Haïti : Renforcer l'Administration Douanière dans un Environnement Peu Sûr

. Haiti: Strengthening Customs Administration in an Insecure Environment April 2024 . . Thomas Cantens*†, Evans Jadotte,* David Cal MacWilliam,*Javier Suarez* Macroeconomics, Trade and Investment *World Bank (WB) †World Customs Organization (WCO) Corresponding author: Thomas Cantens, thomascantens@hotmail.com © 2024 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved. This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Table of Contents Introduction ...............................................................................................................................1 1. Revenues, Customs, and Haiti’s Security Crisis................................................................4 1.1.The effect of gangs on economic activity and trade................................................4 1.2. Impact on customs activities...................................................................................7 2. The Security Crisis has also Affected Port Activities........................................................9 3. Violence, Smuggling, and Trade at Land Borders ..........................................................10 4. A Strategic Perspective on Challenges Faced by Haitian Customs ................................18 4.1. Implications of Haiti’s new customs code and implementation challenges. ........19 4.2. Corruption as a disruption to equal treatment.....................................................21 4.3. Structural weaknesses of AGD in responding to security challenges ...................22 5. Recommendations.........................................................................................................23 5.1. Build on and reinforce digitalization. ....................................................................24 5.2. Develop and strengthen infrastructure at land border offices and small ports. ..26 5.3. Build capacity for customs surveillance. ...............................................................26 5.4. Monitor the practices of offices and inspectors to reduce bad practices.............27 5.5. Provide container scanners at the main port and Port-au-Prince International Airport. ..................................................................................................................28 5.6. Implement a framework for local consultation.....................................................29 5.7. Support a gradual implementation of transaction values.....................................30 5.8. Support the installation of the single window at the PAP port and review the procedures......................................................................................................31 5.9. Cooperate with foreign customs administrations, including Dominican Customs.................................................................................................................31 5.10. Implement data analytics, and create a customs reform unit including data analytics capacities.......................................................................................33 6. Bibliography ...................................................................................................................37 iii Tables Table 1. Summary of Recommendations................................................................................................2 Table 2. Summary of Gang Activity.........................................................................................................5 Table 3. Evaluation of Security Charges for Economic Operators in International Trade ......................7 Table 4. Summary of Recommendations..............................................................................................23 Boxes Box 1: Haiti/Dominican Republic Border Crossing Points.....................................................................11 Box 2. Violent Incidents at Land Borders..............................................................................................13 Maps Map 1. Distribution of Armed Incidents in Metropolitan Port-au-Prince (2018-April 2023). ................5 Map 2. Map of Ports.............................................................................................................................10 Map 3. Main Border Points...................................................................................................................12 iv ACRONYMS and ABBREVIATIONS ACLED Armed Conflict Location and Event Data AGD Haiti Customs Administration APN National Port Authority ASYCUDA Automated System for Customs Data ASYVAL ASYCUDA Valuation BRH Haiti Central Bank BLTS Anti-Narcotics Police Brigade CARICOM Caribbean Community CESFRONT Specialized Unit for Borderland Security CIMO Intervention and Law Enforcement Unit DG Director General Customs DGI Internal Revenue Services DGM Directorate General of Migration DR Dominican Republic EDF European Development Fund ENSEA National School of Statistics and Applied Economics FCV Fragile, Conflict-affected, and Vulnerable FERDI Foundation for Studies and Research on International Development GDP Gross Domestic Product IMF International Monitory Fund IOM International Organization for Migration ISF Internal Security Forces LAC Latin America and the Caribbean NGO Non-Governmental Organization ONE Dominican Republic Statistical Office PNH Haiti National Police POLIFRONT Land Border Police PSI Pre-shipment inspection SAR Synthetic Aperture Radar SGS Testing, Inspection and Certification Company TEU Twenty-Foot