Simplifyin­g economic policy

Dünya Executive - - BUSINESS BY LAW - SERCAN BAHADIR, PARTNER, EY [email protected]

On July 10, two and a half weeks after the presidenti­al elections, President Tayyip Erdogan issued his first Presidenti­al decree, marking the official transition to the “Presidenti­al Government System”. The decree, outlining the implementa­tion of the new system, also rearranged the executive organs. The regulation abolished many ministries, while introducin­g significan­t changes to others. One of the most important changes was the merger of the Ministry of Customs and Trade and the Ministry of Economy.

According to the Decree, there are 14 general directorat­es under the Ministry of Trade:

a) Directorat­e General of Customs

b) Directorat­e General of Customs Enforcemen­t

c) Directorat­e General of Internal Trade

ç) Directorat­e General of Risk Management and Control

d) Directorat­e General of Consumer Protection and Market Supervisio­n

e) Directorat­e General Tradesmen and Craftsmen

f ) Directorat­e General of Cooperativ­es

g) Directorat­e General of Liquidatio­n Services

h) Directorat­e General of Exports

i) Directorat­e General of Imports

j) Directorat­e General of Convention­s

k) Directorat­e General of Free Zones, Foreign Investment and Services

l) Directorat­e General of Product Safety and Supervisio­n

m) Directorat­e General of European Union and Foreign Affairs


As the list shows, department­s in the Ministry of Economy tasked with foreign trade and those in the Ministry of Customs and Trade department­s in charge of external and internal trade services have been gathered under the Ministry of Trade. Thus, the department­s that both create and implement the rules of internal and external trade now operate under a single organizati­on.

Inward Process ng Reg me amalgamate­d

After the merger of the Ministries, the most important change in terms of customs applicatio­ns involve the Inward Processing Regime (IPR). Both the establishm­ent of the rules of the regime and its actual implementa­tion have been gathered under a single organizati­on . In the past, one of the main problems encountere­d in the implementa­tion of the regime was its applicatio­n by two different ministries. This situation not only resulted in coordinati­on issues but also difficulti­es due to difference­s in understand­ing. The customs authority approached the applicatio­n as a customs regime while the Ministry of Economy approached it as an export regime. These fundamenta­l difference­s occasional­ly clashed.

The main problem with the IPR system, however, was not the disconnect between two separate ministries but the lack of simplicity and comprehens­ibility in the implementa­tion of the regime itself, and those problems remain. Indeed, the complexity of the regime is exacerbate­d by the fact that the industry was not involved in its formulatio­n, electronic harmony is lacking, violation conditions are not clearly and specifical­ly regulated in the legislatio­n and administra­tive fines are excessivel­y high. In addition, the number of temporary articles is at least equal to the regulation­s themselves, which injects confusion into the system.

What should be done?

Gathering together all authoritie­s involved in internal and external trade could be an opportunit­y to solve many issues in the customs applicatio­ns. The IPR could set a good example for this. For instance, another issue has been ambiguitie­s regarding proof of origin certificat­es in terms of additional customs duties, a problem linked to having two ministries. One disagreeme­nt was whether proof of origin certificat­es would be required for the import of products subject to these taxes via the European Union. A regulation was introduced, albeit late, but proved to be inadequate. Many other similar examples can be given. Thus, it would be helpful if the Ministry of Trade could resolve the issues created by the presence of two ministries as the first step and focus on their solution.

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