The Tribune

• As hopes rise 14-day system woe near end

• Time for Freeport goods clearance tripled

• Attorney hopes no bonded goods litigation

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Hopes were rising in Freeport last night that Customs is close to resolving the near-two week system malfunction that has tripled the length of time required to clear goods imported to Grand Bahama.

Glennett Fowler, president of the National Import Export Association of The Bahamas (NIEA), told Tribune Business that while Customs’ Electronic Customs Automated Services (eCAS) system was “still down” it was “coming up” in spurts while proving unstable.

Other Grand Bahama businesses, though, said the system had come back online yesterday following two weeks where cross-border commerce in Freeport’s free trade zone area has been sent back to manual processes.

Confirming that the Association, together with the Grand Bahama Chamber of Commerce and all their members, are due to meet Customs on Thursday to chart the way forward, Ms Fowler confirmed: “It’s been a slow process of getting goods. Everything is manual. It’s been taking three days to get everything cleared, whereas it was about a day previously.

“Right now I know some persons are not getting goods because they don’t want to go through the manual processes, while others are.” Ms Fowler, also president and chief executive of Fowlco, detailed these woes in a letter to the government last week: “eCAS has been down for nine days with no formal communication from the Bahamas Customs Department to the industry or the community of Grand Bahama.

“This has left businesses and consumers at a standstill in many respects. In several cases entries are taking more than 72 hours to be processed manually. Some business owners had storage levied on them from freight forwarders, adding further expense to their cost of goods sold. We have been advised the system will come up by tomorrow, which was stated the day prior as well.”

Meanwhile, Carey Leonard, the former Grand Bahama Port Authority (GBPA) in-house counsel, told Tribune Business that it “boggles the mind” how Customs had sought to introduce its new Click2Clear electronic single window (ESW) in Freeport without accounting for its bonded goods regime and the Hawksbill Creek Agreement.

“As usual, everything is done in a Nassau-centric manner without any consideration for the major industrialised area of the country,” the now-Callenders & Co attorney and partner blasted. “Pharmachem, the Container Port and the Shipyard employ thousands of people, and for some reason they’ve just ignored them all.

“The Hawksbill Creek Agreement and bonded items should have been taken into account from the time they started the Click2Clear program. There are other things coming up where Customs is asking for information, and I couldn’t find it in legislation that empowers them to do it. That’s not unusual for Customs.”

Click2Clear has been rolled out throughout The Bahamas with the exception of Grand Bahama due to fears it would undermine, and conflict with, Freeport’s long-standing over-the-counter bonded goods regime and the rights Grand Bahama Port Authority (GBPA) licensees enjoy under the Hawksbill Creek Agreement.

Besides potentially violating Freeport’s founding treaty, concerns have been raised that Customs’ bid to require both sellers and purchasers to submit monthly bonded goods reports breaches a Supreme Court verdict and injunction won by Kelly’s (Freeport) in early 2017, which found there was “no legal basis” for demanding such documentation.

The original Click2Clear implementation plan’s demands for such reports would also increase the red tape and manpower required to administer Freeport’s bonded goods regime, and result in raised costs and delays for the private sector.

This burden would ultimately result in companies electing to pay duty on items they should be entitled to tax-free under the bonded goods regime, since the hassle and expense associated with reporting to Customs will simply outweigh the concession’s benefits.

And, in turn, GBPA licensees will “abandon” buying from other local businesses in favour of importing all the goods they need themselves, reducing local commerce and the amount of money circulating within the Bahamian economy.

Mr Leonard voiced hope that renewed legal action would not be necessary, and that Customs would adjust Click2Clear “in a manner that’s sustainable for the smooth operation of industry on Grand Bahama and the licensees”.

He added: “Grand Bahama has the second largest population in the country, and to ignore it is mind boggling. It’s enough to blow your mind. How can you manage a country ignoring one-fifth or one-sixth of the population? It is mind boggling.

“Business likes certainty, and as usual everything is uncertain. People are muddling through at the moment, and many are waiting to see of this program can be done properly and efficiently. For this [bonded goods sales reports] to be raised again seems a little crazy to me.

“I can’t find any legislation that provides for it, so this would be an overreach. It would be an overreach. If Customs is concerned about certain individuals and businesses, they can conduct an investigation just like the police. It just means Customs will have to do some proper investigation and inspections,” Mr Leonard continued.

“Providing monthly bonded goods sales reports will not solve the problem, quite frankly. It’s a complete waste of manpower and it’s inefficient. To me, the most important thing is to get Click2Clear to work, increase productivity, and increase government revenue as business expands.”

Freeport’s ‘over-the-counter’ bonded goods regime has been a key feature of the city’s business environment for almost three decades, and is now an established practice under the Hawksbill Creek Agreement.

It allows GBPA licensees to sell goods duty-free (bonded) to fellow companies within the Port area for use in the latter’s own business. But any sales to a consumer or household do attract duty, and these taxes have to be submitted in a report - together with the full tax owed - to Customs by the 15th of the following month.

While post-paid duty sales have to be reported, there had never been a similar requirements for so-called ‘bonded’ sales. Justice Estelle Gray-Evans found in April 2017 that the right of Kelly’s (Freeport) - or any other GBPA licensee - to sell ‘over-the-counter’ bonded goods did not depend on submitting a monthly report on such sales to Customs.