Equivalent Unit WB World Bank WCO World Customs Organization WTO World Trade Organization Acknowledgments: The team would like to acknowledge Jean Ralph Gracia (Director of AGD’s Surveillance Directorate) and Sebastian Franco Bedoya (Economist, ELCMU) for their helpful comments. All errors and omissions are the authors’ responsibility. v INTRODUCTION 1. Haiti is facing a severe security crisis, including the increasing armed gang presence and resultant personal security concerns. This has affected social conditions and economic activities, presenting significant constraints and challenges in carrying out basic economic activities. The situation has deteriorated further following the missions undertaken through this activity with Acting Prime Minister Ariel Henry unable to return to the country, his conditional resignation once a transitional presidential council agreed between the CARICOM and Haitian political actors is inaugurated, and the gangs threatening and closing the airport and seaport in Port-au-Prince. The situation is now (April 2024) increasingly volatile and shifting essentially by the day. Jointly prepared by the World Customs Organization (WCO) and the World Bank, this report discusses the impact of gang violence trade flows, customs operations, and the modernization efforts of the Haiti Customs Administration (AGD) in response to the security crisis. While AGD has a Customs modernization plan, it largely reflects technical customs issues and does not adequately, if at all, set such a reform program within the current security environment and attendant risks, constraints, and challenges posed by this environment. 2. Customs practices, policies, and applications have the potential to significantly strengthen the State’s legitimacy and build trust between the government and the citizenry. First, in providing for more fiscal space, increased revenues would allow for greater budgetary expenditures in priority areas that are currently woefully under-resourced, like the provision of needed social services (health, education, social protection, etc.) and critical public investment. Part of the political instability and gang problem in Haiti is that the government provides little in terms of services to the population and is largely absent in large parts of the country. This leads to a lack of government legitimacy and credibility, a lack of trust between the government and the citizenry, and foments civil unrest and protest. Creating increased fiscal space, if such fiscal space is used effectively (including through investment in growth-enhancing sectors), can thus lead to increased welfare, increased government legitimacy, and potentially increased political stability. Second, by visibly strengthening governance practices and reducing corruption, customs can demonstrate that corrupt practices, recognized as widespread and endemic in Haiti, are being addressed and that the authorities are being less predatory of the population. This perception could lead to strengthened governance practices across the board and a perception among the population that the government is acting more responsibly and focusing increasingly on the needs of the citizenry rather than personal gain. This aspect should not be underestimated in strengthening governance practices in customs. While revenue mobilization is a goal, it should be recognized that the objective of customs is to collect the appropriate, fair, and lawful amount of duties and taxes, not necessarily just more revenue. 3. This report is motivated by three primary factors. First, customs administrations tend to continue to operate in crisis situations, contrary to other government services. Moreover, customs taxation is the simplest tax instrument to enforce during security crisis periods because it concerns traded goods, which are easier to tax than individuals or companies. Tax revenues in Haiti are low at 6.3 percent of GDP in FY23 and insufficient to provide adequate public services. As such, customs is the single largest source of domestic revenue and leakage in customs revenues is significant. Second, as noted, strengthened customs practices and applications have the potential to significantly strengthen the legitimacy of the State and build greater trust between the government and the citizenry, including better controlling transborder criminal activity. AGD has a high profile, and corruption, unfair treatment, and perceived ineffectiveness in the administration of customs practices is viewed as highly problematic by the citizenry. Third, the current insecure environment in Haiti, including the increasing gang presence and resultant personal security concerns, presents significant constraints and challenges in carrying out basic customs services and practices, not to mention 1 meaningful reforms. AGD could benefit from lessons learned in other fragile, conflict-affected, and vulnerable settings (FCV) and better adapt to the current insecure environment. 4. In sum, it is essential to strengthen customs control in the territory, not only to collect more revenue, but above all to collect it more efficiently, more fairly, equitably, and in-line with allowable amounts. It is also necessary to avoid competitive distortions linked to special treatment across different offices, to deter the corrupt pacts of certain civil servants with importers, and to strengthen the legitimacy of the State. Donors should support the AGD in placing its actions within a broader political perspective of restoring the legitimacy of the State and give priority to measures that will make revenue collection fairer and customs treatment more egalitarian, considering the present environment and accounting for the challenges posed by the high level of insecurity. 