Archive for January 6th, 2016


Reforming the national customs service – by bypassing the Cabinet of Ministers

January 6, 2016

When the Verkhovna Rada meets once more following the festive holidays, high upon the agenda is a draft Bill submission that seeks to insulate the National Customs Service from interference within the structure of the Ministry of Finance whose structure it sits within.

Naturally one of the first questions to ask is why the National Customs Service is within the Ministry of Finance in the first place.

The answer is quite simple.  The National Customs Service is viewed by the Ukrainian political establishment not as a facilitator of seamless trade/import and export, nor is it viewed as a first line of defence against smuggling, or an essential part of the State security apparatus.  It is viewed as an entity that is primarily tasked with filling the Ukrainian national budget with revenue..  Hence the National Customs Service is part of the Ministry of Finance.

Fair enough, there is nothing wrong with the National Customs Service being part of the Ministry of Finance.  HM Customs is part of HM Revenue & Customs in the UK – in short it is located with the tax institutions, delivering customs and excise duties as part of its role.

However prioritising its tax collection and national kitty filling abilities is also perhaps a slightly wrongheaded way of looking at the role of the Ukrainian National Customs Service considering the ill-winds Ukraine currently faces and the free trade agreements currently and soon to come into force.


If asked to write a mission statement for the Ukrainian Customs Service, it would read something like “to facilitate legitimate international trade, to protect Ukrainian physical, social, fiscal, and economic security before and at the border, and to collect Ukrainian trade statistics” – specifically written in that order of priority.

The draft Bill attempts to prioritise the National Customs Service duties in a similar way, proclaiming that in doing so it will develop the economy of Ukraine and insure Ukrainian integration into the global economy.  Maybe it will.

Further it identifies clear department structures within the National Customs Service – from customs and excise, a financial investigation department, an intelligence department, and all the clearly delineated structures expected to be found within a European customs service.

The draft Bill also proposes some extremely robust and automatic penalties for customs officials caught in nefarious deeds – perhaps even disproportionate if truly automatic and arbitrary.

The issue at hand however, is that it is not the Ministry of Finance, nor the Cabinet of Ministers, that seeks to insulate and “Europeanise” the National Customs Service – and neither it seems, are the Ministry of Finance or the Prime Minister particularly supportive of the draft Bill that seeks to achieve this insulation and “Eurpeanisation” for the National Customs Service.

The draft Bill is the creation of Andrei Antonyschak and about a dozen colleagues within the Solidarity Party.  It has been created with the assistance of  numerous European customs experts – and will therefore put trade facilitation and security as the lead roles of the National Customs Service rather than remaining an institution primarily charged with filling the State coffers (by hook or by crook).

Indeed, rumour has it that both Prime Minister and the Ministry of Finance have let these MPs know that their draft Bill runs contrary to the IMF agreement – which having read the IMF agreement seems to be complete nonsense.  The IMF agreement clearly states combating corruption is a priority, therefore any customs reform along European standards will certainly assist in combating corruption compared to what currently exists often working to the whim of vested interests.

So far, so usual for the domestic dysfunctional political discourse between coalition parliamentarians, and parliamentarians and the Cabinet of Ministers.

What is particularly interesting however, is that this group of MPs has decided to cut out any and all Cabinet of Ministers involvement in further discussions and negotiations with the EU and the IMF regarding the draft Bill.

They intend to carry out direct discussions and negotiations with the EU and IMF themselves, proclaiming it impossible to do so through the Government of Ukraine without deliberate distortions and grotesquely warped feedback.  In short, they do not trust the Government of Ukraine as an intermediary for their (European expert assisted) draft Bill when it comes to EU and IMF discussion.

Working visits to Strasbourg and Brussels have been organised to enable direct discussions – without Government Ukraine input or facilitation.  No doubt the relevant egos and micro-managers within the Cabinet of Ministers will be seething.

Thus it remains to be seen whether the draft Bill will ever see Verkhovna Rada committee or voting chamber time – let alone whether an irked and vengeful Government of Ukraine will insure it is voted down because it did not get the chance to manipulate the draft Bill content, or the feedback from the EU and IMF, or whether it will begrudgingly see the statute book if there is EU and IMF backing for it .

Nevertheless, to view the National Customs Service as a revenue generator first and foremost, as Ukraine always has and clearly still does, is looking at the institution with anything but a “European lens” – despite the Presidential “Ukraine 2020” plan that states the “European normative” is the goal for Ukraine and all its institutions.

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