Instituto de Estudios Políticos y Derecho Público "Dr. Humberto J. La Roche"
de la Facultad de Ciencias Jurídicas y Políticas de la Universidad del Zulia
Maracaibo, Venezuela
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Vol. 40, Nº 75 (2022), 824-843
IEPDP-Facultad de Ciencias Jurídicas y Políticas - LUZ
Recibido el 25/08/22 Aceptado el 12/11/22
Determinants of smuggling and
ways to combat it
DOI: https://doi.org/10.46398/cuestpol.4075.49
Oleg Reznik *
Olha Bondarenko **
Maryna Utkina ***
Lyudmila Telizhenko ****
Artem Sorokin *****
Abstract
Given the peculiarities of Ukraine’s geographical location and
military conicts in the east of the country, the harmful eects
of smuggling on the economic development of the country are
constantly increasing. The volume of smuggling amounts to about
209-311 billion grivnas. The article aims to identify the main
determinants of smuggling in order to develop measures tailored
to the needs of Ukrainian social development. In the article we
have used various methods of scientic knowledge, which allowed us
to enrich our research to make it more meaningful. Analysis of ocial
statistics, examples of police practice, sociological and legal research
allowed us to identify the main causes of smuggling in Ukraine. The authors
conclude that, based on the selected determinants of smuggling in Ukraine,
it is essential to give priority to the implementation of preventive measures,
i.e. to prevent the conditions of its commission and also the resumption of
criminal liability for commercial smuggling of goods. In addition, there is a
need to design more and better public policies to minimize the conditions
that enable the action of smuggling agents.
Keywords: determinants of smuggling; determinants of corruption; ght
with smuggling; State Customs Service of Ukraine; Eastern
Europe.
* Department of Criminal Legal Disciplines and Procedure, Sumy State University, Ukraine. ORCID ID:
https://orcid.org/0000-0003-4569-8863
** Department of Criminal Legal Disciplines and Procedure, Sumy State University, Ukraine. ORCID ID:
https://orcid.org/0000-0002-2288-1393
*** Department of Criminal Legal Disciplines and Procedure, Sumy State University, Ukraine. ORCID ID:
https://orcid.org/0000-0002-3801-3742
**** Department of Fundamental Jurisprudence and Constitutional Law, Sumy State University, Ukraine.
ORCID ID: https://orcid.org/0000-0003-4558-513X
***** Department of Criminal Legal Disciplines and Procedure, Sumy State University, Ukraine. ORCID ID:
https://orcid.org/0000-0001-9765-3830
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CUESTIONES POLÍTICAS
Vol. 40 Nº 75 (2022): 824-843
Determinantes del Contrabando y
Formas de Combatirlo
Resumen
Dadas las peculiaridades de la situación geográca de Ucrania y los
conictos militares en el este del país, los efectos nocivos del contrabando
en el desarrollo económico del país no dejan de aumentar. El volumen
del contrabando asciende a unos 209.000-311.000 millones de grivnas.
El artículo pretende determinar los principales factores determinantes
del contrabando para elaborar medidas adaptadas a las necesidades del
desarrollo social ucraniano. En el artículo hemos utilizado diversos métodos
de conocimiento cientíco, que nos han permitido enriquecer nuestra
investigación para hacerla más signicativa. El análisis de las estadísticas
ociales, los ejemplos de la práctica policial y la investigación sociológica y
jurídica nos permitieron identicar las principales causas del contrabando
en Ucrania. Los autores concluyen que, sobre la base de los determinantes
seleccionados del contrabando en Ucrania, es esencial dar prioridad a la
aplicación de medidas preventivas, es decir, impedir las condiciones de
su comisión y también la reanudación de la responsabilidad penal por el
contrabando comercial de mercancías. Además, se impone la necesidad de
diseñar más y mejores políticas públicas para minimizar las condiciones
que posibilitan la acción de los agentes contrabandistas.
Palabras clave: determinantes del contrabando; determinantes de la
corrupción; lucha con el contrabando; Servicio Estatal
de Aduanas de Ucrania; Europa del este.
Introduction
Smuggling as a negative and modern phenomenon has become a
challenge for many countries (Hossein and Mohammad, 2019). Smuggling
has existed since ancient times. Its development is inextricably linked
with the formation of statehood: establishing state borders, economic
development, foreign and domestic trade, and the development of customs.
On the territory of modern Ukraine, smuggling began to be recognised as
an illegal act in the XIV-XVI centuries. With the advent of capitalism, at
the time of the mass spread of commodity-money relations, the connection
with which the available import and export of goods harmed the economy
(Filippova, 2019).