5. The report provides detailed specific actions for improving customs performance and governance under the ongoing security circumstances. This includes building on and reinforcing digitalization, strengthening infrastructure at land border offices and small ports, building capacity for customs surveillance, monitoring the practices of offices and inspectors, implementing a framework for local consultation, supporting a gradual implementation of transaction values, supporting the installation of the single window at the port of Port-au-Prince, and increasing cooperation with foreign customs, including Dominican Customs (Table 1 below). Table 1. Summary of Recommendations Recommendation Priority Timeframe given current insecurity context (April 2024) Build on and Reinforce Digitalization Enable the automatic assignment of declarations to inspector-verifiers High Immediate Connect to ASYCUDA the 4 remaining customs offices that are not connected High Future Enable online payments Medium Future Install ASYCUDA terminals in metropolitan areas of Port-au-Prince (like substations) Medium Future Simplification of document processing High Future Strengthen infrastructure at land border offices and small ports • renovation of physical premises • security measures and equipment, including networked surveillance cameras • passageways according to the types of carriers • control and bonded areas • mobile scanners to speed up the inspection of vehicles • improved power supply and connection to the customs’ computer network High Future Build capacity for customs surveillance New strategy for more proactive action by customs High Immediate Acquisition of physical equipment (radios, GPS) and personal protection equipment High Immediate Specialized training, particularly in the use of weapons High Immediate Training and acquisition of new technologies, particularly to promote spatial analysis Medium Future Joint training with the security and defense forces Medium Immediate 2 Recommendation Priority Timeframe given current insecurity context (April 2024) Monitor the practices of offices and inspectors Introduce a policy for measuring the individual performance of frontline customs officers High Immediate Monitor clearance conditions in offices High Immediate Measure the performance of offices High Immediate Installation of container scanners at the main port and scanners at the international airport While scanners can be highly beneficial, careful consideration should be given prior to committing to their installation (see narrative further below) Medium Future Implement a framework for local consultation Implement a regular and transparent framework for consultation between customs and the private sector High Future Sharing of quantitative and fact-based analyses within this framework Medium Future Support a gradual implementation of transaction values Limit the introduction of transaction values to certain targeted products initially High Immediate Provide customs officers with reference values to assess the value presented by declarants High Immediate Develop a tool for calculating acceptable values (European Union fair price type) High Immediate Provide regular training based on concrete cases for customs officers in relevant offices High Immediate Support the installation of the single window at the port of Port-au-Prince The single window presents an opportunity to review all procedural practices and resolve evident problems Medium Future Increase cooperation with foreign customs, including Dominican Customs Facilitate the exchange of cargo data (manifest type, quantities, declared values, vehicle and driver data) High Future Facilitate the sharing and reconciliation of information, data, and statistics Medium Future Implement data analytics and create a data team Specific details on the creation and implementation of a data team are included below (the creation of a dedicated data team is a pre-condition for the success of other high-priority measures above) High Immediate 6. This report was prepared based on three missions: The first mission (March 2023) was in Port-au-Prince for a series of discussions with AGD and private sector representatives; the second mission (June 2023) was to the four official border crossing points between Haiti and the Dominican Republic, namely Anse-à-Pitres/Pedernales, Malpasse/Jimaní, Belladère/Comendador (Elias Piña) and Ouanaminthe/Dajabón; and the third mission (January 2024) helped refine the report with comments from the AGD and the office of Haiti’s Minister of Finance. The report incorporates developments since these missions, but it should be recognized that the situation continues to evolve relatively rapidly and significantly. As such, the report reflects conditions existing at the time of the report. Risks to the findings, recommendations, and indeed Customs performance, both to the upside and downside, are substantial as security, political, and socio-economic conditions evolve. 7. The authors would like to thank AGD’s Director General and his team for their candor during the discussions and for their many interventions in facilitating access to customs offices. 