Bill on domestic trade could lead to widening of shadow market, says Ukrainian Trade Association

Kyiv, November 30 (Interfax-Ukraine) – The adoption of the draft law on domestic trading in its present form could affect the sector in Ukraine and promote the widening of the shadow market, according to the Ukrainian Trade Association.

"We don't oppose the bill, but we oppose the way it was written and the purposes of the bill. We support bringing the market out of the shadows. We support all businessmen being open and agreeing to business principles, and not on the conditions of state manual regulation. The bill is written so that businessmen will go into the shadows. The bill contains nothing supporting trade," Ukrainian Trade Association President Ihor Balenko said at a press conference at Interfax-Ukraine on Tuesday.

He said that the bill contains mistakes by lawyers.

In turn, the head of the Legal Department of Fozzy Group (Kyiv), Karyna Lavrova, said that the bill is not in line with the information in the explanatory note.

Lavrova said that the bill does not regulate markups, while it introduces the terms of payments for consumer goods and responsibility for their non-observation.

"When responsibility for the violation of payment terms is introduced, the fines stipulated in the bill are sent not to the producers affected by untimely payments, but to the state," she said.

The lawyer also said that the requirement foreseeing the defining of sites for the location of stores by central power bodies could encourage corruption.

The head of the group of the Institute for Economic Research and Policy Consulting, Dr. Heinz Strubenhoff, said that the draft law does not promote an inflow of investment into the trade sphere and does not create preconditions for provision of the public with cheaper goods.

Strubenhoff said that the bill is not in line with the key principles of a free market economy and reflects a lack of understanding of the role of the state in the trade area, and some its requirements create a burden for small and medium companies.

Ukrainian Trade Association Director General Ihor Kishko said that trade representatives did not take part in the drawing up of the bill at the last stage.

"My proposal is to sit and write all agreed actions to change the bill clauses jointly with the cabinet. If the bill supports the development of trade, it will support the whole economy," Balenko added.

The director of the trade development department at the Economic Development and Trade Ministry, Ihor Harbaruk, said that the draft law is aimed at bringing the market out of the shadows and settling relations between market players.

He pointed out five key disputable clauses of the bill: an obligatory general taxation system for companies engaged in trade on space over 200 square meters; trade with fresh, cooled and frozen poultry and fish only in fixed trade premises; goods, in which sales are restricted in terms of the age of buyers, and which are to be sold in specialized stores or separate store sections; a ban on collecting fees for providing marketing or other advertisement services for socially important goods, and the obligation of companies trading online to have offices.

As reported, draft law No. 9443 drawn up by the government was registered in the parliament on November 10, 2011.

According to the draft, a new requirement on trade space for tobacco could be set (apart from special warehouses, stores, departments and sections) - 100 square meters, while the present law permits an area of from 20 square meters.

The draft foresees amendments to the Administrative Infringement Code, the law on medicine and the law on the state regulation of production and turnover of ethyl, cognac and fruit spirit, alcohol and tobacco.