Currently, the volume of shadow schemes in the economy of Ukraine is
estimated at 550 to 1050 billion UAH, of which the amount of smuggling
– is 209-311 billion UAH, budget losses per year – 63-93 billion UAH (The
826
Oleg Reznik, Olha Bondarenko, Maryna Utkina, Lyudmila Telizhenko y Artem Sorokin
Determinants of smuggling and ways to combat it
state budget losses from shadow schemes are estimated at UAH 150-275
billion, 2019). Such volumes are enormous and cause numerous problems
in Ukraine’s economic development, political stability, and investment
attractiveness. In addition, smuggling leads to the export of cultural
property or strategic raw materials, a complete ban or restriction on the
export of which is established by the state to stabilise the economic situation
or for other purposes, such as improving the nancial crisis (restrictions on
the export of timber in Ukraine).
Therefore, the ght against smuggling is important (Reznik et al., 2021).
It is rst essential to identify the main determinants of this phenomenon
and develop eective countermeasures. Smuggling of goods reduces
the mismanagement of state customs and taxes, causing mass seizure of
currency, mass ight of capital, increase in unemployment, reduction of
domestic industrial production, etc. (Miri and Ghasemi 2019).
The authors want to emphasise that the complexity of combating
smuggling is due to the wide range of its items dened by Ukrainian law,
such as commercial goods, excisable goods, timber or lumber, rare tree
species, cultural values, poisonous, potent, explosives, radio materials,
weapons or ammunition, parts of rearms, as well as unique technical
means of covert information, drugs, psychotropic substances, their
analogues and precursors (Criminal Code of Ukraine, 2021). Considering
all these factors, the authors aimed to identify the main determinants of
smuggling in general and oer adapted to the needs of Ukrainian social
development, economic situation, the level of civil society and legal culture,
and measures to combat key determinants of smuggling in Ukraine.
1. Methods
In the article, the authors used various methods of scientic knowledge,
which allowed us to enrich our research to make it more meaningful. Such
practices were chosen to consider the purpose and objectives of scientic
research. The authors used a method of logical analysis to develop proposals
for improving criminological measures to combat smuggling. A synthesis
method unites the abstract aspects of an object and reects it as a concrete
whole.
The historical approach allowed the authors to understand the origin
and historical essence of smuggling deeply. The method of hermetic analysis
was used to transform the system of countermeasures for smuggling. The
statistical method was used to analyse statistics on the facts of smuggling
and the damage it caused. The generalisation method was used to identify
the conclusions based on the study. In addition to these, other forms of
scientic knowledge were used.
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2. Results and Discussion
Analysis of ocial statistics, examples of law enforcement practice, and
sociological and legal research allowed us to identify the leading causes
of smuggling in Ukraine. Their study is essential for developing unique,
narrow-prole measures to combat and eliminate smuggling. On each of
the determinants, the authors oer special attention.
• Corruption
Corruption and smuggling are manifestations of internal aggression,
two destructive phenomena designed to destroy economic gains and
ensure the enrichment of particular groups. Especially disastrous is their
arrangement of a single crime scheme. According to the ocial data of
the Ministry of Finance of Ukraine, almost UAH 3 million of revenues to
the state budget of Ukraine were lost in the rst six months of 2021 due
to the existence of corrupt smuggling schemes (Ukraine lost up to UAH 3
billion a month due to corruption at customs, 2021). The authors want to
note that the permanent renewal of the management of the State Customs
Service of Ukraine, unfortunately, is associated with the failure to eradicate
corruption in this structure. Employees of this body of state power are
often members and sometimes founders of organised criminal groups and
criminal organisations.
To eliminate these factors, the State Customs Service has created a
particular unit - the Department for Prevention and Combating Corruption.
The primary purpose is to implement anti-corruption measures within this
public authority. For example, from January-May 2021, this department,
within the competence dened by anti-corruption legislation and regulations
of the department, considered the involvement of territorial units for the
prevention and detection of corruption 21 reports of possible corruption by
ocials of the State Customs Service and its territorial bodies, one of which
– introduction by the whistleblower.
The Department for Prevention and Counteraction of Corruption of
the State Customs Service systematically checks the possible presence of
potential or actual conicts of interest and relatives working in the State
Customs Service and its territorial bodies. After conducting electronic
public consultations to study public opinion on April 22, 2021, a general
discussion of the Anti-Corruption Program of the State Customs Service for
2021-2022 took place. The meeting with the public took place in the format
of a web conference chaired by the Deputy Head of the State Customs
Service with representatives of the Working Group on the EU4PFM project,
NGO “Association of Taxpayers of Ukraine (Prevention and anti-corruption,
2021).
