Cleaning Up Customs
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Archaic procedures exacerbated the problems at the border. For instance, valuation of goods for taxation purposes had been a major problem. In most cases, the invoice value of goods reported by importers differed significantly from the actual value. Customs officially were given discretion to valuate goods using methods that many importers found abusive. Initially, the value databases and methods were not sophisticated enough to provide for selectivity and objective judgment. This lack of adequate procedures, coupled with the intense scrutiny of the financial police, often slowed customs clearance to a crawl. Officers opened every single bag crossing the border, taxing more than was fair. A joke ran that if you had a pair of socks, one of the socks must be for sale. The strict enforcement of rules sometimes created unexpected problems. For instance, the enforcement in 2004 of a 1990s rule that allowed importers to bring up to 20 kilograms of homogeneous goods into the country without full customs procedures and taxation led to large-scale abuse, as importers divided their shipments into numerous 20-kilogram packages and hired locals for GEL 2–3 to bring them across the border. Sometimes the local population aided smugglers by creating a disturbance to distract the financial police. In response to the problem, customs officials conducted more intensive searches, inspections, and passport checks, but this strict approach created frictions that eventually led to confrontations. The financial police and even special forces from the Ministry of Internal Affairs tried to protect the border, but fights occasionally broke out. The searches for smuggled items contributed to the already long queues, forcing importers with big trucks to spend up to a week waiting to cross the border. These delays created annoyance with the new system. The perception that it was no longer possible to smuggle goods into Georgia grew, but so did complaints about the unfriendly attitude of officials. Gradually, institutional changes were implemented that eased and then eliminated the queues. A one-stop shop was put in place to minimize the physical interaction between customs officers and traders. Under the old system, importers had to go to different customs windows to process their goods. With the one-stop shop, they obtained all the documents they needed from a single window. The documents were assigned a number and processed in back offices, where contact between the importer and the customs official was not possible. This approach reduced the number of steps to clear customs, sped up the process, and limited opportunities for corruption.