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- On a gray background: the authorities are reducing parallel imports of goods to the Russian Federation
On a gray background: the authorities are reducing parallel imports of goods to the Russian Federation
The authorities are reducing the flow of parallel imports to the Russian Federation, Izvestia has learned. Previously, the Ministry of Industry and Trade allowed businesses to import entire categories of goods, such as clothing, perfumes or cosmetics, but now only a limited number of brands will be allowed to import. The new order of the department should appear in late April or early May, according to two editorial sources at once. The ministry confirmed this information, saying that the relevant document is already being registered with the Ministry of Justice. The ministry cited the development of domestic production as one of the reasons for reducing the list. Izvestia investigated what else could have prompted the authorities to take this step.
How will parallel import change?
The Ministry of Industry and Trade is once again preparing to update its parallel import order, which allows the import of foreign products into the country without the permission of the copyright holder. Almost once a quarter, the agency conducted a rotation of brands in the document, studying the situation with sales of foreign products. But this spring, the ministry plans to reduce the volume of goods that can be imported into the country through parallel channels, a source familiar with the preparation of the document told Izvestia. The Ministry of Industry and Trade will, in fact, change its concept, he added.
So, at the start, in 2022, the ministry allowed the import of entire categories of goods into the country — clothing, cosmetics, shoes, alcohol, pharmaceutical products, and so on. There were some exceptions in these groups, they were made for individual brands that still operated in Russia or supplied products by direct import. Now the logic of the order is changing: a limited list of brands will be allowed for parallel import, and not the entire product category, according to another Izvestia source.
It is no coincidence that the Ministry is cutting this delivery channel — domestic manufacturers are gradually filling the market with products and in some industries they are already ready to meet the needs of customers, the source said.
— This approach will give customs officers more opportunities to control the import of goods into Russia. The fact is that before the introduction of parallel imports, FCS employees used a mechanism that allowed them to easily distinguish between legal and counterfeit products. They checked the list of suppliers approved by the copyright holders. If the importer was not on such a list, his shipment could be slowed down at the border," the source said.
But after the Ministry of Industry and Trade approved parallel imports, the situation changed: now almost anyone could supply products to the country, he added. The customs officers have only an order as a guideline — which groups of goods can be imported through parallel channels. A flood of brands poured into Russia, but customs could no longer determine at the border how legal the products were. The situation was aggravated by the fact that the market needed to be quickly filled with foreign goods.
The new approach will really allow customs to better control the flow of products right at the border, which means it can resist counterfeiting, the Rusbrand association told Izvestia.
— Until now, the Federal Customs Service has been able to inspect products already imported into Russia, without actually having the tools to promptly assess foreign goods at the border. Now we can assume that it will be easier for customs officers to evaluate shipments when they arrive in the country," said Alexey Popovichev, executive director of the organization.
The Ministry of Industry and Trade confirmed to Izvestia that they are reducing the flow of parallel imports, the agency has prepared the next changes to the necessary order, it is already being registered with the Ministry of Justice. It contains information about the codes of the commodity nomenclature of foreign economic activity (HS), some of which are limited to specific brands, the department noted.
"Parallel imports are a flexible tool that has been developed to provide the Russian economy with all the necessary commodity nomenclature in a stable manner in the face of turbulence in foreign markets," they added. — As the domestic production of missing items develops, supplies from friendly countries and other factors increase, the list of products is being adjusted towards reduction.
Parallel import of products
In the winter of 2022, foreign brands began to announce en masse that they were suspending the supply of products to the Russian Federation and leaving the country. The Russian authorities reacted promptly: in March, the government approved parallel imports, an approach that allows the import of goods without the permission of its copyright holder. It has been forbidden until now. In April, the Ministry of Industry and Trade issued the first supply order through parallel channels, its goal is to fill the market with products popular with people.
The document contained a list of 50 groups of goods that can be imported into the country freely. The Ministry allowed some categories to be imported completely, for example, clothes and shoes, while others made some exceptions for some trademarks, as they could not be imported in this way.
As a result, Apple phones, watches, and headphones; Samsung, Nokia, Sony, Siemens, HP gadgets and electronics; Huawei and Lenovo printers, scanners, and so on could be shipped to Russia without the knowledge of the copyright holders. Almost once a quarter, the Ministry of Industry and Trade adjusted the document depending on how the sales of foreign products were going. At the same time, the FAS advocated the full legalization of such imports: this could bring down prices for products.
Indeed, the cost of goods that began to be imported through parallel imports began to decline. In some cases, the average price drop was 50%, the FAS reported in the fall of 2022, using data from online sellers. At the same time, the cost of products that were not included in the list for such imports gradually increased.
By September, Russia had imported 1.3 million goods worth more than $9 billion. The Ministry of Industry and Trade then assumed that by 2023, the volume of supplies would jump to $20 billion. Although the Ministry later classified the figures for such imports. By the end of 2023, it became clear that the crisis had passed: the market was filled with the necessary products. Then there was talk about domestic producers who should be supported. The Ministry of Industry and Trade has started talking about the fact that in the future it is ready to reduce the "parallel" flows of goods.
Currently, each individual brand from the list of parallel imports is undergoing a public examination, Artem Sokolov, president of the Association of Online Commerce Companies (AKIT), told Izvestia. That is, when deciding whether to exclude it or include it in the list, the authorities take into account many factors: the company's withdrawal from our market, the availability of local production and the preservation of jobs in the Russian Federation, the demand for products from consumers and the availability of an equivalent alternative among domestic brands.
— We are in constant constructive dialogue with the department, we believe that it is important to maintain the conditions under which Russians can buy familiar brands, and there will be a wide range of goods on the market. Obviously, if a legal business is banned from importing demanded goods, the shadow sector will occupy this niche," he said.
Parallel imports helped to avoid the risk of shortages of goods during the outflow of Western brands, and also made it possible to respond promptly if there were difficulties in supplies due to sanctions, the chairman of the Presidium of the Association of Retail Trade Companies (ACORT) reminded Izvestia Stanislav Bogdanov.
— In the product segment, the situation has leveled off in three years, and a significant proportion of the brands that left have been replaced by analogues. We believe that parallel imports should be allowed for those goods that are necessary for consumers and that the domestic industry either cannot replace or does not yet have the necessary production volumes," he said.
The Ministry of Industry and Trade has repeatedly stated that it intends to reduce parallel imports, but has not yet taken any serious steps towards this, Georgy Ostapkovich, director of the HSE Center for Economic Research and Economic Analysis, told Izvestia. However, it is very early to claim that in this way the agency clears the ground for the return of foreign companies: while sanctions are in effect, it is useless to talk about it, he is sure.
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