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Determinants of smuggling and ways to combat it
An analysis of the ocial statistics of the Oce of the Attorney General
clearly shows the high-prole monthly revelations of corrupt customs
ocers who are subsequently punished. However, severe punishment is
not a panacea. Measures to prevent corruption and develop a mandatory
methodology for professional selection of the State Border Guard Service
employees and the State Customs Service should become more eective.
In the authors’ opinion, it is essential to introduce mandatory testing
for the level of legal and anti-corruption culture (1), an interview with a
psychologist who will help determine a person’s propensity to commit
corruption oences (2); verication of applicants for a polygraph (3).
Comprehensive application of these measures will limit the access of
“potential corrupt ocials” to the service in border areas and reduce
corruption schemes.
• Temporarily occupied territories
The peculiarity of smuggling on the territory of Ukraine is the presence
in our state of territories not controlled by the central government. The
temporarily occupied territories are subject to a special legal regime for
crossing the borders of the temporarily occupied territories, making
transactions, holding elections and referendums, and exercising other
human and civil rights and freedoms. First of all, the authors propose to
analyse smuggling from occupied Crimea. In the seven years since Russia’s
annexation of Crimea, the peninsula’s economy has gone from a free
economic zone in the occupied territories to a blockade and from blocking
to a ban on the supply of goods, which, however, does not rule out Ukrainian
interests, especially food, in Crimean shops.
The authors would like to note that per the resolution of the Cabinet of
Ministers of Ukraine № 1035 of December 16, 2015, “On restricting the
supply of certain goods (works, services) from the temporarily occupied
territory to another territory of Ukraine and/or from another part of
Ukraine to the temporarily occupied territory “is prohibited for the period
of temporary occupation of the supply of goods (works, services) under
all customs regimes from the temporarily occupied territory to another
territory of Ukraine and from another part of Ukraine to the temporarily
occupied territory, except personal belongings of citizens moving in hand
luggage and accompanied baggage; socially signicant foodstus driven by
citizens, the total invoice value of which does not exceed the equivalent of
10,000 hryvnias and the total weight of which does not exceed 50 kilograms
per person.
These restrictions apply when a person who imports goods into the
temporarily occupied territory of Ukraine (On the restriction of supplies
of certain goods (works, services) from the temporarily occupied territory
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to another part of Ukraine and from another territory of Ukraine to the
temporarily occupied territory, 2015). The border between occupied
Crimea and mainland Ukraine is now demarcated, so there are no conicts
with illegal smugglers across the customs border. The situation with the
temporarily occupied territories of Donbas is a bit more complicated. After
all, according to the essence of smuggling, it is an illegal act to move certain
items outside the customs border or conceal them from the customs border.
The customs border is the border of the customs territory of Ukraine
(Customs Code of Ukraine, 2021). The customs border coincides with the
state border of Ukraine. Of course, those currently occupied territories are
de jure considered by Ukraine to be their territory, but de facto, they are
not such at the moment. Various researchers propose establishing a border
between the controlled and uncontrolled territories of Donbas in the form
of a demarcation line or customs border, etc., with the appropriate regimes
(as was the customs delimitation of the Crimea based on the relevant Law
of Ukraine (Babikov, 2019).
The partial loss of state control over the country’s customs border has
restored old smuggling schemes and led to the emergence of new ones,
opening vast opportunities for drug tracking, counterfeit intervention,
and uncontrolled movement of cash, which are often used to nance
terrorism and undermine economic and socio-political the foundations
of society. According to a Transparency International report, the goods
enter the occupied territories of Donetsk and Luhansk oblasts through four
illegal routes. The rst is the movement of goods through checkpoints on
highways through agreements with employees, through humanitarian and
logistics centres for retail trade, where wholesale work with self-proclaimed
republics is carried out.
The second illegal route is through the entry-exit checkpoint on the
railway and agreements with employees and outside specic road corridors.
In this case, arrangements are made with military or law enforcement
ocials to move goods to the occupied territories by bypassing ocial
checkpoints.
Another way of illegal transportation of goods - “interrupted transit”
– is the movement of goods to the self-proclaimed republics through the
territory of Russia. “The carrier is allowed to move goods in transit to a third
country, such as Kazakhstan or Georgia, but in Russia, the truck changes
course and arrives in the temporarily occupied territories. According to the
organisation, there is also a fourth way - the sea.
