Exporters Persist, Red Line Penalty Reaches TRY 5,000

Both exporters and importers are complaining about extra costs in customs procedures. Payments made under dozens of documents and processes by different names amount to millions of lira. According to World Bank research, Turkish customs impose document fees on companies 6 times higher than OECD countries that are 4 times richer than ours. In foreign trade, the annual loss to companies from the Red Line procedure alone reaches TRY 250 million. Yavuz Eroğlu, Chair of TOBB Plastic, Rubber and Composite Industry Council and PAGEV, announced that as a result of efforts to resolve the Red Line problem—one of the extra costs imposed on foreign trade companies—the penalty has been increased to TRY 5,000, thereby relieving foreign trade companies of an annual burden of TRY 250 million. Turkey recorded TRY 157 billion in exports in 2017 while conducting TRY 234 billion in imports during the same period. An average of 5 percent of containers in exports and 18 percent in imports fall into the Red Line category. The Red Line means that goods falling into this category are subject to more detailed inspection by customs authorities, and the customs authority obtains these inspection services from port operators. During these mandatory procedures, port operators charge companies excessive fees for loading, unloading, storage, in-yard transport and similar costs.

The Customs and Trade Ministry's Directorate General of Customs issued Circular 2014/29 in 2014 on Determination of Port Service Tariffs, which set maximum prices for these services and made compliance mandatory.

However, since the penalty for non-compliance was only TRY 102—a negligible amount—port operators simply ignored the rule and paid the fine when complaints arose.   Yavuz Eroğlu, Chair of TOBB Plastic, Rubber and Composite Industry Council and PAGEV, announced that demands to make this penalty more deterrent found support at the Customs and Trade Ministry and the penalty has been raised to TRY 5,000. Eroğlu stated that this unlawful gain of TRY 250 million annually will remain in the pockets of our foreign trade companies: "Regarding the Red Line problem, at a meeting held by our Council last year, we requested that the Ministry make the penalty more deterrent. Indeed, our request was accepted by the law published in the Official Gazette dated 10 March 2018, and the penalty per transaction was increased to TRY 5,000. The excessive fees demanded for services resulting from mandatory operations performed by port operators for inspection of goods falling into the Red Line will be eliminated with the penalty increase to TRY 5,000. Thus, the unlawful gain of TRY 250 million annually will remain in the pockets of our foreign trade companies. Logistics costs, a key element of foreign trade, are increasing day by day. Monopolistic structures in logistics operations connected to ports have a significant share in these costs, and we believe we must solve them collectively. These extra burdens are imposed not only on industrialists but on the country's economy. We are pursuing an active policy through both our PAGEV Plastics Industrialists Foundation and TOBB Plastic, Rubber and Composite Industry Council to resolve problems such as the Red Line, weighing fees, and ordinance charges that impose extra burdens on companies. We express our gratitude to our Ministry of Economy, Nihat Zeybekçi, for their support in these processes related to facilitating exports and reducing costs. We are determined to continue fighting for solutions to problems until we remove the obstacles before exports one by one." Official Gazette dated 10 March 2018, Issue No. 30356 Amendments were made to Articles 218 and 241 of the Customs Law by Law No. 7099. -In case of non-compliance with the maximum fees determined by the Ministry pursuant to the third paragraph of Article 218 of this Law, an administrative penalty of five thousand Turkish lira shall be applied for each transaction.