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. Last Updated: 07/27/2016

Customs Tiff Imperils Imports

The flow of imports entering the country by road could slow to a trickle if Europe's leading truckers union makes good on its threat to stop issuing special permits used by thousands of trucks each month to avoid lengthy customs inspections.

Under an international agreement designed to facilitate European trade, reputable trucking companies can obtain special trip permits sanctioned by the Geneva-based International Road Transport Union, or IRU, for about $100.

The permits, called Transport Internationaux Routiers, allow holders to save hours if not days by bypassing customs inspections at the border and clearing their cargo at their destination.

But the IRU is threatening to suspend the system in Russia because it says law enforcement bodies are not doing enough to investigate and prosecute rogue carriers. Under the TIR system, the IRU is liable to pay the customs duties of carriers who do not make it to their declared destinations because every carrier insures their deliveries through IRU.

"We don't know of a single case in which customs investigated the disappearance of cargo," Igor Runov, the head of the IRU's Moscow office, said Monday. He said the IRU had given the State Customs Committee $20 million over the last three years to help create a system to deal with the problem, but has little to show for it.

"By not doing what it should do, customs is essentially stimulating the crime," he said.

A State Customs Committee official said Monday, however, that the IRU is just trying to avoid paying its $60 million bill. "We have to get what IRU owes us. Why should we forgive it this debt?" he said.

If the IRU does make good on its threat, however, "movement through the border will just stop," the official said on condition of anonymity.

Runov said the $60 million bill comes from 2,500 cases of fraud at the Vyborg checkpoint on the Finnish border between 1998 and 2000.

Aside from Vyborg, the other major checkpoints in European Russia are in Kaliningrad, near the German border, and in Smolensk, where trucks entering from Belarus are registered.

An executive at one of the largest international cargo companies moving goods through Vyborg warned of enormous delays at the border if the IRU cancels the TIR system. "They are only just coping now even though TIR trucks whisk by without being checked."

The customs official said billions of dollars' worth of goods pass duty-free through the border each year under the TIR system.

"The trucks could be attacked on the road by bandits and the load stolen. Or they can deliberately avoid delivering to their clients, stealing the cargo themselves," the customs official said. "This is why every cargo is insured by an international and Russian insurer and the guarantee money is transferred to the IRU and accumulated by its special branch. But they don't want to pay us."

Runov said such logic could ruin a guarantee system used successfully in more than 50 countries.

"What is going on here is an absolute abuse of the system," he said.

"This insurance system was created to stimulate European trade," Runov said. "It is based on statistical data and gives insurance guarantees with extremely low interest -- 5 cents per $100."

On average, the IRU guarantees daily $125 million worth of goods coming in and out of Russia, Runov said.

In Russia, the Association of International Road Carriers issues about 200,000 of the IRU permits each year. And trucking companies say if they are halted, they will be hit hard because most cannot afford to leave a deposit at the border that offsets the cost of each shipment.

"It would just mean that the whole army of Russian carriers will be paralyzed," said Vladimir Kayakin, head of Sovtransavto's transportation department. "We will be just unable to operate. We don't have the money to deposit at customs."

Runov said the IRU will decide whether or not to suspend the permit system after meeting with top customs and Transportation Ministry officials later this week. "If the decision is taken, then the suspension will take place in the next couple of weeks," he said.