The study found that in some cases, some Ukrainian servicemen
collaborated with militants on illegal trade. There were also situations
when conicts arose, including weapons, between units that separately
facilitated the unlawful movement of goods to the temporarily occupied
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Oleg Reznik, Olha Bondarenko, Maryna Utkina, Lyudmila Telizhenko y Artem Sorokin
Determinants of smuggling and ways to combat it
territories. There are cases when both servicemen promote illegal trade and
those who oppose it serve in one unit. The primary motivation to facilitate
the illicit movement of goods is its high protability (5 ways of smuggling to
the occupied Donbass, 2021).
Counteraction to the so-called smuggling on the line of contact should
be strengthened through organisational, preventive, control, and technical
measures. In particular, it is appropriate to carry out individual preventative
work with residents of the temporarily occupied territories to increase
the qualication requirements for law enforcement ocers and service
members serving on the border with Crimea and the Joint Forces Operation
area. In addition, the material and technical base require improvement.
• No criminal liability for smuggling commercial goods
Geographically, Ukraine is located in the centre of Europe, on the
border with the European Union, and therefore is attractive for smuggling.
According to which the number of cases of smuggling of goods, including
excisable interests, is growing every year; this is conrmed by ocial
statistics. Smuggling is the exemption of imported goods from any taxes
and duties on the territory of Ukraine. The importer, having received a
VAT refund on average at 20% when exporting products from the country
of origin and paying about 5% as transaction costs for illegal delivery of
products to Ukraine, automatically acquire an undue competitive advantage
over domestic producers.
Thus, even in the shadows, Ukrainian business is still inferior to
smuggled imports. Do ordinary citizens lose out? By buying contraband
goods and receiving short-term benets, domestic consumers launch a
multiplier to reduce domestic demand and curtail production. As a result,
companies are starting to cut sta and payrolls. Accordingly, the actual
payer for smuggling schemes, in the end, are ordinary citizens (Analysis of
smuggling volumes in Ukraine: scale, direct/indirect losses of the budget
and the economy, 2021).
At the same time, despite the lack of social conditioning in 2011, there
was an articial narrowing of the subject of smuggling, so now it is only
cultural values, deadly, potent explosives, radioactive materials, weapons,
or ammunition (except smooth-bore hunting weapons or ammunition, it)
parts of rearms, as well as unique technical means of secret information;
timber or lumber of valuable and rare tree species, unprocessed wood, as
well as other timber prohibited for export outside the customs territory
of Ukraine and narcotic drugs, psychotropic substances, their analogues
or precursors or falsied medicines. So the issue of application of legal
liability for movement through the customs border of goods in violation
of the current customs legislation has acquired a particular relevance in
Ukraine (Pidgorodynskyi et al., 2021).
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However, rst, to counter the smuggling of large quantities of goods,
including excisable; second, lling the state budget by paying customs duties
and applying nes (as criminal penalties), as well as special conscation to
the state revenue of all goods moved outside the customs border or with
concealment from the customs border, criminalisation of smuggling of
goods is necessary and urgent.
That is why today, scientists and practitioners need cooperation to
develop an eective model of legal liability for smuggling goods, notably by
expanding its boundaries and updating the content of the articles providing
for the penalty for smuggling various items.
• Problems in the coordination of international cooperation
Given the cross-border nature of smuggling, controlling its level is the
responsibility of a particular country and part of synergistic governance
worldwide (Sui et al., 2018). Ukraine’s orientation towards integration
into the international community in general and the European Union, in
particular, implies the obligation of the international community to ensure
compliance of the national legal system with the standards of the European
community, including the creation of eective mechanisms to combat
smuggling (Nastyuk et al., 2020). To this end, Ukraine became a member
of the World Customs Organization (the name is unocial and has been
used since 1994).
It has 172 member states, sometimes referred to as the United Nations
Customs Organization. This organisation proclaims an open, transparent,
and predictable customs environment, resulting from which the national
economy should develop and the social welfare of the organisation’s
member countries should increase.
Of course, a robust national economy will be attractive to other
countries, contributing to the prosperity of international trade and,
simultaneously, making it possible to combat criminal activity eectively.
Since its inception, the World Customs Organization, Ukraine has become
a party to the following international customs conventions developed
by the World Customs Organization: Customs Convention on the
International Carriage of Goods under Cover of an International Road
Transport Book; International Convention on Mutual Administrative
Assistance in Preventing, Investigating and Ending Violations of Customs
Law; International Convention on the Harmonization of Frontier
Controls of Goods, October 21, 1982 (Geneva Convention); International
Convention on the Harmonized Commodity Description and Coding
System of 14 June 1983, as amended by the Protocol of 24 June 1986
(HS Convention); Convention on Temporary Admission of 26 June 1990
(Istanbul Convention); International Convention on the Simplication and
Harmonization of Customs Procedures (Kyoto Convention, June 26, 1999).
