Raising import tariffs is a really bad policy

Responding to this:

http://www.kyivpost.com/business/bus_focus/45805

It would immediately hurt consumers – all 46 million people who live in Ukraine – because they would have fewer products at higher prices.

It would further worsen situation with corruption – domestic producers will attempt to influence the decision of policymakers on which sectors to protect, importers will try to avoid paying import duties.

It would cause a reciprocal response from foreigners who will put trade restrictions on our products and hurt our exporters.

Import substitution policy involves immediate costs and requires a long term strategy and coordinated efforts from all political parties for benefits to materialize: when new political leaders replace the old ones, policy should not be changed and I really doubt the ability of our leader to coordinate their efforts.

Imported products that replace local ones are not the cause of domestic economic problems. When people buy a car or computer they care the most about its quality and price and much less about its origin. The very unpleasant fact for local producers is that foreign companies offer better products at lower price.

There are many reasons why Ukrainian firms are far behind in the global race for consumers. One of the major obstacles to doing business in Ukraine is poor investment climate, anti-market regulations, widespread corruption, and almost no respect for the rule of law. Will the policy of import substitution resolve these issues? No, I am afraid it will make things worse.

Improving the investment climate and opportunities for doing business in Ukraine would be a daring task even for a benevolent ruler who cares about common people. Unfortunately, only a very naïve person would describe our politicians using words “benevolent” or “caring”. In current circumstances, the best policy for common people is if our leaders stay away from economics and focus on their political fights.