3 1. Revenues, Customs, and Haiti’s Security Crisis 8. Haiti is the poorest country in LAC, highly reliant on trade. As a small economy with limited natural resources and a relatively small domestic market, Haiti relies on trade to obtain many manufactured goods and services that are unable to be produced domestically at scale and at competitive costs. Haiti is also dependent on imported food products and being able to import food at globally competitive prices has a significant impact on food security. The seamless movement of goods through customs clearance procedures is thus essential in facilitating economic activity and increasing societal welfare. 9. Revenue collection is among the lowest in the world and heavily reliant on customs. At 6.3 percent of GDP in 2023, Haiti’s tax revenue is the lowest in the Latin American and Caribbean (LAC) region, a level that is insufficient for providing basic public services. Customs revenues account for 50 percent of revenues. There is significant potential for increasing revenues from customs since taxing goods at the border is easier to administer than other forms of revenue collection. There are also significant leakages in customs revenues through governance issues, evasion, collusion, fraud, etc. Haiti Customs is thus at the center of the Government’s tax collection. Customs also play a role in governance, ensuring the presence of the State at the border, limiting smuggling and illicit trade. 10. Gang violence and the gangs’ direct involvement in economic activity significantly undermine the government’s capacity to raise revenues. Rampant gang violence and associated activity depresses economic activity and lowers growth by raising the cost of doing business, decreasing competitiveness, limiting business formation, forcing viable businesses to close, and thus reducing government revenue across all tax revenue sources, including customs. 11. Gang activity also directly affects customs performance. The theft of containers by gangs, the rising cost of importing and transporting goods, and the insecurity involved in both importing and exporting goods, reduce trade volumes and thus significantly reduce trade-related revenues, on which Haiti is highly dependent. Insecurity also directly affects customs operations, limits inspection services, and directly inhibits the authorities’ ability to control cross border trade and collect revenues, as customs officials are unable to fulfill their responsibilities. The impact of increasing gang activity and related insecurity are further described below. 1.1.The effect of gangs on economic activity and trade. 12. Gang activity in Haiti has been steadily increasing with consequent economic, social, and personal implications. Between 2018 and 2023 (September 15th), 95 gangs were perpetrators of armed incidents. The number of gangs has increased since 2020, as well asthe number of victims killed in incidents. Kidnappings have increased markedly. Yet, deaths are largely concentrated in a few gangs: two gangs, the G91 and the 400 Mawozo, were involved in more than 100 violent incidents over the period. Six gangs—Kraze Baryè, Baz Krache Dife, Baz Gran Grif de Savien, Grand-Ravine, Chien Méchant, and Village de Dieu—are implicated in more than 30 incidents each, according to the Armed Conflict Location & Event Data Project (ACLED2). From January through March 2024, the UN has estimated over 2,000 gang related deaths. Gangs have also become increasingly independent of political patronage as they gain additional and varied sources of funding, including by controlling territory and essentially imposing taxes on businesses and economic actors. 1 G9 is a group of nine gangs operating in the Port au Prince area. They have reconstituted themselves into a larger group called Viv Ansanm (Living Together) by allying with virtually all other powerful gangs operating in the Port-au-Prince area. 2See https://acleddata.com/ and Raleigh et al. (2023) for more information on ACLED data. 4 13. Geographically, gang violence is concentrated in the Port au Prince metropolitan area but has been spreading to smaller population centers and rural areas, as gang activities are copied and emulated by other groups. Gangs have also moved from a funding model dominated by political patronage to one increasingly more autonomous as it is oriented towards engagement in kidnappings, extortion and protection rackets, theft of merchandise, control of roads, and essentially the taxation of neighborhoods under their control. Gang confrontations for neighborhood dominance have increased sharply since 2022 (see Table 2), transforming more traditional defensive territorial strategies where neighborhoods were fallback zones, into offensive strategies where gangs now fight for neighborhood control. This switch is also reflected in semantics. The Creole name for armed groups has itself evolved, from the name baz ("base") to that of gang recently, reflecting identification with a group (gang) rather to a place or neighborhood. This may represent a mode of violence inspired by neighboring countries (Colombia, United States, Mexico). Table 2. Summary of Gang Activity3 Number of gangs identified Number of incidents with at least 1 death (involving at least one gang) Number of victims (with at least one gang present) Number of kidnappings Number of gang confrontations 2018 7 80 (47) 224 (157) 1 7 2019 22 168 (120) 364 (286) 6 33 2020 41 216 (196) 522 (489) 63 52 2021 24 207 (184) 628 (528) 160 55 2022 38 372 (345) 1341 (1299) 157 80 2023 (Sept.15) 34 318 (297) 1270 (1208) 101 45 Source: ACLED. 