On September 22, 2023, the Association of Customs Brokers of Ukraine held the fourth focus group discussion this year on the current conditions for export-import operations, transit cargo clearance, and interaction with representatives of the State Customs Service.
Discussing the trends in foreign trade over the past few months, the panelists – customs brokers – noted that there have been no significant changes. This applies to both export and import of goods and logistical challenges in their implementation.
Due to Russia’s military aggression in Ukraine, the vast majority of goods are cleared at the Ukraine/EU border at international automobile checkpoints (IACPs) and by rail.
Over the past two months, the focus group participants noted an increase in the number of export operations associated with the season of harvesting and exporting agricultural products. The main export countries remain the European Union, Moldova, Turkey, Israel, the USA, and Lebanon.
Customs brokers noted the low efficiency of the electronic queue. In practice, this mechanism often does not speed up border crossing, but even slows it down. According to the participants, the alternate arrival of cars at a certain time delays the clearance somewhat, as more cars could theoretically clear the live queue during this time. Expedited border crossing is provided for vehicles transporting perishable goods. However, in practice, this advantage does not always work.
The presence of significant queues and delays associated with passing through the crown causes freight costs to rise, and sometimes carriers refuse to accept cargo in certain directions.
The need for sealing of goods and the impossibility of carrying out this procedure at international road checkpoints leads to long queues at the nearest terminals near the western border (for example, in Lviv). The workload of terminals in the eastern regions (Zaporizhzhia) is much lower. The vast majority of goods are stored near the border with the EU.
The procedure for clearing goods differs by region of Ukraine. According to the FGD participants, the lack of unified requirements for the list of documents required to be submitted by business representatives is a significant obstacle to overcoming corruption at customs and creating truly market-based competitive conditions for customs brokers, foreign trade entities, etc.
The main problem that, in the opinion of the FGD participants, needs to be addressed immediately is the determination of customs value. The existing procedure remains as non-transparent as possible and contains a corruption component. There are situations when the customs value of the same product is determined differently by different customs offices. Customs brokers are confident that the State Customs Service of Ukraine has the tools to resolve the issue of customs value by introducing a unified and clear approach to its determination. This requires, first of all, a political decision at the highest level.
Businesses are cautiously awaiting the changes scheduled for November 2023, namely the abolition of EA declarations. Starting from November 7, 2023, the requirements for mandatory arrival at the terminal will be introduced for companies that do not have simplified taxation. It is worth noting that not all companies will be able to obtain simplification due to the complexity of the process and high requirements for business. For their companies, customs brokers do not see obvious advantages in obtaining the AEO-B and AEO-C status.
Many business representatives do not fully understand how the system will work in the future in connection with the above changes. Customs brokers assume that the northern and eastern regions of Ukraine (Chernihiv, Kharkiv, Zaporizhzhia regions) will be left without work, as under the terms of insurance contracts, carriers are mostly restricted in their movement within the territory of Ukraine. However, the terminals near the border with the EU and Moldova will be overloaded.
Customs brokers have raised the issue of a lengthy border crossing procedure at Orlivka for express carriers. The clearance of such carriers is carried out according to a separate procedure (in a specific office, by a separate inspector) and is too time-consuming, as it takes place only during the day. The participants believe that it is inappropriate to separate the processing of express carriers from other carriers, as this procedure does not speed up the border clearance.
The group members noted that vehicle clearance in the “import” mode is often done “according to tables”. That is, customs officials use the available tabular data and make decisions on the customs value of a particular imported vehicle. This raises many complaints from businesses. For example, this scheme does not take into account vehicle malfunctions, which can significantly affect the price of a vehicle.
When clearing vehicles, customs also rely on their databases. This means that if a certain brand of car was previously cleared at an inflated price, this will affect the customs value of subsequent clearances of cars of the same brand. Businesses expect a reasonable and transparent approach to customs value determination.
Regarding interaction with customs authorities, the participants noted that communication between business and customs representatives has improved since the beginning of the war. They also noted the interest of customs inspectors to facilitate business and help business entities. However, there is a lack of staff qualification due to their high mobility and renewal. Many experienced customs officials resigned, including due to mobilization.
When there are changes in legislation, innovations are introduced, decisions are made by local inspectors too slowly, including due to the expectation of instructions and clarifications from the central office of the SCSU. In order to overcome these obstacles, according to the focus group participants, it is necessary to improve the skills of regional customs officers. This includes conducting explanatory activities in advance on innovations in legislation and the procedure for clearing goods under various customs regimes with the participation of representatives of regional customs offices to ensure a unified approach throughout Ukraine.
The AMCU plans to hold such focus group discussions on a regular basis in order to monitor changes in the customs sector related to the introduction of martial law in Ukraine.
If you would like to join the discussion, please send us a request by e-mail: info@ambu.org.ua or call: +380953046894
We will be glad to see you among the participants of our next events.
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This publication has been prepared within the framework of the project Support to the Public Initiative “For Fair and Transparent Customs” with the assistance of the European Union), implemented by the Institute for Economic Research and Policy Consulting. The contents of this publication are the sole responsibility of the Ukrainian Association of Customs Brokers and can in no way be taken to reflect the views of the European Union.