The slow speed of cargo clearance has always been one of the reasons Ukrainian ports are less attractive than nearby competitors on the Black Sea. Outdated technology and corruption considerably complicate the operations of shippers and forwarders. Coming to the aid of Ukrainian port workers and regulatory authorities is the European Union Border Assistance Mission to Moldova and Ukraine (EUBAM), which has studied the main reasons for this state of affairs and made recommendations to Ukrainian officials. The study was carried out during May-September 2014, and it focused on analysis of operations in the Odessa and Ilyichevsk ports.

The study concludes that although progress has been made in specific areas of customs control for the last five years, major reforms need to be further carried out, particularly in simplification and modernisation of clearance control procedures and in diminishing the scope for corruption.

The study proposes 29 key recommendations based on EU and international best practice. "They cover six strategic areas: legislation; institutional framework, including development of a personnel management system; operational procedures; information exchange; infrastructure and equipment; corruption," said Colin Gazeley, EUBAM adviser on border control.

What did European experts uncover in the course of their analysis? Firstly, Ukraine will have to work on the regulatory framework. As a consequence of changes envisaged for all the border control services in terms of modernization and harmonization of procedures with those of the EU, further rationalization, adjustment, and alignment with legislation will be required. Therefore, it is recommended that the Ukrainian authorities conduct an assessment and review of the appropriate EU legislation, including the EU Community Customs Code, the EU ‘Acquis communautaire,’ and the EU Customs Blueprints.

It is recommended that the authorities assess and review the appropriate EU legislation, including the EU Community Customs Code, the EU ‘Acquis communautaire,’ and the EU Customs Blueprints

In addition, according to EUBAM, many legal acts, orders, and regulations create additional difficulties for business in their interpretation, and as a result open up many opportunities for corrupt practice. Therefore, the study recommends review of existing legislation and cancellation of redundant decrees and orders.

According to European experts, motivation also plays a major role in transformation of regulatory bodies. The first is financial incentives because a newly appointed customs officer receives a salary that will not cover living expenses, even at the most basic level. Constant personnel changes create high levels of uncertainty and instability, which also has an adverse effect on the operations of the customs. EUBAM experts recommend that rotation of customs officials should be made systematically in line with an implementation policy that seeks not only to ensure integrity, but also the effectiveness and efficiency of the organization.

Western experts also recommend that the functional workloads for all the state border control services at the ports “should be reviewed and re-adjusted to take account of more flexible working hours/increased attendance based around a 24/7 three-x 8-hour shift pattern where demand is sufficient.”

EUBAM also emphasized that in order to bring Ukraine’s state border control services fully into line with those of the EU and other developed economies, it is necessary to consider further reductions in the number of services involved in clearance procedures at the ports. In addition, it said that further automation of the current declaration-processing system needs to be implemented in order to avoid and reduce human interference and the continuance of manual checks that permit off-record negotiations between officials and declarants and their agents.

European experts also criticized the State Fiscal Service’s use of blanket 100% weighing and X-ray scanning of import and transit containers, contrary to EU and international best practice, stressing that this does not indicate the appropriate or effective use of pre-arrival or other elements of risk analysis and risk profiling methodology. Meanwhile, according to them, greater use of simplified procedures supported by the application of risk-based controls, including regular review and updating of risk profiles, can further reduce the number and level of physical examinations undertaken, thereby facilitating legitimate trade. For the same reason, the study recommends establishing the sharing of information at the international level with control services in partner countries.

To improve risk analysis, the study also recommends that the State Fiscal Service create an integrated reference database of all images obtained from Customs vehicle mobile X-ray scanners to assist officers to make informed intelligence led risk based decisions and avoid unnecessary and potentially unwarranted examinations.

EUBAM noted that the application of GPS locks allowed the State Fiscal Service to observe transit consignments in real time. Before their suspension in June 2014, in combination with a dramatic reduction in the number of approved transits, no violations or negative consequences in transit procedures/transit securities on the Ukrainian customs territory were detected, indicating that the policy was successful. However, the use of the devices was stopped, and, according to the experts, this was is a very big mistake.

Experts also concluded in the study that legislation that safeguards customs valuation in accordance with WTO guidelines has been introduced. However, according to the document, declarations for goods originating in high-risk countries still face delays caused frequently by the need to produce additional supporting documents. The study recommendation states that valuation procedures at the ports need to be developed further, kept under constant management review, and administered in accordance with national provisions based primarily on transaction value and the WTO agreement.

Ukrainian customs officials welcomed the proposals and promised to prepare and approve an action plan based on the results of the study

The study also found that while the movement from paper to electronic declarations within the State Fiscal Service is well advanced and has been steadily increasing, a significant percentage of declarants and their agents continue to submit declarations in hard copy. To address this issue, the experts said that measures are required to further encourage business to wholly adopt electronic means of submitting customs declarations.

Ukrainian customs officials welcome these proposals and promise to prepare and approve an action plan based on the results of the study. The outcome of this will become clear soon.

"The State Fiscal Service has prepared a preliminary schedule for implementation of the recommendations contained in the study. We need to prepare a roadmap at the departmental level to ensure that this work does not hang in the air. We have prepared such a project. We are currently modifying it before sending it to our control services working at the border, including law enforcement agencies. I hope that we will be able to sign it in all ministries and departments in the next two or three weeks," the State Fiscal Service’s deputy head Anatolii Makarenko said.