14. Gang action at sea is so far limited, although boat attacks by sea have been reported at Abraham Terminal in Thor.4 The bay of Port-au-Prince is not protected by naval forces. While gangs do not have major naval assault weapons, they can shoot at ships and pose a threat that can discourage shipping companies from calling at the Port-au-Prince port. Map 1 illustrates the most active gang territories. 15. This expansion in gang activity is increasingly affecting economic activity and directly affecting customs performance. Gang activity depresses the level of Map 1. Distribution of Armed Incidents in Metropolitan Port au-Prince (2018-April 2023). 3 ACLED data, reporting many events attributable to unidentified gangs. These data may underestimate the extent of gang activity, as other human rights organizations report a higher number of gang confrontations, kidnappings, and other victims. However, the team was unable to obtain specific data from these organizations. 4 Port operator interview, Haiti, March 2023 mission. 5 economic activity and affects the cost, ease, and indeed ability of doing business in Haiti. As noted, this reduces domestic revenues both indirectly by reducing both indirect and direct tax bases, but also directly by affecting customs performance. This is independent of the devastating impact it has on societal well-being, the ability of households to generate income, and the serious impact on poverty levels and food insecurity. 16. Port-au-Prince is now extremely insecure and is the heart of gang activity. A large part of the metropolitan Port-au-Prince territory is now under complete gang control. The border area with the Dominican Republic, while not as gang-controlled as Port-au-Prince, is becoming increasingly gang affected and increasingly violent. Ports and borders are natural areas of gang involvement as they are centers of economic activity, and hubs for criminality, arms trafficking, and drug movements. Customs operations are, by their nature, concentrated in these port areas and along land borders and thus are directly subject to pervasive gang influences and indeed represent prime targets for gangs. This is further illustrated below. 17. Gang control of economic activities through three key channels: i) Theft and resale of imported goods in local urban markets. Gangs steal goods, especially containers and imported vehicles, on routes between port infrastructure and the importers' private facilities. They may seize all or some of the goods. They may demand ransom payment for their release or resell them in local urban markets. Sugar and rice containers appear to have a high probability of going missing in ports. Gas station managers are sometimes forced to sell part of their supplies to gangs at below market prices, which are then resold at 4 to 5 times the price in "laboratories."5 The informal resale of fuel via "laboratories" is a long-standing practice in Haiti but seems to have recently taken on a new dimension and armed incidents near or in markets have increased since 2022. The control of urban markets for the resale of stolen products implies that gangs have become increasingly active around the main routes and centers of economic interest. ii)Levies. Gangs use several methods to extract rents from economic activity, through different type of levies. For example, a few gangs have set up “toll booths” at the exit of Port-au-Prince and on the main road between Malpasse (a border crossing point) and Port au-Prince. Tolls are levied on interurban transport buses, particularly between Port au Prince and Carrefour, trucks (empty or full), and private individuals and vehicles. iii) Cost of countermeasures. Several operators have adopted countermeasures, such as police escorts and movement of goods by sea, to protect their goods from gang activities (Table 3). Many operators prefer to use barges to transport goods by sea, from the main unloading points to secondary wharves. For example, the Lafiteau operator chose the sea route to transport containers to the dry port on the outskirts of Port-au-Prince. Industrialists also choose this route between Port-au-Prince and Thor. This comes at significant additional costs. 5"Laboratories" is the common name used by mission interviewees to refer to illegal gas stations. 6 Table 3. Evaluation of Security Charges for Economic Operators in International Trade Gang extortion charges Escort extortion charges US$4,000/container for a gang escort at land borders US$200/container for an escort between Lafiteau port and MAD Lafiteau Other extortion Charges/tolls 200,000 gourdes per month per oil or gas company US$400 per truck + container (Martissan toll) Ransoms during the interception of a cargo truck in the city US$5,000 per driver US$3,000 for the truck US$10,000 per container US$2,500 per vehicle Removal of a container or vehicle from a consignment Fees charged by legal entities for specific security-related transactions Police escort fees US$200 per container for police escort in Port-au-Prince Sea transportation costs US$700-900 per container by sea between Port of Lafiteau and Port-au Prince On the barge, US$2300 per container (pre-gang period, US$150-175 fee to get the container out) Source: Interviews held during the mission. 18. Gang activities have also led to increases in other costs: • Insurance: Insurance companies refuse to insure container transportation; some maintain a service at a cost of around 1.5 percent of the container's value. • Transfer costs: Port operators and shipping lines no longer offer, or strongly avoid door-to door service and ask importers to organize the transfer of their containers to their unloading points, with police escorts or even gang safe passage agreements. • Increase in clearance times: Container costs have increased due to the likely lengthening of dwell times related to gang-influenced clearance times (cf. next section). • Pass-through of taxes by gangs from oil and gas operators. Fuel prices are administered, but there now appear to be price disparities between the north and south of the country, probably due to the varying taxes charged by gangs on trucks going to the two parts of the country. 