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Oleg Reznik, Olha Bondarenko, Maryna Utkina, Lyudmila Telizhenko y Artem Sorokin
Determinants of smuggling and ways to combat it
The Customs Service of Ukraine is constantly expanding the legal
framework of international cooperation on customs issues. In October 2006,
Ukraine acceded to the International Convention on the Simplication
and Harmonization of Customs Procedures (Kyoto Convention), the
General Annex and Special Annexes A, B, C, D, E, F, G, H, J, and K to
that, as amended by June 26, 1999, approved by the Protocol amending
the International Convention on the Simplication and Harmonization of
Customs Procedures. Ukraine’s accession to the Convention was to establish
common standards and approaches to regulating identical legal relations.
Regarding Ukraine’s cooperation with the World Customs Organization,
it can be said that Ukraine’s accession to this organisation and the
conventions developed by it and the proposed Security Framework
Standards will simplify customs procedures, promoting international
trade, information technology, and legal and technical bases. Eective
customs control (Kredisov et al., 2009). According to the Memorandum
of Understanding between the State Customs Service of Ukraine and the
World Customs Organization on the establishment of the Regional Training
Center of the World Customs Organization in Ukraine, in June 2010, such a
centre was established in Dnipro, and in 2016 the Regional Training Center
of the World Customs Organization was relocated.
To the city of Khmelnytsky. This centre aims to train and train
representatives of customs administrations of the European region of
the World Customs Organization and conduct seminars and training on
customs issues. The main tasks of this centre are to strengthen cooperation
between customs administrations and the World Customs Organization (1),
develop of eciency and eectiveness of customs authorities, preparation
and publication of scientic and educational journals on customs issues
(2), provide training, technical assistance on uniform application of
fundamental customs conventions, recommendations, and standards of
the World Customs Organization (3). In addition, the Regional Cynological
Training Center of the World Customs Organization operates in Ukraine. It
is a body for training service dogs for the needs of the customs authorities
of the member countries of the World Customs Organization.
As part of the operation of the Regional Cynological Training Center
of the World Customs Organization, developed and approved programs
for training cynologists with service dogs of foreign customs authorities to
search for drugs, psychotropic substances, weapons, ammunition, tobacco
products, banknotes; explosives for law enforcement (World Customs
Organization, 2021).
Despite such positive steps in the context of international cooperation,
unfortunately, one of the critical reasons for smuggling in Ukraine is the
lack of coordination and lack of coordination between the State Customs
Service and the State Border Guard Service of Ukraine and relevant bodies
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Vol. 40 Nº 75 (2022): 824-843
of neighbouring countries on mutual exchange of information (Busol,
2019). To overcome this negative factor, it is essential to create a single
database of customs authorities, at least in the framework of cooperation
of neighbouring countries, and further expand it to the borders of the
European region. Such a measure would signicantly reduce the movement
of goods outside customs control or concealment from customs control.
• A signicant dierence in the cost of goods in neighbouring
countries
Assessing the current state of the shadow economy of Ukraine, we can
condently conrm that it poses a real threat to the country’s national
security and democratic development. According to various estimates, the
shadow turnover in Ukraine is 20-60% of the GDP ( Kulish et al., 2018). The
economic well-being of any people, nation, or state is associated primarily
with developing its national production and commodity market. Conquest
of the market by another country, as a rule, threatened the existence of
independence and statehood of this country.
Therefore, states sought to protect their production by restricting
importing goods from other states and increasing the export of goods of
their output. For this purpose, taris and taxes on moving goods were set.
In addition to protecting its production, the goal was to obtain income for
its development and reimburse the price dierence between imported and
exported goods (Turchin, 2010). Avoid unsubstantiated statements; the
authors give a real example. First of all, due to their consumer properties
as a commodity, tobacco products are traditionally in very high demand
worldwide and have stable sales. This provides appropriate prots to their
producers and sellers. At the same time, the steady sales of tobacco products
have made them a reliable object of taxation worldwide.
Moreover, the level of taxation of tobacco products relative to the cost
of their production, as a rule, is relatively high compared to other taxable
goods in the relevant national economy. However, since the levels of income
and taxation of tobacco products and economic policy, in general, vary from
state to state, the retail prices of tobacco products vary depending on the
national market (Kulitsky, 2021). Thus, in almost every country, in parallel
with the legal demand for tobacco products, there is an illegal market for
them. The sum of these two markets determines the total supply of tobacco.
