Ukrainian blitzkrieg of “Elopak”: the customs always gives OK…

The last decisions of the Russian government concerning entry of Ukraine into economic space of the EU don’t leave any doubts: Russia will undertake all measures established by the international agreements to protect the market from unfair European suppliers. Meanwhile Ukraine became peculiar «black hole» for a long time through which the production of not only the Ukrainian by origin gets into Russia, but also simply ruins the Russian producers.
The answer of Russia to the sanctions imposed by the European Union, the USA and some other countries in the form of import ban of a number of foodstuff from these countries, caused enthusiasm in a camp of domestic producers and processors of agricultural production. Still, after all for the first time the Russian peasant, it seems, had an opportunity sharply to increase production for some decades …
Besides the Russian Prime Minister Dmitry Medvedev on September 19 signed the document on introduction of the customs duties on the Ukrainian goods. These duties will start being collected only in case the Kiev authorities violate the agreements reached earlier and will start applying articles of economic part of the agreement on association of Ukraine with the European Union before January 1, 2016.
To this event the president of Russia Vladimir Putin personally held a meeting of the State Council at which the concrete decisions were made allowing to increase sharply a share of the Russian food in the market. After such attention, apparently, the Russian producer needs only to be put and please the buyer with the qualitative production …
The European and Ukrainian schemers found a common language …
From Soviet period the domestic food was lost import concerning packing and design. Quality almost always was above any criticism, the level of any content of harmful substances, as a rule, even was much lower than admissible.
In recent years the lag in this branch substantially managed to be overcome thanks to efforts of domestic processing industry.
The Russian food production which is in deserved demand, in high-quality and beautiful packing even more often began to replace import on counters.
As it was a question of the huge market of consumers numbering more than 140 million people, there were no foreign competitors indifferent. Without having opportunity to win against the Russian producer in fair competition, they began to apply such methods which differently unfair is impossible to call simply …
And Ukraine them with it. It should be noted that for all stay of this former Soviet republic in a free trade zone of the Commonwealth of Independent States there was a typical algorithm of illegal penetration of the foreign companies on the Russian market.
In brief it consists in the following: the foreign company creates the subsidiary in the beginning in the territory of Ukraine, then imports the production or raw materials, often as «customer-owned raw materials».
Customer-owned raw materials are these raw materials, materials, semi-finished products, components, energy carriers that are the property of one enterprise (customer) and are transferred to other subject of managing (producer) for production of finished goods, with the subsequent transfer or return of such production or its part to their owner or on his assignment to other person.
After that the production or raw materials receive the testifying documents from the appropriate Ukrainian authorities that it has allegedly the Ukrainian origin. Respectively, when crossing the Ukrainian-Russian border such goods aren’t assessed with the customs duties that, certainly, reduces their price, increases competitiveness and at the same time conducts to ruin of the Russian producer. Here is such Slavic «brotherhood» …
It would seem, the Federal Customs Service, considering the highest level of competence of its employees, can establish the truth and to block a way to false «Ukrainian» goods on the Russian market. However, absolutely other picture turns out in practice. Also it is necessary to guess only why the customs officers don’t hear neither the voice of the Russian President, nor instructions of the prime minister Dmitry Medvedev.
Packing «tar spoon» in the dairy sea
In 2013 the Russian dairy industry made 30, 7 million tons of milk. After introduction in action by the Russian side of a ban on import of many types of milk and the dairy products connected with the answer to sanctions of the western states, production of domestic dairy products started showing a tendency to growth. And, certainly, this production should be provided with high-quality packing for transportation and further placement in distribution networks. And here on a scene there is a financial and industrial group «Elopak/Ferd Group» of Norway, presented in Russia by subsidiary JSC Elopak.
Proud Scandinavians already now won more than 50% of the market of cardboard packing of a fresh dairy product and their share continues to increase.
Only on following the results of the first half of the year 2014 the growth of sales of financial and industrial group «Elopak» in comparison with the similar period of last year exceeded 20% with a tendency to further increase.
By the way, in 2007 the Federal Antimonopoly Service in the research noted that FIG «Elopak» realizes a packing material at the dumping prices.
In 2013 — 2014 FIG «Elopak» in leased rooms installed and started the equipment with the declared volume over 1,6 billion packing that exceeds 80% of market size of the corresponding packing of the Russian Federation. For implementation of the plans on market monopolization FIG «Elopak» temporarily offers the Russian producers of drinking dairy products such prices of packing which are at the level of expenses of the Russian producer only on (!) raw materials.
For example, the average prices across Russia on packing of 1 liter taking into account a dominant position in the Russian market FIG «Elopak» make 40−45 euro for one thousand pieces. In E. U. countries (including our next neighbors Finland, the Baltic States, Poland) «Elopak» realizes similar packing for 55−65 euro for one thousand.
