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Chaos Sweeps Over Customs

AS chaos swept over the country’s customs offices this week, government officials assured importers and business chambers that the “inconveniences” that had made it impossible for them to retrieve their merchandise from customs warehouses had been resolved.

“It was all a large misunderstanding,” said Roy González, Vice-Minister of Finance, during a press conference Wednesday afternoon. “The Director of Customs [Francisco Fonseca] signed a document clarifying the situation to customs officers.”

The misunderstanding had to do with a reform to the country’s customs law that went into effect last Friday, requiring all imported merchandise to include a difficult-to-obtain shipping document that in some countries, including the United States and several European countries, is confidential, and in several other countries doesn’t even exist.

WITHOUT the documents, importers were unable to retrieve their merchandise from the customs warehouses at the country’s ports. As the days passed, goods of all kinds piled up in the warehouses.

Importers, many who claimed they were not properly informed about changes to the law, were outraged.

One of the first groups to react was the Costa Rican-American Chamber of Commerce (AmCham), which on Monday forwarded its members an e-mail message from Harvey Monk Jr., Chief of the U.S. Census Bureau’s Foreign Trade Division, telling them to ignore Costa Rica’s new government requirements.

On Tuesday, the Costa Rican Chamber of Commerce declared a state of emergency, warning that the country’s customs offices would collapse unless the problem was solved.

ON Wednesday morning, the Costa Rican Chamber, in the name of several affected companies, filed an injunction before the Constitutional Chamber of the Supreme Court (Sala IV) alleging the law violated Article 46 of the Constitution – the right to conduct commerce.

The Costa Rican Chamber of Industries followed suit on Wednesday afternoon, filling its own injunction with the Sala.

During the week, the National Direction of Customs received calls and letters from several embassies here, including those of the United States, Canada, Chile and several Asian countries, requesting a clarification of the new rules.

THE problems began last Friday after the legal changes went into effect. The reforms aimed to crack down on illegal smuggling and import tax evasion by requiring all shipments to include a copy of the Shipper’s Export Declaration (SED).

The declaration is a form filled out at a shipment’s port of origin that includes information about the transaction, including the parties involved, the date of the shipment and the weight and value of the goods, among other information.

As of Friday, importers were allowed only to retrieve shipments that included their respective SED. Customs officials applied the rule to all incoming shipments – even those that entered the country before the law went into effect.

IMPORTERS blasted the measure, arguing it was not legal to require SEDs for shipments sent before the reform went into effect. This is particularly important, they pointed out, because many maritime shipments take 10 to 14 days to arrive at the country’s ports and, in some cases, can take as long as 22 days.

In addition, several of Costa Rica’s trading partners – the largest being the United States – have laws that protect the confidentiality of SEDs, and prohibit them from being given to unauthorized people.

“… The information on the SED may not be disclosed to anyone except the U.S. Principal Party in Interest or their agent and only when such a copy is needed to comply with United States official legal and regulatory export control requirements,” Monk wrote in the letter forwarded by AmCham. “Therefore, we are requesting that you [Principal Parties, Freight Forwarders, and Common Carriers] do not provide the SED or Automated Export System records to the Government of Costa Rica.”

Furthermore, several other trading partners don’t require SEDs, making it impossible for vessels from these countries to present one, said opponents of the new measure.

TO resolve the crisis, Customs Director Francisco Fonseca sent a letter to customs officers clarifying how to correctly apply the law. His letter also cited a long series of exemptions to the law.

The law cannot be applied, and was never supposed to be applied, to any product that arrived in the country or was shipped before Friday, Fonseca admitted. Since the purpose of the reform is to stop tax evasion, products not subject to import taxes, such as medicines and aid shipments, also are exempt from the new requirements, he clarified.

Products from various countries will be exempted from the law, he said, so all products from the United States and other countries where SEDs are confidential will be exempt. The same goes for products from countries that don’t use SEDs, he said. Central American countries, which use joint Central American Customs Declarations, also will be exempt, he added.

“THE law can’t ask importers to do the impossible,” Vice-Minister González explained. “For that reason, we have the exemptions.’’

González denied all the exemptions would weaken the law’s ability to combat smuggling and tax evasion. He said the country would begin to negotiate bilateral and regional customs cooperation and information exchange agreements with several countries in the coming months to complement the law.

“However, it’s important to mention the lack of preparation shown by the export sector,” he said. “The change in the law was published six months ago. Many importers had time to prepare but chose not to.”

The Executive Branch plans to resubmit the law to the Legislative Assembly to be revised, he added.



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