19. Gang activities have also led to a reduction in customs presence and a significant decline in port activities. Nonetheless, competition in the bay of Port-au-Prince exists, though unfortunately, the port of Lafiteau is (at the time of writing) temporarily hampered by a sunken ship), and the Varreux container terminal cannot operate due to the lack of Customs presence. According to the figures provided by the various operators, the occupancy rate of the port of PAP is currently 60 percent. Port activity declined by 26 percent between 2021 and 2022. Import volume was 97,000 TEU in 2020, 73,000 TEU in 2021, and 54,000 TEU in 2022. In January 2023, the port of Port-au-Prince received 2,875 containers, which is about the typical monthly volume of the port of Lafiteau. As such, considerable potential exists for increased traffic and increased revenues. 1.2.Impact on customs activities. 20. Gang activities limit the movement and customs presence in cities and at the border. The building that housed the main customs office and the General Directorate in downtown Port-au-Prince was stormed by a gang. Security forces have not regained control. Staff had to move to the airport’s customs office building to continue their operations. Since 2022, several customs officers have been kidnapped. The kidnapping of customs officers in Haiti is not specific to this period, as similar acts 7 were committed by gangs in 2005.6In October 2020, the head of customs at the port of Port-au-Prince was the victim of an assassination attempt.7 Over the space of a few months in 2022, customs officers were particularly targeted: the Deputy Director General in May 2022,8four customs officers in June 2022 in Port-au-Prince,9 one customs officer at a border crossing point,10 and two customs officers in Saint-Marc in July 2023.11 Travel to the city is difficult, involving considerable risk for customs officers going to the ports, customs warehouses, and clearance areas. Port operators and importers use their own vehicles (armored or otherwise) to transport customs officers and dependence on private operators has increased. Outside the metropolitan area of Port-au-Prince, travel to border offices is also very dangerous, and maintaining a customs presence there is often impossible, or under severe limitation of activities (cf. section 4 below on border offices). Many customs officials have been working remotely and the capacity of customs to verify information provided by private operators has declined. In this environment, it will be important to initially limit pressure on primarily seeking increased revenue collection, and much more important to define a new operational approach, including improved behavior of officers and initiating a dialogue with private operators to operate in the existing environment more effectively. 21. The security situation has led to significant delays. In July 2022, arms found in containers from the United States were seized,12 and consequently, customs were instructed to strengthen immediate controls in port areas. Due to the increased rate of container inspections and agents’ movement restrictions, border and clearance times have lengthened substantively. Unloading times have also probably increased. In Port-au-Prince, customs maintain teams responsible for sorting and tallying goods when vessels land. In Lafiteau, customs is present only 3 days per week, leading to further delays in the unloading of ships. Indeed, some ships avoid Haiti or leave the port without having been able to unload. In the case of exports, the problem may be even more critical because the vessel has only a limited time to take charge of the exported containers, which forces operators to wait for the next port of call to export their goods. When home inspections are requested by an importer located in a "lawless" zone (a term used by customs officers), customs refuse them and require inspection to be carried out at another location, adding to costs and delays.13 These home inspections, or ex-port inspections, are frequently necessary as access to the port by customs officers is restricted by gang activity and goods can languish in the port. 22. In this volatile security context, AGD has adapted by relying on telecommuting, digitalization, and simplification measures. The institution has resorted to telecommuting which has weakened knowledge exchange among customs officers. The AGD has upgraded the network to respond to these new needs, including providing laptops to managers. It also accelerated the ongoing digitalization of customs procedures and the introduction of new ASYCUDA modules, including the automatic assignment of declarations to inspectors, the latter of which is an important governance measure to limit collusion and is widely practiced across customs administrations. Among other things, this responds to a need for greater flexibility, in a context where access to customs offices is 6 https://reliefweb.int/report/haiti/haiti-poursuite-ininterrompue-des-op%C3%A9rations-de-kidnapping- %C3%A0-port-au-prince. 7 https://www.juno7.ht/lattaque-contre-julcene-edouard-est-une-tentative/ 8 https://www.alterpresse.org/spip.php?article28409. 