Smuggled cigarettes are sold at a price lower than what can be aorded by
traders selling cigarettes for which all taxes have been paid.
This, in particular, increases their consumption. The problem is
exacerbated by signicant tax disparities between neighbouring countries,
where widespread corruption and smuggling are tolerated. Large-scale
tobacco smuggling relies on criminal organisations, relatively complex
834
Oleg Reznik, Olha Bondarenko, Maryna Utkina, Lyudmila Telizhenko y Artem Sorokin
Determinants of smuggling and ways to combat it
distribution systems for smuggled cigarettes in the destination country,
and shortcomings in controlling international cigarette tracking.
To improve the quality of counteraction to the illegal movement of
tobacco products across the customs border of Ukraine, the immediate
attention of customs authorities should be paid to the detection of foreign
illicit trade transactions with tobacco products using ctitious enterprises
and measures to counter such transactions (1); control over export-import
operations with tobacco products carried out by residents and non-residents
(2); application of covert control measures during the movement of tobacco
products across the customs border of Ukraine (3); comparing the statistical
data of the State Customs Service of Ukraine with the data of the customs
service of the country of location of the sender (recipient) of goods on the
origin, quantity, value of tobacco products exported from Ukraine and
imported into it (4); to establish eective interaction of customs authorities
with law enforcement agencies (5) (Lipinsky, 2014).
• The imperfection of the technological arrangement of the
state border
In the dynamic development of modern society, ensuring security and
control of the state border is a simultaneous goal of the country’s internal
and external security. Therefore, it is vital to identify and develop tools
and ways to address new challenges ( Kublickis, 2020). An essential tool
for such counteraction is the involvement of modern technologies. After
all, today, the development of control technologies is becoming one of the
priorities of the relevant bodies.
It is of interest as a system of measures aimed at customs control after
registering enterprises’ goods, especially in the conditions of a large-
scale shadow sector of the economy of Ukraine (V. Yevimov et al., 2018).
It is technology, not politics, one of the essential systems in charge of
protecting borders and countering the inux of illicit drugs and smuggling
(Military+Aerospace Electronics, 2018).
Engineering support of the state border is inextricably linked with a
set of organisational and practical measures taken to create the necessary
conditions for the timely detection of violators of the state border, eective
service of border guards and their use of weapons and equipment, covert
advancement, implementation of the State border service of the necessary
manoeuvre by forces and means, increase of protection of divisions in case
of complication of a social and military-political situation (On the State
Border Guard Service of Ukraine, 2003).
In the authors’ opinion, the urgent issues of legal regulation at the level
of bylaws are the denition of an exhaustive list of entities, the organisation
of their activities, resource provision for engineering and technical
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arrangement of the state border; the procedure for granting state border
protection bodies permanent use of land plots along the state borderline.
Currently, there are no program documents that would dene the system
of measures for engineering and technical arrangement of the state
border and allow the State Border Guard Service of Ukraine to build and
maintain engineering structures, fences, border signs, and border clearings
communications, other border infrastructure.
These questions determined the relevance of the chosen topic. According
to Nikiforenko V., the most appropriate approach is that, with adequate
funding, allows: to introduce methods of sectoral assessment of the impact
of legal regulation of integrated border management (1) (V. Nikiforenko,
2020b), to increase the eectiveness of measures to implement the Law
of Ukraine “On Amendments to Certain Legislative Acts of Ukraine on
Ensuring Engineering and Technical Arrangement and Maintenance of the
State Border” (2); to improve the arrangement of engineering infrastructure
along the state border of Ukraine by consolidating the eorts of the subjects
of integrated border management (3); to take high-quality measures to
strengthen the banks of transboundary rivers, which will protect them
from erosion and reformatting and, as a consequence, from the loss of
territories of Ukraine by involving more competent personnel of the
relevant executive authorities (4); to create additional motivating factors
due to the competition within the competence of the subjects of integrated
border management on the engineering and technical arrangement of the
state border (5).
To implement these measures, it is advisable to develop the concept of
the State target law enforcement program for the arrangement of the state
border for the construction of engineering and technology and fortications,
fences, border signs, border clearings, communications of the State Border
Service (Nikiforenko, 2020a).