What allows «Elopak» to offer buyers in Russia the production at so low dumping prices?
There are no miracles here: «Elopak» simply imports from the Ukrainian plant «Elopak-Fastov» belonging to the same financial and industrial group, production where there is a cardboard processing in ready packing. It, the Russian producers assume, in the quantities estimated by hundred million pieces a year, already about 10 years (!!!) is imported into the Russian Federation without payment of duties on the basis of the documents not corresponding to a true origin and allegedly of made in the territory of Ukraine.
Surprisingly, however, but such aggressive trade policy of FIG «Elopak» still remains unaddressed by the relevant Russian departments. And after all the similar situation a few years ago led to closing of plants in Europe and Canada — «Elopak's» competitors: one appeared the bankrupt, one is bought a song and its equipment was destroyed that there would be no new competitor. And it is called as food security?
Mysterious role of the Federal Customs Service of Russia
In September, 2013 the Russian producers of packing addressed in FCS of Russia with the statement for illegality of Ukraine recognition as the packing country of origin as it allows FIG «Elopak» to use a zero customs rate, underestimating thereby customs cost imported from the territory of Ukraine of cardboard preparations. And it, in turn, is barefaced violation of the Russian customs legislation.
The share of cost of import raw materials, the cardboard and polyethylene of EU production (exchange goods), makes 70−80% in packing cost that directly contradicts the rule of an ad valorem share, on what the attention of the Federal Customs Service of the Russian Federation was paid.
The rule of «an ad valorem share» is when the percentage share of cost of the used materials or a value added reaches the fixed limit in the price ex-works of the delivered goods.
The direct loss to the budget of Russia from such illegal actions of FIG «Elopak» makes millions (!) euro only by the minimum estimates which the state doesn’t receive in the form of customs payments and taxes.
If to add the revenue of the Russian producers of packing which is constantly decreasing in connection with attack of «Elopak», and, as a result, reduction of their tax contributions to budgets of different levels, the picture becomes sad at all …
Rejection of measures besides will sharply increase in a case of social tension at the domestic enterprises — producers of packing as big reduction of workplaces approaches.
For now there are no answers in essence to appeals of domestic producers neither from FCS of Russia, nor from CCD of FCS. Applicants are only informed that «carrying out test actions of commission of customs operations with the above goods is organized». We will remind that this epic proceeds more (!) than a year …
The last reply of the Central Customs Department of the Federal Customs Services, dated on August 6, 2014, in general says that the issue of validity of providing tariff preferences in the territory of Russia for FIG «Elopak» will be resolved on the basis of certain decisions and documents of authorized bodies of Ukraine.
Interesting picture turns out: the Russian businessmen in the appeals to the Federal Customs Service accuse financial and industrial group «Elopak» of the abuses connected with violation of the Russian customs legislation and provide obvious proofs and calculations. And the Federal Customs Service in reply reports that will find out circumstances of scandal with … the authorized body of Ukraine issuing certificates of origin!
In other words, the Russian customs officers suggest the Russian producers revolted with the facts unfair competition from FIG «Elopak» which is promoted in every possible way by Ukraine to accept as the ultimate truth … the opinion of that Ukrainian body which our producers directly suspect of falsification of documents!
It is necessary only to ask one question: what actually is the reason of so touching «love» of the Russian customs officers to the Ukrainian authorized body issuing certificates to «Elopak»? From where is such «keenness»? And how the events correspond to the last requirements of the president R. F. Vladimir Putin for food security and need of commission of economic breakthrough in the next two years?
Unfavourable conclusions
«Elopak's» actions already led to monopolization of this segment of the Russian market, creation of discrimination conditions of access on the dairy market to the Russian producers of similar packing, breaking those Article 10 of the Federal law of July 26, 2006 No. 135-Federal Law «About competition protection». Because of unfair competition the Russian enterprises are faced already by a question of closing of productions that will lead to complete control of the Norwegian FIG «Elopak» over a bigger share of socially significant market of the food of the Russian Federation, and, finally, will threaten ensuring food security and the country sovereignty.
The question of activity of hundreds dairy combines from Kaliningrad to Vladivostok, providing the Russian citizens with one of the main food, is considered by the Russian industrialists, will depend on the decisions made out of Russia, namely, in Norway which, as we know, is the member of NATO …
In conclusion it remains only to notice that, most likely, similar schemes of ignoring of the Russian customs legislation work not only concerning packing, but also many other goods arriving from the territory of Ukraine. And the account to losses of the Russian budget in that case goes any more on millions, but hundreds millions euro…