9 https://aidfdouaniers.org/haiti-enlevement-de-4-douaniers-a-port-au-prince/ 10https://aidfdouaniers.org/enlevement-du-douanier-haitien-floreal-oriol-en-poste-a-la-frontiere-dominicaine/ 11 https://centreinfos.com/article/actualite/haiti-deux-agents-douaniers-enleves-a-la-croix-perisse/1511 12 https://www.alterpresse.org/spip.php?article28466. 13 The WB and WCO team did not have the opportunity to conduct simple quantitative analyses with AGD on the full impact on customs clearance times, based on ASYCUDA data. However, such analyses would be particularly useful in accurately determining the impact of longer lead times and the operators and customs units most affected. 8 complicated for civil servants who unpredictably, for typically sound reasons, do not show up for work. In addition to digitalization, the AGD has promoted operational coordination with economic actors: anticipation of procedures (manifests are recorded in the system 24 hours before the arrival of ships) and development of customs clearance at the declarant’s or importer’s premises. 23. Thanks to structured customs controls, revenues collected by customs more than doubled in 2023.14 This reportedly led a 110 percent increase in customs revenue annually by end-September 2023,15 despite a more than 50 percent drop in the volume of imported containers. AGD's revenue accounted for more than 60 percent of total revenue for fiscal year 2023, compared to 44.4 percent in fiscal year 2022. 24. Quantitative analyses using data from ASYCUDA and from the National Port Authority would be necessary to obtain a more accurate picture. Access to data would allow for greater analysis, to be conducted jointly with the AGD, of changes in the volume of goods, in relation to the evolution in revenue, changes in disputes and threshold values, as well as to conduct a mirror analysis of probable fraud, based on data from UN COMTRADE, customs, and the ports. This would allow the AGD to better identify the factors driving revenue variations, but also, from a more operational standpoint, to improve its strategy for combating fraud. From a policy standpoint, this would help raise awareness among economic actors, the government, and donors, about the critical role played by customs and the need to strengthen it. A greater understanding of the need for, and the benefits of evidence-based decision making and robust data literacy, among AGD senior management should be cultivated. 2. The Security Crisis has also Affected Port Activities 25. The APN has also adapted to the context of insecurity. The Port Authority grants 17 days to clear goods, which is generous. Demurrage charges exceeding 17 days amount to US$125/day for refrigerated containers, US$75/day for twenty-foot containers, and US$140/day for forty-foot containers. However, port operators understand ongoing insecurity issues, and when shipping lines are unable to access the port because of armed clashes, the counting of free days is suspended. 26. Outside of the Port-au-Prince metropolitan area, three small ports receive sporadic international calls and other very small ports have Ro/Ro (Roll-on/Roll-off) capacity and provide revenue niches. The small ports receive significant quantities of smuggled goods, particularly new vehicles (4,000 new vehicles are imported officially each year, but estimates are that 20,000 new vehicles are actually imported; traffic comes from Dubai), and aggregated containers (30 percent of the containers are "personal belongings" from Florida), which are largely used commercial goods imported by small importers from the Haitian diaspora. 14 Until very recently, customs applied the Brussels value and is shifting toward the transaction value system with the adoption of the new Customs Code, which incorporates the standards in this area. Haiti has been a member of the World Trade Organization since 1996. 15 Meanwhile, the gourde has depreciated by 13.7 percent against the US dollar over the period. This increase in customs revenue has caused dissatisfaction among many importers. See Section 6.1 below for a discussion. 9 27. Small ports are preferred by the informal sector. In Haiti, this informal import sector takes the form of so-called "personal belongings" containers. From a customs point of view, personal belongings are exempt below a certain value, provided the goods are not sold in the market. Essential necessities (fish, rice, flour, milk) are sent monthly by Haitian expatriates, from Florida. Such “personal belongings" also frequently include goods marketed by small importers of varying degrees of informality and thus facilitate inputs, supplies, and income opportunities for Map 2. Map of Ports16 the poorest. Proof of the critical social character of these small ports, violent protests took place in Saint-Marc in 2022 to re-authorize the clearance of "personal belongings" in this small port.17 These goods are also an important niche, however, for corruption and fraud. For example, boats arrive with “used mattresses” and then a few kilometers away, the mattresses are cut open, the goods recovered, and the mattresses burned.18 According to port operators, there are also about 10,000 containers of used or new general cargo that transit through these smaller ports, which represents about 5 percent of imports. Haitian customs taxes goods that are clearly not "personal belongings” at these small ports but the diversity of the goods and their used nature complicate the calculation of their value. Again, significant revenue opportunities exist if valuation, oversight, and fraud and corruption could be better controlled at these smaller ports. 