• Imperfect control over international postal services
Global trends show that the volume of international postal trac is
constantly growing, which creates a violation of fair competition, even in
developed countries. In particular, the latest OECD report devoted dozens
of pages to the signicant negative impact on countries’ economies from tax-
free goods imported through small mail. That is why developed countries are
introducing stricter requirements for postal imports; in particular, Europe
currently has a signicant restriction on the tax-free value of international
parcels. The EU plans to eliminate the minimum tax threshold in the next
few years. All lots will be taxed from zero euros.
In Ukraine, more and more of our compatriots use foreign online stores,
allowing buying a wide range of goods. This way, 42 million international
836
Oleg Reznik, Olha Bondarenko, Maryna Utkina, Lyudmila Telizhenko y Artem Sorokin
Determinants of smuggling and ways to combat it
postal and express items worth about 1 billion euros are imported to
Ukraine annually. And this is good for the development of competition: the
consumer gets more choices and often at a lower price than in Ukrainian
stores. Of course, buying something in China, we still have to pay for its
delivery, which will cost a few euros, but the volume of orders in such stores
from Ukraine is so large that it allows Chinese companies to save on books
signicantly reduce the delivery price.
However, the norm on duty-free import of goods into the territory of
Ukraine through postal items has interested not only ordinary citizens.
Several multibillion-dollar online stores have repeatedly been the subject
of journalistic investigations into the use of “postal import” schemes. All
that needs to be done is to break up a commercial party and register it as
a ctitious recipient in Ukraine and across the border legally. And this
scheme is actively spreading because today, there is no mechanism for
identifying the recipient and almost no control over the customs value of
goods imported into Ukraine in the form of parcels.
In addition, the standard on the marginal cost of lots of 150 euros is
subjective, and the only mechanism to control whether the maximum limit
of tax-free imports is exceeded is the vigilance and honesty of the customs
ocer.
At rst glance, this scheme will benet an ordinary citizen, who seems
to buy goods cheaper, but in reality, he is the primary victim of this scheme.
First, the goods are sold almost at the price of imported goods with payment
of all taxes, and the dierence usually does not exceed 3-5%. Secondly,
there are severe problems with obtaining warranty repairs or refunds for
substandard goods; thirdly, the possibility of duty-free and uncontrolled
sales kills fair competition and hints of domestic production within the
country.
Neither foreign nor domestic investors will develop business in a
country where their products will be uncompetitive and their activities
unprotable. As a result, hundreds of thousands of Ukrainians do not
receive decent wages, do not have jobs, and are forced to seek work in other
countries or engage in the same smuggling.
The Ministry of Finance sees this problem, but some deputies of the tax
committee oppose more from the standpoint of budget losses, even those
legislative initiatives that are put forward.
In particular, from the beginning of this year, a mechanism of restrictions
on the number of parcels received by one recipient per month without
paying taxes, namely up to three boxes per month, was to work, which
completely covered the needs of the vast majority of Ukrainians. This was
aimed not so much at lling the budget as stopping “postal smuggling.” For
a few years, this would make it possible to reduce shadow schemes through
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CUESTIONES POLÍTICAS
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this channel signicantly. After studying the EU’s experience with a new
integrated model for moving goods across the border, such as the EU’s One-
Stop Shop system, introduced by Europeans in 2021 - perhaps it would be
considered to introduce a similar model in Ukraine.
Developing and implementing an accounting system for parcels and
their recipients was necessary to implement this form of control, but this
work has not been done. As a result, a few months before introducing new
rules for importing goods into Ukraine in the form of postal parcels, postal
operators began to sound the alarm: “the lack of registration of parcels
following the law can lead to collapse” and refused to implement it.
To simulate the ght against smuggling, the Parliament adopted a norm
of reducing the tax threshold from 150 to 100 euros, which does not solve
this problem (“Postal smuggling”: cheap imports or European wages, 2019).
• Limited powers of the state customs service
In Ukraine, counteraction, prevention, regulation, and control over
a particular area are often scattered among various state institutions.
Unfortunately, this situation does not cause the eradication or at least
reduce the manifestations of negative phenomena, including smuggling,
but vice versa. Thus, state institutions are simply trying to compete for
spheres of inuence and their own, sometimes corrupt interests, according
to Kulish et al., (2020), the current situation is primarily due to the lack
of authority in the State Customs Service to investigate the smuggling of
commercial goods.
After all, according to the Regulations of the State Customs Service
of Ukraine, the powers of this service include only the organisation and
conduct following the law of operational and investigative activities and
control over its implementation by functional units of the State Customs
Service and its territorial bodies ghting to smuggle; interaction within the
powers dened by the law with other bodies carrying out the such activity;
taking measures to compensate the state for damages within the powers
prescribed by statute.
