On 5 May the Malta Chamber of Commerce, Enterprise and Industry delivered a presentation to the Parliamentary Standing Committee on Economic and Financial Affairs on the subject of abuse in free movement of goods. 

Following the coverage of the meeting in the media, the Malta Chamber continued to receive further information from members specifically regarding the regulations in respect of the transport of accompanied cargo to Malta (i.e. multiple importers shipping on the same trailer).

In a communication to this paper, the Malta Chamber emphasized it is in favour of free trade. It is not advocating protectionist measures or further border controls. But Free Movement of Goods should not equate to a “free for all” situation.

The issue, in the Chamber’s view, is twofold:

the majority of accompanied cargo(not for personal use) that arrives in Malta in trailers via the catamaran service is not supported by any form of documentation e.g. cargo manifest. This means that the authorities have no audit trail of goods arriving in Malta in accompanied trailers via the catamaran. In the case of the catamaran the contract of carriage is covered only by a ferry passenger and vehicle ticket. This leads to a lack of audit trails, trader information and trade statistics.

accompanied cargo that arrives in Malta in trailers via the catamaran is immediately released whereas other groupage cargo that arrives in Malta  via other shipping lines is taken to the Hal Far bond stores.

Valletta Gateway Services Ltd. is, since 2006, the exclusive operator of vessel and passenger terminals within the Grand Harbour with minor exclusions such as the quays granted on concession to Valletta Cruise Port. Therefore all providers of maritime transport services to Malta must make use of terminals operated by VGT.

The operators of the catamaran service between Malta and Sicily appear to have been given the exclusive right by VGT to freely operate a loading and discharge operation within the Grand Harbour which is largely independent from VGTs involvement and which is not subject to the same regulations that apply to other providers of maritime transport services.

This, the Chamber holds, is giving rise to unfair competition particularly in relation to the services for the carriage of accompanied cargo in the sense that importers perusing the services of other maritime transport providers are subject to more expensive and onerous loading and discharge fees and operations when compared to customers perusing the catamaran service.

Ultimately such increased costs are reflected in the retail price of the goods to the consumer.

The main sectors that are being negatively affected by this state of affairs are:

-          Shipping agents and providers of maritime transport services.

-          Importers of goods that are subject to eco tax e.g. white and brown goods, tablets, wines etc.

-          Furniture manufacturers and importers.

-          Turnkey contractors.

-          Importers and installers of airconditioning equipment.

-          Etc.

By virtue of Police Ordinance (LN. 82 of 2003) entitled ‘Motor Tractors Regulations’, Groupage Operators must discharge their accompanied cargo at the freight station at Hal Far Bonds

On the other hand vehicles (exceeding 10 t) carrying accompanied cargo are being allowed to drive off the catamaran without fulfilling the Motor Tractor Regulations obliging Groupage Operators to route all groupage cargo to the container freight station at Hal Far Bonds. It takes the catamaran approximately half an hour to discharge all passengers, private vehicles and trailers.

Therefore, trucks and trailers arriving via catamaran and containing cargo that is clearly not intended for personal use, are discharging their cargo directly in private warehouses and/or in the street.   In these cases, the benefits are significant as the expenses such as the rent of a customs bonded warehouse, the salary of an employee to attend the warehouse and preparation of paperwork are saved, not to mention the time and effort. 

Other providers of maritime transport services are not allowed to start cargo discharge from the vessels before all bills of lading are inputted in the CES system. This is not being done on board the catamaran service. Unless the quantity and nature of cargo is self-declared by the trader, it is not recorded in Trade Statistics

Port operations and maritime issues should have been solved in 2010 when all carriers on the Sicily-Malta route should have started berthing at the Valletta Gateway Terminal, the Chamber said. Instead a special concession resulted in a section of Valletta Gateway Terminal being given to the catamaran operator therefore leading Virtu’ Ferries to bypass the normal maritime procedures and augmenting the unfair competition between the major maritime transport operators.

Consequently there are significant differences in terminal operator costs and operational conditions between regular shipping lines and the catamaran service. For example no mooring services are rendered to the catamaran hence there are zero costs in this respect.

This and other discrepancies in the enforcement of laws and maritime regulations, is creating unfair competition between maritime operators, the Chamber alleged. Maritime and shipping agents who are complying with regulations are finding themselves at a great disadvantage since, to cover the expenses, their transport rates often result more expensivethan the competition.
The official sanction for the un-stuffing of trailers in places other than at the Hal Far bonds is the same or similar to a parking fine. The cost of renting a warehouse in the bonded area, manning it, insuring it etc., cannot of course compare to a small penalty even if (and it’s not) such penalty was imposed each time.

The Malta Chamber continues to maintain that if there is a rule, this should be applied and enforced in the same way to all the stakeholders whether they are suppliers, customers and/or operators.

There exists a serious lack of enforcement of Supplementary Declaration reporting. In Malta VAT-registered entities and traders are ultimately responsible for ensuring that the arrival or dispatch of goods are duly recorded for Supplementary Declaration (Intrastat) purposes.Supplementary Declaration is the system for collecting data on the trade in goods between the countries of the European Union. This system, known as Intrastat in most Member States, has been operating since 1 January 1993 and replaced customs declarations as the source of trade statistics within the EU.  The requirements of Supplementary Declaration are similar in all EU Member States.

Trade statistics are an essential part of Malta’s system of economic statistics. These are an essential part of the country’s balance of payments account and are regarded as an important economic indicator of the performance of Malta’s economy.   As a very open economy, Malta is heavily dependent on international trade.  Both import and export data are used as indicators of the state of health of the Maltese economy and in particular of the country’s manufacturing sector.

This lack of control, reporting and market surveillance is leading to a rampant fiscal evasion, the Chamber claims. This includes VAT, excise duties and eco-contribution dues which is unique in Europe. Besides, this is creating an uneven playing field between law abiding and rogue traders, this is also leading to loss of revenue to Government.

Example: There is no or very little follow up from Italian authorities on whether VAT is being paid in Malta or Sicily. There is also a major issue in the lack of communication between local and Italian authorities.

Non- compliance with environmental/veterinary regulations

Goods placed on the local market are obliged to comply with the Waste Packaging and WEEE Directives. These laws place a producer responsibility on companies that place these type of goods in Malta. The producer can self-comply or shift part of the responsibility onto a recognised waste management scheme by paying fees based on tonnage to the latter. Given the lack of reporting, these traders are falling under the radar of these obligations and therefore MEPA (competent authority) is not aware of these traders importing these goods leading to an uneven playing field.

Non-compliance with consumer protection regulations 

There are health considerations in relation to products that either contain chemicals such as detergents, paints, healthcare products etc. or foodstuff. Labelling legislation requires certain products to be printed in English, Italian or Maltese. In many instances, this is not happening.

Legitimate and authorised traders also have a direct relationship with the manufacturer which lead to further consumer safety in case of recalls.

Example: Baby Food – What if baby food or any other food product for that matter is transported with contaminants that can affect someone’s health?

The authorities have absolutely no idea of what is arriving in Malta in terms of accompanied cargo.

Bona fide operators being subjected to continuous and selective inspections.  Experience shows that companies with long and impeccable track records of fiscal compliance have, in the past, bore the brunt of continuous scrutiny because this was the most convenient approach for enforcement officers.  This, of course, further intensifed the uneven playing field.