By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Freeport faces “a very precarious situation” after Customs’ top official made clear the agency’s determination to disregard the city’s founding treaty as well as prior Supreme Court rulings.

Dr Geannine Moss, the Customs comptroller, in a July 1, 2021, letter responding to private sector concerns warned that Click2Clear’s implementation in Grand Bahama will require Port Authority licencees to provide the agency with a monthly report on bonded goods sales despite the existence of a permanent Supreme Court injunction that bars this.

While agreeing to remove the $10 entry processing fee for Grand Bahama Port Authority (GBPA) licencees who purchase such goods, Dr Moss indicated this was the only concession that Customs is prepared to make to-date.

“This office has heard the concerns about the Freeport Trade Zone Module (FTZ) of Click2Clear and, in a trade-facilitative manner, has determined that suppliers of bonded goods who would be requested to make an end-of-month report of sales would indeed continue, and the purchasers of such goods would not be levied a $10 fee,” Dr Moss wrote.

“This process will allow suppliers of bonded goods to submit, at the end of the month, a record of all sales and pay a $10 fee while such purchasers of said goods will not have a bill to pay. Certainly, this is a most equitable and fair system for persons licensed to sell and purchase bonded goods.”

Many GBPA licencees are likely to disagree, not least because requiring 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 that found there was “no legal basis” for demanding such documentation.

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 have never been similar requirements for so-called ‘bonded’ sales reports, but Dr Moss’ letter shows that is exactly what Customs is seeking with the implementation of its Electronic Single Window (ESW) or Click2Clear platform in Grand Bahama.

The comptroller’s letter was sent to Glennett Fowler, president of the National Import Export Association of The Bahamas (NIEA), who yesterday confirmed to Tribune Business that Customs was calling in GBPA licencees for one-on-one meetings in which it was effectively dictating how they will file and report using Click2Clear.

“They’re asking for monthly reports on the 25th or something like that, but because they have not had a general meeting with us we are getting different things from different people until they send out some kind of standard operating procedure,” she said of Customs, while warning that several GBPA licencees are now considering legal action. 

“I believe they’re playing around with us until it gets ready to launch. I’ve spoken to a few people who have said they will wait to the launch and then put something in the courts. That’s what we’re hearing. We’re hoping everybody taking legal action will do it together, and to put in one action as opposed to individual companies doing it, but I don’t know if everybody will go for that.

“This is a very precarious situation, and I think that because everyone is very timid in dealing with Customs many persons are not making comments in these meetings, and instead using them to gather information. Until we get together and deal with this as an issue affecting everybody, Customs will get away with it.”

A well-placed Freeport source, speaking on condition of anonymity, yesterday said Customs was using the one-on-one meetings with GBPA licencees as part of familiar “divide and conquer” tactics designed to pick off companies one at a time.

Revealing that single licencee representatives were being confronted with five to six Customs officers, the source said: “They are coming out of these meetings totally bewildered because it’s impossible to comply with what they want. Customs is ganging up on them, and most people are completely timid when dealing with Customs.”

Disclosing that two fellow licencees had informed them they will cease operations if Click2Clear is implemented as is, the source said: “We would have to upload our entire inventory to Customs Click2Clear system. And every single day we would have to update to show both bonded and duty-paid sales.

“If we were to sell a 2 x 4 x 8 piece of lumber, we have to do an entry for it, and the customer - if a GBPA licencee - must upload to Customs’ site that they’ve gained a 2 x 4 x 8 piece of lumber in their inventory. It’s not possible. We’re going to have to shut down. It’s not possible to physically comply.

“Everybody is just reeling. Customs is doggedly pursuing this and it just cannot happen. De facto it’s going to put hundreds of people out of work. Companies will shut down because they cannot comply. It can’t fly. It’s impossible to comply and flies in the face of an existing court injunction,” the source continued.

“They have never consulted with the licencees or anybody else as to how to properly implement Click2Clear in the Hawksbill Creek area. They were told several years ago it couldn’t work, and even the then-comptroller conceded it couldn’t be applied here.”