The Trinidad and Tobago Manufacturers Association (TTMA) Illicit Trade Desk is calling for greater accountability in Free Trade Zones to prevent illicit trade and money laundering.
Roger Montero, Managing Director of Bastion Market Intelligence Limited said some business use FTZs to re-package consumer goods, and export to another Free Zone or Country which, sometimes, can create the environment for illicit trade, “Many people use the free zones to bring in items to reduce the administration time and speed up the movement of goods that are in transit to another FTZ or Country. When the goods are exported, they are in different containers and it is difficult to track goods from point of origin when they pass through FTZs. When goods are exported from FTZs they are done legally; however, when those goods are not declared before entering a destination Country it is illegal (contraband/smuggling). Those products are then sold at a reduced-price tag, and the profit is high. Illicit trade robs Government of taxes, is unfair to businesses who legally imports goods, in some cases provides goods that are inferior or unsafe and contribute to organized Crime & Terrorism.”
Two of the most illegally traded items are tobacco and alcohol, and even though there are COVID-19 restrictions around the world on manufacturing, these products are in demand. According to Mr. Montero, there is a huge movement of illicit goods in the Caribbean and Latin America, and it is steadily increasing, “Recently we had to destroy four sets of illicit footwear that were seized by Customs & Excise because there is an increase of persons bringing in items under the veil of “entrepreneurship”, and they want to buy products and sell with a profit, but they are not doing it the right way.”
The responsibility, however, to monitor FTZs should not fall squarely on the Customs and Excise Division, he said, “The main focus of Customs and Excise is to collect revenue and they do not have the resources to continuously audit all these warehouses. I would recommend the owner and company of the Free Trade Zone be held more accountable and provide Customs & Excise with regular and frequent documented updates. It is important to note that, in most cases, unless goods leave the Free Zones, Customs and Police do not have access or jurisdiction over these goods.”
Mr. Montero regards Suriname as the most efficient in curbing illicit trade in their FZ because of their coding and bonding system. He said, “Suriname has even discouraged loose cigarettes from moving through their bonds – meaning, its difficult to ship the cigarettes by master cases, shipping by containers is heavily encouraged. They did this to prevent adding to the annual 26 billion sticks illicit trade numbers in Brazil.”
To curb illicit trade in Trinidad, Mr. Montero is calling for an enforcement arm and the introduction of license requirements for all companies who operate in FTZs, “In order for companies to maintain this license there should be a track and trace of some feature with the products they have moving through the free trade zones. I believe this will discourage illicit trade, it will not stop it, but will discourage it from occurring.”
Fanta Punch, Attorney at Law and Partner at Hamel-Smith and Co noted international reports which cite that illicit trade industry is set to increase and reach an estimated US $991 billion by 2022,[i]. Illicit trade operates in the underbelly of the world economy and counterfeiting is an integral part in its contribution to criminal activity.
In her view, stemming the flow of counterfeit goods through our ports of entry is now more possible with the recently proclaimed Trade Marks Act, 8 of 2015. Customs and Excise can now play a greater role in enforcement and has authority to conduct of ex officio actions, seize and detain counterfeit goods including goods for export and in transit on suspicion of being counterfeit.
While the Trinidad & Tobago Free Zones Act does not specifically set out similar powers for the transshipment of counterfeit goods through FTZs there may be other ways in which Customs & Excise could exert its influence and presence, for example retaining goods where duties remain unpaid or are non-compliant with import restrictions.
She felt that FTZs require more stringent rules and regulations as they act as havens for unchecked criminality. One of main reasons countries establish FTZs is to encourage foreign investment, economic growth and employment. This focus sometimes takes precedence over instituting better controls and regulations so there is a bit of a blind eye by governing agencies.
Ms. Punch believes there ought to be specialized training for judicial officers on some of the complex issues involving FTZs and illicit trade to better adjudicate on criminal and civil actions. Equally important is the empowerment of Customs & Excise and Police in the scope of their authority and the benefits of using a multi-faceted approach to tackle the flow of counterfeit goods.
Ms. Punch noted that success in reducing the illegal activity in FTZs need not only co-operation between enforcement agencies and regulatory bodies like the Trinidad and Tobago Free Zone Company but also engagement with regional and international organizations to aid in the fight to restrict illegal activity in FTZs.
– Press release