AEB sent its comments and suggestions regarding the draft Decree of the President of the Republic of Belarus "On measures to improve state regulation of the consumer market"

The purpose of the development of the draft Decree is to provide support to domestic producers and create conditions for ensuring national food security. To introduce effective regulation, it is necessary to analyze the reasons why some Belarusian manufacturers are inferior in the competition not only to some Belarusian-made goods, but also to imported goods, the cost of which includes increased logistics costs and often customs duties.

The introduction of the proposed regulation eliminates the need to improve the competitive qualities of Belarusian products. Support for domestic producers should help reduce the cost of goods produced and, as a result, increase their competitiveness both in the domestic and international markets. The introduction of the proposed restrictions will in no way affect the distribution of the number of units of goods of domestic manufacturers on the shelf space in trade organizations, however, it will negatively affect both the economic indicators of individual enterprises and the Republic of Belarus, and the image of our country in the international arena in connection with the emerging exemptions in terms of antitrust legislation of the Republic of Belarus, as well as a number of obligations assumed under international treaties.

Due to the fact that the subject of regulation of the draft Decree does not include the procedure for granting discounts within the framework of supply agreements, the restrictions proposed by the draft Decree will lead to more active use of this instrument, which will not allow suppliers to establish flexible conditions for working with trade objects. If, instead of paying bonuses, the contract provides for the provision of discounts in advance, this will negatively affect both suppliers and retailers, for example: for manufacturers and suppliers, refusal to provide a low price or discount may mean a refusal to cooperate, and retailers will either are obliged to redeem the agreed volume of goods, thereby tying the working capital, or to violate the terms of the contract, which will result in lawsuits or penalties. In addition, bonuses are often used by manufacturers and suppliers as a tool to accelerate the collection of receivables.

In this regard, the proposed regulation will cause delays among manufacturers and suppliers in the receipt of proceeds to settlement accounts, lead to a shortage of liquidity and, as a result, to a refusal to invest in new equipment and technologies, which may negatively affect the competitiveness of Belarusian products. Among other things, the draft decree is limited exclusively to the relationship between the trader and the supplier and does not take into account the fact that other parties may also be involved in the legal relations that are the subject of regulation of the draft decree, such as: owners of trademarks under which goods are produced that do not act as a supplier, marketing agencies and other third parties.

The proposed regulation will contribute to the development of “shadow” cash and commodity settlements in order to circumvent these restrictions, which, in turn, will negatively affect the interests of producers and consumers directly. Prohibitions and restrictions on the payment of remuneration in accordance with the draft Decree in relation to all groups of food products will reduce the profitability of trade organizations, which can provoke an increase in retail prices, as well as lead to refusal of retail chains to invest in modern methods of trade and creating comfortable conditions for consumers. In addition, in the long term, the proposed regulation will contribute to the bankruptcy of retail and chain stores. Taking into account the fact that the draft Decree proposes significant changes, we believe that the Decree establishes too short a transitional period of one month. I would like to note that within the proposed period it will be very difficult and almost impossible to bring all existing contracts in accordance with the law, this especially concerns large manufacturers and suppliers, whose client base numbers hundreds and thousands of buyers.

The project does not solve the set task, the proposed instruments for market regulation are not sufficiently developed: they will create inconveniences for consumers, will have a negative impact on the business climate and the international image of the country, which in the long term will have a negative impact on the state of the economy as a whole.