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. Last Updated: 07/27/2016

Shuttle Traders Face Tough New Rules

MTShuttle traders piling their goods onto a car Sunday near Kievsky Station.
The government on Sunday cracked down on the country's shuttle traders, drastically cutting the weight limit on goods that can be brought into the country by individuals without paying customs duties.

The tougher rules, which came into effect Sunday, are a major blow to shuttle traders, or chelnoki, who during the 1990s introduced millions of Russians to basic foreign-made goods, including clothes and housewares.

Under the new rules, an individual can bring up to 35 kilograms of goods per month into the country, compared to the previous limit of 50 kilograms per week.

Trade officials said the new rules could mean drastic price hikes on some goods. "The prices of goods will go up by 30 percent or more," Galina Balandina, head of the Economic Development and Trade Ministry's external trade and customs department, said Sunday, commenting on the new rules, Interfax reported.

Shuttle trade represents between 20 percent to 30 percent of clothes and shoes imported to European Russia and between 60 percent and 80 percent of all goods imported to the Far East, Balandina said.

As from next year, the rules will get even tougher, drastically cutting the value of goods that can be imported by individuals without customs duties, Balandina said.

According to an Economic Development and Trade Ministry proposal, beginning on Jan. 1, 2007, the maximum value of goods allowed into the country without duties will be cut from 65,000 rubles ($2,300) to 15,000 rubles ($530).

The clothes, shoes, toys and small housewares imported by shuttle traders have filled stores and market stalls across the country since the Soviet collapse, giving millions of hard-pressed consumers the option of buying foreign-made goods without the customs mark-up.

Flocks of tired people carrying large woven plastic bags full of goods are still a common sight at the country's airports, bus and railway stations. And although in recent years much of the shuttle trade has grown into larger businesses, it still booms in many border towns and cities.

The new rules and next year's proposed change would bring Russian customs regulations closer to those in the United States, where U.S. citizens are allowed to bring in only $200 worth of goods per month.

The government's main argument behind the restrictions on shuttle trade is that these imports fuel the gray economy and are notoriously hard to control or tax.

Economists and shuttle traders, however, were skeptical on Sunday whether the new rules would bring more imports out of the gray economy or lead to significantly more customs duties reaching state coffers, implying that the change could lead to more corruption.

"The measure could have a short-term effect, but then people will find other ways to import goods," said Peter Westin, chief economist at MDM Bank.

Although it is hard to estimate the volume or type of gray imports entering the country, even the import figures provided by the Central Bank and the State Statistics Service tend to be 20 percent higher than those from the Federal Customs Service, Westin said Sunday.

The success of any attempt to legalize imports would effectively be determined by the level of compliance and detection, Westin said. Procedures for supervising customs officers' work, however, appear to have been left unchanged.

Customs officers currently have the authority to search any large bags brought into the country and levy duties if the volume or price of goods exceeds legal limits.

"I really doubt that money will be flowing into the budget as a result of this new regulation," said Dina Krylova, head of the Center for Economic Problems of Firms, a division of Opora, the country's leading small business organization.

Even in the country's border regions, where markets are flooded by cheap imports, the new limits are unlikely to help local producers, Krylova said.

"A more complex set of rules has to be applied to help local producers compete," she said.

"All that will happen now is that the margins will be cut, the traders will earn less, and inflation will be pushed up in these areas," she said.

Krylova said she realized that tougher import rules for individuals would be introduced at some point. "But while it is clear who is being hurt by this innovation, it is unclear who exactly will benefit," she said.

Traders working near Moscow's Savyolovskaya metro station appeared to be unhappy too.

"It's wrong, it sounds like they want to strangle small traders," said Lida, a former teacher who now works at the Stankolit market, selling women's clothes brought weekly from abroad by a colleague. She refused to give her last name.

Lyubov Kamover, who sells French-made women's clothes just a few meters down the aisle, also disliked the new rules.

"But a way will be found to get around the new system," she said.