The Ukrainian Week discovers the likelihood of a dubious scam to import and export goods during Euro 2012, which is being lobbied on the legislative level
Preparations for Euro 2012 continue. One of the components is to finalize and pass a draft law to specify a procedure for importing and exporting goods for the European championship finals in Ukraine. The Verkhovna Rada refused to put the first draft of such document on the agenda in May of this year due to very curious circumstances. On 10 May MP Serhiy Teryokhin published a high profile article titled Twenty Twelve where he ripped the addendum to the government’s draft law No. 8443 to pieces, listing goods that the draft law, if passed, would exempt from VAT and customs duty when crossing the border of Ukraine. The items mentioned by Mr. Teryokhin, who used to enjoy the reputation of the most successful lobbyist, were quite impressive including carpets, cotton wool, cast iron, alloy steel, gold, horsewhips, and even bull sperm. On 11 May the Main Research and Expert Department of the Verkhovna Rada recommended that the draft law not be included in parliament’s agenda, which the Verkhovna Rada did on 17 May. MPs decided to return to the issue at a later date.
Of course, in itself, the simplified customs procedure for UEFA entities and championship participants cannot be evaluated unequivocally. On the one hand, this approach is a standard practice for international competitions. On the other, it raises the logical issue of the limits for the opening of Ukrainian customs borders. To find out the background and circumstances of this matter, the Ukrainian Week was forced to examine this most scandalous draft law, as well as the codes attached thereto, for goods from the Ukrainian Classification of Commodities for Foreign Economic Activity, in great detail. Decoding almost three pages of numbers attached to draft law No. 8443 and the resulting 43-pages long list of commodities was totally worth the effort.
The encoded EURO
The first conclusion: the bull sperm coded 0511 10 00 00 that Mr. Teryokhin mentioned in his publication was not in the addendum to draft law No. 8443. The MP obviously, overreacted. However, he did notice other items on the list of goods necessary for conducting Euro 2012, such as combine harvesters coded 8433 and described as “vehicles and mechanisms to harvest and thresh crops and straw and hay presses; lawn-mowers and mowing machines; machines for the cleaning, sorting or sifting out damaged eggs, fruit or other farming products, in addition to goods code No. 8437, specifically mowers for lawns, parks and sports grounds.”
On the whole, the list of commodities in draft law No. 8443 looks like a humorous novel if it were not for the fact that the issue at hand is to arrange a football championship, not build a military base on a deserted island. For example, the addendum has a 6-page list of foodstuffs, as well as natural graphite (coded 2504); granite, porphyry, basalt, sandstone, and other stones for statues or construction (2516); items used in firework displays; signal, anti-rain and anti-hail rockets (3604); mixes, ingredients and refills for fire extinguishers; ready-made fire extinguishing grenades and bombs (3813 00 00 00); hydraulic break fluids and other ready-made fluids for hydraulic transmissions (3819 00 00); natural and fake furs and products thereof (group 43); musical instruments (group 92) and so on. Medicines, soap, toiletries and photo goods were not left out, but at least their use during the Euro 2012 makes more sense.
What could be the reason behind the intent to exempt organic and non-organic mercury compounds other than amalgams (2852 00 00 00), self-propelled bulldozers with a swivel and non-swivel unloading capability, graders, planners, scrapers, mechanical shovels, excavators, single-bucket loaders, ramming machines and road rollers (8429), and the like, from customs duty?
And that is not all!... After the Verkhovna Rada considered putting draft law No. 8443 on the agenda, it turned out that at least nine codes in the addendum had no commodities behind them. We were unable to find them in the Ukrainian Classification of Commodities for Foreign Economic Activity, specifically codes 3817 00 and 3825, which probably belonged to the “Other Chemical Products group”, and 4114 and 4115 for “Unprocessed hides and leather (with the exception of natural fur), and leather group”, etc. These codes were filled in later.
Draft law No. 8443 proposed not only the customs-free import, but also export of the above mentioned commodities, but not by all entities, only by UEFA, entities authorized by UEFA or championship participants, with the exception of the national team of Ukraine.Q&A
Could Ukraine do without such a draft law? The answer is in Law No 2372-IV “On the Introduction of Changes to Some Laws of Ukraine with Regard to the Organization of the European Football Championship Final in 2012” passed on 29 June 2010. According to this document, “UEFA, entities authorized by UEFA or any championship participant other than the Ukrainian national team are entitled to import or re-import items free of customs duty and value-added tax”. However, there was no list of items; it was supposed to be specified in a separate law.
