FOREIGN TRADE BASED ON NEW RULES

Important changes will soon be made in our country's foreign economic activity: Azerbaijan's new Customs Code is due to come into force around 1 July of this year. A draft document was discussed in the Milli Mejlis at the end of February and was adopted at its first reading, but final endorsement is due before the end of parliament's spring session.

A new code for new realities

Preparations for the new Customs Code began in 2005 as part of a project 'Improving the customs system in Azerbaijan', funded by the European Commission and implemented with technical support from the UN Development Programme (UNDP). International experience was utilized in full measure in drawing up the new Code. A wide range of experts from Australia, New Zealand, Canada and Turkey, as well as a number of local, independent experts were invited and customs legislation in Europe, in particular Estonia and Sweden, was studied. The first version of the Customs Code was examined by experts at the European Commission in Brussels and then by experts from 24 of our country's partner-states and deemed meet international requirements.

"The need to update legal documents in the customs sphere arose because the Customs Code that was adopted in 1997 did not fully comply with changing realities. Over the past 13 years or more there has been a perceptible increase in the development of the Azerbaijani economy and our country has joined numerous international conventions concerning customs operations, updating its whole system. All these changes require radical improvement to the legal base," said Aydin Aliyev, chairman of the State Customs Committee (SCC), at a recent meeting of the Milli Mejlis committee.

The content and key principles of the Customs Code show significant differences from the document of some 15 years ago. It is based on the principles of the international convention on simplifying and harmonizing customs procedures, or the Kyoto customs convention in short, which was adopted in June 1998. This international document was ratified by Azerbaijan in 2004 in order to bring national customs legislations in line with the requirements of present-day international trade - the principles of the World Trade Organization (WTO). The document provides for the broad use of information technology in the process of registering and monitoring the movement of freight, as well as standardising and simplifying customs procedures. The chapters of this code are more transparent and clearer, enabling easier passage of goods across borders, reducing bureaucratic obstacles to a minimum and making entrepreneurs' work easier. Sections of the revamped code provide for more effective combat against smuggling.

The new code is designed to improve the basis of the customs system and consists of two sections (general and special), 68 chapters and 358 paragraphs. The general section includes questions on the rights and obligations of customs bodies and the social position of its employees. The special section is devoted to customs procedures, supervision, tariffs, risk analysis, currency control, customs declaration, customs expertise and customs statistics. The draft includes paragraphs regulating border crossings for goods destined for Free Economic Zones (FEZ). In other words, in this area the new Customs Code will be an appendix to the law 'On special economic zones' that was adopted by the Milli Mejlis in June 2009. As a consequence a number of normative documents regulating fiscal preferences and a simplified customs regime were adopted. Thus, in December 2009, the cabinet approved a procedure for the customs regulation of enterprises operating in the FEZ, including rules for a simplified customs control regime, the work of customs posts, the documentation of goods and the passage of transport and persons within zone borders. The State Customs Committee may also keep special customs statistics for the FEZ for which a special accounts form will be used. All these normative documents are also reflected in the new code.

Among other measures, the new customs code will enable an entrepreneur to choose the customs body to which he will make his declaration. In other words, in the future this will not just be possible at the place of the juridical person's registration. Furthermore, foreign businesses will also be able to submit, and customs bodies accept, declarations and accompanying documents for registration or investigation before the arrival of goods. Documents for goods can also be submitted in advance and customs documentation or arrangements for a foreign-economical contract can be done in the same way. This will make it possible, on the one hand, to avoid the need to keep goods in storage and, on the other, to save time and money. The convention allows storage at open depots of all goods without exception, including tobacco and alcohol. In addition, the draft says, the storage period at a customs depot in Azerbaijan has been extended to three years. The procedure for the transfer of freight across the border has also been finalized and simplified: a shipment can be carried out by notification.

Fast-track modernization

The adoption of the new Customs Code will create favourable conditions for strengthening the material-technical base of the customs system and the building of a customs infrastructure in line with modern requirements, with full transition to an automated customs control system. The effectiveness of customs control will be enhanced and customs' role in ensuring the country's economic security and combating illegality will be intensified. Thanks to the improvement and development of the customs tariff policy, and also by bringing customs regulation into line with international regulations, the procedure for registering export-import operations and thus broadening trade and economic relations, has been simplified. The latter will help to increase trade turnover and bring in more revenue to the state budget, thus achieving one of the most important objectives of the SCC.

The draft of the new Customs Code was approved by the experts in the Azerbaijani president's administration and, in the opinion of Milli Mejlis deputies, the document fully complies with the basic principles of the Kyoto convention and EU standards. "Our country has committed itself to update by 2013 all its economic legislation to the standards of EU countries, and the new Customs Code is one of the first documents to be drawn up to European standards," believes Ali Huseynov, chairman of the Milli Mejlis committee for legal policy and state construction. Its adoption will have a significant impact on the integration of the country's non-oil sector into the world market and will speed up the procedure for Azerbaijan's membership of the WTO, from which the country's business circles will gain to a considerable degree. During the debate MPs drew particular attention to the fact that the new code will make it possible for ordinary citizens and businessmen to approach the Customs Committee or the courts regarding any problems that arise. MPs also proposed that a litigant or his representative should be present during the examination of complaints and that the time taken over considering complaints should be reduced to a maximum of 30 days.

During the debate on the draft bill a decision was taken to broaden publicity work on the improvements to customs legislation. So, on the initiative of the parliamentary committee for economic policy and the SCC, a special seminar will be held for businessmen engaged in export-import operations. The purpose of this venture, according to Ziyad Samedzade,  head of the parliamentary committee, is to educate the population and business circles about the changes in legislation, which should also help to reduce the number of customs offences.  

Foreign investors are also showing an interest in the new code, because their contributions to the country's economy are, as a rule, preceded by acquaintance with details of tax and customs legislation. Complete awareness of the new code is extremely important if you bear in mind that today the customs authorities have to produce accounts on over 10,000 items of trade covered by normative acts. According to SCC chairman A. Aliyev, when the new edition of the Customs Code is approved, up to 70% of existing normative-legal acts, most of them regulating the economy, will have to be updated.

"The customs control system currently being adopted in Azerbaijan is one of the most advanced in the world, and the new Customs Code will speed up even further the modernization of the country's foreign trade system and will improve its work. The new code provides for the broad use of IT and countries wishing to cooperate with Azerbaijan will soon be able to increase the quantity and speed of documentation, which will definitely help to increase trade turnover," thinks Ziyad Samedzade.

One hopes that MPs will do everything they can to ensure that this document is adopted before the end of parliament's spring session.