year, says Lissov, a 23-year veteran of trade policy-making, the best that can be hoped is for import value to rise by 6 percent. And yet, he acknowledges, the government has told the customs agency to raise collections by 10 percent to at least $1.2 billion.

Lissov flatly denies any intention to raise import tariffs overall. The trade-weighted average Russian tariff was 16 percent in 1995, he notes. "It has fallen to 13 percent in 1997," he said.

The best way 'to harvest' more revenues from a shrinking 'farm,' recommends Lissov, is to treat legal, duty-paying importers more softly; pursue trade violators more vigorously; and to hit harder at trade in goods which are "at risk."

The G.T.K. currently oversees 13 regional customs divisions, and 50,000 customs officers. The long-time head of the agency, Anatoly Kruglov, was replaced in May, after coming under parliamentary and press scrutiny for unexplained bank account holdings. The new G.T.K. chief is Valery Draganov, who steps up from a deputy chairman's post.

According to Andrei Smirnov, head of Russia's new National Association of Customs Brokers, there was a 146 percent increase in identified customs crimes in the first half of 1997, compared with the same period of 1996. Smirnov told the Moscow conference his 1,300 members are urging the G.T.K. to allow brokers deferral of payments, based on their collateral; and to establish electronic filing of customs declarations. "At the moment, we work without any privileges from Customs," he added. The increased enforcement effort that was noticeable last year, according to Smirnov, "puts pressure on the law-abiding members of the trade."

Art Franczek, an American accountant who heads the Customs Policy Committee of the U.S. Chamber of Commerce in Russia, said Russia's customs agency is evolving very rapidly. "The system is just seven years old. Before that, it was the Soviet system, which emphasized a policy of uncovering contraband and stopping smuggling." Franczek said he hopes the G.T.K. will soon accept a proposal from American traders to establish a independent disputes tribunal. This is to hear appeals of G.T.K. decisions under the auspices of the World Trade Organization.