Therefore, the effective Law No 2372-IV basically makes no sense without draft law No. 8443. And who needs it anyway? As Ukraine took part in the tender to host the European football championship finals, it guaranteed UEFA a simplified and duty-free procedure for importing and exporting commodities for Euro 2012 in the document titled “Customs”.
After Serhiy Teryokhin’s article was published, the Local Organization Committee for “Euro-2012 Ukraine”, chaired by Markian Lubkivsky, issued a statement to supposedly clarify things for the public. It turned out that the government’s draft law No. 8443 had taken UEFA’s recommendations into account. It is not final though, and can be amended when being finalized in the Verkhovna Rada. In addition, it emerged from the above-mentioned statement, that the amount and the procedure for importing the items mentioned in the document would be subject to strict control at the subsequent stages of fulfilling the guarantees Ukraine has pledged to UEFA in order to prevent any abuse, particularly in retail trade. The scope of the draft law had an explanation, too. On the one hand, UEFA’s experience in major sports events has shown that the most unpredictable emergencies can occur during their organization. On the other hand, the Ukrainian classification of import- and export-oriented commodities is a voluminous document comprising 21 sections, 97 groups and almost 11,000 commodity codes. Technically, this makes it more difficult to specify the list of necessary items. But are these arguments enough to prove how important the draft law is?
I’m writing to you …
The Ukrainian Week has written a letter to UEFA to clarify, among other things, whether a high-standing organization like UEFA really needs duty-free imports and exports and whether it has coordinated the list of commodities with Ukrainian government. The answer was prompt. Initially, being diplomatic, UEFA suggested that we ask the Local Organization Committee. When we requested additional clarification, European football officials responded that UEFA and the Local Organization Committee have different responsibilities and that the Ukrainian party was in charge of the issues we were asking about.
However, the process of obtaining answers did not stop here. The Ukrainian Week unexpectedly received a letter from the Local Organization Committee for “Euro-2012 Ukraine”. It appeared that the initial list of codes for Euro 2012 commodities had been revised and significantly abridged. The extent to which this is true will be clarified in time, when the Verkhovna Rada considers the draft or some version of it. To a large extent, its substance will decide whether Ukraine will turn into a stockpile country with a customs territory that is open for individual entities, At the same time, is it possible that a favorable environment for uncontrolled imports and exports will be established, while the eyes of Ukrainians are on the football? Is it possible that somebody wants to earn a lot of dirty Euros on Euro-2012? Neither journalists, nor experts can answer these questions today. One of the reasons for this is that some codes that were previously in both the Classification and the addendum to the draft law have disappeared from the former, such as number 0511 99 31 00, i.e. “Natural unprocessed sponges”, or 0511 99 39 00, i.e. “Natural unprocessed sponges, and others”, etc.
Euro 2012 or a cargo truck?
Which items are really necessary during a football championship like Euro-2012? Football experts say that as a rule, organizers do everything to ensure such conditions, that the teams have all they need at hand, including paper towels, needles and thread. However, coaches often refuse to eat local food or drink local water, so some bring along all necessary food products and their own chefs. This is not simply a matter of lack of trust alone. The latter know their own cuisine and the reaction of football players to the foods they are used to. Teams also bring along doctors with whole stockpiles of medication, souvenirs, toiletries, soap, perfumes, photo and video equipment, and many other things that are necessary during a competition.
In addition, the goods of UEFA’s commercial partners (sponsors) are being brought in for the organization of the tournament. Euro 2012 is sponsored by Adidas, Carlsberg, Castrol, Coca-Cola, Hyundai/KIA Motors, McDonalds and so on. As a rule, for such tournaments UEFA selects exclusive providers of goods and services needed for conducting a championship. These include providers of catering services, different types of equipment for stadiums, such as furniture, containers, fencing, stadium security equipment and so on, clothes and footwear for both teams and officials, needed for the tournament, souvenirs, gifts, printed products, medical equipment for the teams and other items.
Meanwhile, the teams arrive to find that everything is ready for them and don’t adapt anything to fit their needs. The preparation of hotels, training camps and fields occurs during the process of establishing the infrastructure for the championship. UEFA and team representatives inspect the level of readiness of accommodations and training fields prior to their arrival for the tournament. All this makes the appearance of combine harvesters and bulldozers on the duty-free list look weird.