The authors believe that the eectiveness of combating smuggling
directly depends on the need to expand its capabilities and its total
concentration in this public authority. Such “concentration” will determine
eciency and controllability. In addition, proper coordination within and
between government agencies is necessary to achieve high anti-smuggling
productivity (Basu, 2014).
838
Oleg Reznik, Olha Bondarenko, Maryna Utkina, Lyudmila Telizhenko y Artem Sorokin
Determinants of smuggling and ways to combat it
• Unemployment and low wages of residents of the border
areas
Undoubtedly, the analysis of the determinants of smuggling in Ukraine
clearly shows that they are objective due to external factors and causes.
However, there is a solid subjective reason for them. The economic
crisis and corruption in Ukraine cause a situation where exercising one’s
constitutional right to legitimate business activity is almost unrealistic and
unprotable. That is why many entrepreneurs and businesses operate in
the shadows.
In addition, urbanisation is complicated by urbanisation, with young
people moving to large cities and rural areas, where most border crossings
are located, in decline. It is dicult for people and sometimes impossible
to nd a job. Even the emergence of large agricultural enterprises or farms
requires knowledge of the latest processes and technologies. And the
inhabitants of rural areas, predominantly middle-aged and older people,
do not have such knowledge.
To overcome such negative processes, it is advisable to implement such
measures. First, to improve the legal and organizational and economic
support of the labor migration regulation system and increase employment
in the domestic markets of border areas, especially in the western regions
by: creating specialized employment agencies in border areas to ensure jobs
and cooperation of Ukrainian and European employers in the eld of work
and stang:
1. development and adoption of state and regional programs for the
return and reintegration of domestic labor migrants, the main
direction of which should be to promote entrepreneurship and
create new jobs in the border areas of Ukraine;
2. strengthening legal protection and providing social guarantees,
providing assistance in protecting labor disputes with foreign
employers to domestic labor migrants during their stay abroad
(subject to repatriation), opening consulative centers on the basis of
diplomatic missions, cooperation with centers Ukrainian diasporas;
3. development of an action plan for the implementation of migration
policy with an emphasis on the opportunities and benets of
employment in the border areas of Ukraine;
4. introduce the practice of providing special state subsidies for wages
to employed young people, the unemployed or persons of pre-
retirement age in the amount of 50% of the employer’s expenses for
these purposes for 3-6 months, which can be provided directly to
citizens for vocational training and self-employment;
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Vol. 40 Nº 75 (2022): 824-843
5. It is appropriate to implement the European experience of job quotas
for non-competitive categories of workers by developing a joint
action plan for allocating quotas for employment of their citizens
in border areas within the framework of cross-border cooperation
programs and projects;
6. Secondly, to diversify the economy of rural areas to ensure
productive employment, increase labour eciency and income, self-
employment and streamline “shuttle” trade-in border areas. It can
be achieved by: promoting the development of small and medium-
sized businesses in the non-agricultural sector as the main direction
of diversication of the rural economy) (On improving the eciency
of labour market regulation in the border areas of the western
regions of Ukraine, 2021).
Conclusions
Summarising the above, we emphasise that the key to counteracting
any negative phenomena is to determine the causes of these phenomena
accurately. Despite the transnational nature of such an illegal act as
smuggling, its reasons and conditions may vary. Undoubtedly, there are
universal, but at the same time, some of the determinants are due to the
specics of historical development, economic situation, level of legal
awareness, and legal culture of the population. In addition, the existence of
a political eld to combat smuggling is essential.
Analysis of ocial statistics, examples of law enforcement practice, and
sociological and legal research allowed us to identify the leading causes of
smuggling in Ukraine. In our opinion, they are corruption in the activities
of bodies to protect the state border of Ukraine, the presence of temporarily
occupied territories, lack of criminal liability for smuggling of commercial
goods, problems in coordinating international cooperation, signicant
dierences in the cost of goods in neighbouring countries, arrangement of
the state border, imperfect control over international postal trac, limited
powers of the State Customs Service, unemployment, and low wages of
residents of border areas.
Based on the selected determinants of smuggling in Ukraine, we consider
it essential to apply not universal measures to combat smuggling but
specialised, which would take into account the essence of each determinant.
In addition, it is necessary to prioritise the application of preventive
measures, i.e., to prevent the conditions of its commission. At the same
time, the resumption of criminal liability for commercial smuggling goods
should be an essential measure.
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Oleg Reznik, Olha Bondarenko, Maryna Utkina, Lyudmila Telizhenko y Artem Sorokin
Determinants of smuggling and ways to combat it
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