PARLAMENT CHANGES ITS RESOLUTION

Maia Razmadze

By the resolution of the Parliament of 21 December 2001, export of non-ferrous metals will be forbidden since 31 December 2003.

The reason of it was frequent theft of non-ferrous metals. Yet, the taboo did not put an end to such thefts as the Parliament’s resolution did not cover a sphere of the regulation of metal production and aroused discontent of donor organisations.
Moratorium was still cancelled despite the fact that some Parliament members were against the lifting of ban.Natia Turnava, deputy minister of economy: All kinds of relations should be legalised. Shutting one’s eyes to something does not mean that an undesirable fact will cease to exist. Prohibition of export is a clear example of it. Ignoring a problem even on the legislative level does not mean settlement of the problem. On the contrary, the problem has become more acute. As a result of moratorium on the export of non-ferrous metals, things that were in the sphere of legal relations passed into that of illegal ones. This has a negative impact on the state. In case of legalisation, apart from income tax the state gained profit from taxes from people who worked in this sphere.
One can always find a way of evading and misinterpreting laws. It is not difficult to remelt non-ferrous metals in home conditions. Metal was melted into ingots and exported abroad. Export of non-ferrous ingots is by no means regulated by the law of Georgia. To illustrate this, we would like to draw one example: according to customs data, 2230 tons of copper ingots were exported from Georgia in 12 February – 20 March in 2001. i.e. for 35 days whereas 7 tons had been exported before the prohibition. Thus, export of copper ingots have increased significantly. If we prohibit export of ingots, metals will be exported in some other form. Thus, the main thing is to separate criminal case and logical economic relations. Theft of graveyards and conductor cables is a criminal case. This happened before the prohibition (f.e. theft of Didgori memorial) and this will continue after the ban is lifted provided control of law enforcement agencies becomes more tough. It is their prerogative. We should say that after the lifting of moratorium amendments to criminal law and administrative code were submitted to the Parliament. These amendments provide for toughening of responsibility for such crimes. Thus, these breaches will be eradicated if appropriate instances wish to do so. If this does not happen, the problem will not be settled by either bans or lifting of bans. Purely economic side of the matter is another thing. We have often heard economists saying there was no metal left in the country. Many people think that deposits of metal are running short. Metal can not run short as technical equipment in the country wears out during production process and becomes useless for entrepreneurs. We have limited import of new technical equipment and prohibited export of metal before making any amendments to the Tax Code. I do not understand the logic. It is absurd to say there is no metal left in the country. Metal will exist for as long as there are economic relations and economy on the whole. Besides, this issue should be considered from the macroeconomic point of view. Somehow or other, metal plays a leading role in the structure of country’s export. This is, in fact, logical. It is common knowledge that technical equipment has long been outdated. It, certainly, is a potential basis for export of metal. What will happen if this article on export is cancelled? In fact, if export really stopped, we would receive a non-descript picture. A particular amount of currency would be necessary for the financing of the same amount of import. Currency will not be supplied to our country. There would be a misbalance in the monetary market of the country. This would, certainly, affect lari. Unfortunately, administration is weak here, laws are not observed and prohibition of non-ferrous metal export had no affect on the exchange rate of lari. Yet, this measure, certainly, caused some negative consequences. For instance, trade balance has deteriorated for the late 6 years as compared with the previous period. This was, to a certain extent, caused by passing of metal export from legal sphere to illegal one.
– Was lifting of moratorium recommended by the Monetary Fund?
– Prohibition of export came in contradiction with the principles of trade liberalisation as well as with the agreement on partnership and co-operation between Georgia and Euro Union whereas trade liberalisation is one of the terms of macroeconomic assistance of the Euro Union to Georgia.
– There was the same situation with regards to the World Trade organisation and the International Monetary Fund. These organisations would refuse to provide Georgia with assistance if the Georgian party ignored the responsibilities. This would be followed by cancellation of free trade agreement with partner-countries. The decree of the president N141 on “additional measures for collection and transportation of metal and remains of ferrous and non-ferrous metals” and on “temporary rule of collection, purchase and transportation of ferrous and non-ferrous metals” has already been prepared and signed. This decree defines the legal and natural persons who have the right to sell metal. The notion of metal was defined, either. This rule makes it possible to identify metal as well as people who sell it. The notion of such metals as conductor cables, cultural and ritual things, nonoperating military equipment and its component parts were forbidden. The Justice Ministry and the Ministry of Internal Affairs of Georgia were authorised to prepare the bill on toughening punishment for breaches in the sphere of metal realisation.
Sandro Tvalchrelidze, independent expert: – Prohibition is the main reason of corruption. The less are prohibitions the better. After prohibition of export, lobbying came from structures that in their time “absorbed” government reserve and sold factories and ships as metal. Metal export is lobbied by those who are involved in illegal business. The problem should be settled by the law. This will weaken corruption. Lifting of the ban is the only way of saving our economy from hide sphere. Besides, we will cut vital arteries of some clans by lifting the moratorium. 117 mln. tons of metal was exported from the country during the prohibition. If export of metal were legalised, budget would receive taxes.
David Saganelidze, member of Parliament, fraction “New rules”: Such a situation in the sphere of metal export is absolutely unacceptable. Very often a state resorts to bans when it is unable to manage elementary problems. At first sight, illegal export of metal should be nipped in the bud. However, you should see what happens in the country with so many cargoes not passing through customs and other controlling organs. The law should forbid it. However, this will not change the picture: metal will be exported as before. The state will lose incomes that were registered during official export. Unfortunately, it is possible to peg exchange rate of lari by means of currency export. However, the first place here is occupied by metal export. Prohibition of metal export means less currency earnings. This will, certainly, become a reason of misbalance between foreign and national currency, which will end in devaluation of lari.
The Monetary Fund and the World Bank demanded that the Parliament of the country should pass a law on the cancellation of metal export.
Our fraction supported export of metal on condition that the administrative Code is tightened. Control should be exercised in places of metal collection. If these issues are settled, lifting of ban will become acceptable.