28. Unfortunately, traffic trends by port, the share of maritime traffic at each port, nor the trend in second-hand vehicle traffic could be verified jointly with the AGD. It was thus impossible to quantify potential customs revenue or to detect regular and recurrent "informal" imports by the same importers. The Haitian authorities would benefit from a quantitative view of the potential revenue losses and the social benefits of weak customs control in this area. 3. Violence, Smuggling, and Trade at Land Borders 29. The Dominican Republic is Haiti’s second most important trading partner after the USA. Haitian imports from the Dominican Republic have increased significantly over the last decades. According to the Dominican Statistical Office (ONE), exports to Haiti reached US$1,040 million in 2022,19 while exports from Haiti to the DR were US$10.5 million (AGD).20 Most trade between the two 16 Author's reconstruction from World Port Source data. http://www.worldportsource.com/ports/index/HTI.php) 17 https://www.alterpresse.org/spip.php?article27854. 18 Interview with logistic operator (March 2023 mission). 19 anuario-de-comercio-exterior-2022.pdf (one.gob.do) 20 DR Customs. 10 countries happens through land flows, which accounts for 89 percent of Dominican flows to Haiti in 2017 (Banco Central 2021, p. 38). A 2011 Dominican law regulates the trade applicable to 14 "border" markets and defines prohibited goods and the rules for granting merchant licenses for Dominicans and Haitians.21 Between 2001 and 2021, the Dominican Republic also adopted 14 legal and regulatory measures to promote the economic development of border areas (Banco Central 2021, pp. 40-41), and sought as well to bolster its policy through a border observatory that was established in 2018.22 Yet, informal trade along the 360 kilometer long and porous border is significant, and anecdotal evidence suggests that a large share of Haitian imports from the Dominican Republic is not recorded. Foregone tax revenue due to informal trade has been estimated to be as high as 7 percent of Haiti’s total revenue. (IMF, 2020). Box 1: Haiti/Dominican Republic Border Crossing Points A study (CSIS 2019) found that AGD presence and the impact of violence on trade vary significantly across border points. The study assessed traffic at four official border crossings: Anse-à-Pitres/Pedernales, Malpasse/Jimani, Belladère/Comendador (Elias Piña), and Ouanaminthe/Dajabon (see map 2). These 4 crossing points have bi-national border markets, on the Dominican side, open to Haitians generally two days a week according to fixed time slots from 9 am to 4 pm, except Ouanaminthe/Dajabón, which is open every day. Haitian localities also have a communal market, reserved for national trade, not frequented by Dominicans. According to the Dominican Central Bank, the markets of Dajabon, Comendador, Jimani, and Pedernales are the largest with, respectively, about 2,000, 1,500, 680, and 330 Dominican and Haitian vendors (Banco Central 2021, p. 49). Customs presence varies greatly at these 4 border points: 5 commercial operations staff in Anse-à-Pitre (without brigade cooperation with the Police), 10 in Malpasse, 20 in Belladère (with the support of a brigade of 15 agents), and 53 commercial operations staff in Ouanaminthe (supported by a brigade of 12 officers). In addition to these border points, there are surveillance brigades within the territory. Insecurity significantly affected merchandise flows from Malpasse to Belladère. The Malpasse office is closest to Port-au-Prince. In the past, this crossing accounted for a large share of land imports (57 percent) and monthly receipts of some 300 million gourdes (source: local AGD official). Currently, the office collects about 1 percent of these amounts, or 3 million gourdes per month from about 20 declarations per day (idem). The few remaining importers involved are cross-border commuters, which increases the pressure on the civil servants on duty. The gangs reportedly charge a toll of 25,000 to 30,000 gourdes per truck. There are no remaining licensed customs brokers, but they have left behind some "representatives" who have professional knowledge or experience of the site and who guide operators through the administrative process. In contrast, monthly revenues in Belladère are reported to have increased from 70 million gourdes to 200 million gourdes per month between 2019 and 2022. The team was not given access to ASYCUDA data to conduct quantitative analysis. Such an analysis would have made it possible to study the diversion of traffic, the emergence of new economic operators at land borders, and to examine the adaptation of the current Customs system to trade flows. 21 Law No.216-11 regulating the establishment of markets on the Dominican-Haitian border. G.0.No.10636 of September 14, 2011. https://prodominicana.gob.do/wp/wp-content/themes/ceird/ceirdpdf/Ley-216-11- regula-mercados-en-la-frontera.pdf 22 https://mepyd.gob.do/dpdzf/ozf/ 11 Map 3. Main Border Points 30. Border points between Haiti and the Dominican Republic have been dominated by a climate of violence on both sides of the border, most often non-organized. There are reports of regular violence against women, who are highly represented in small-scale cross-border trade (Petrozziello 2011), and of demonstrations of anger on the part of the population toward state23 services. A simple field observation is enough to see the very tense relationship between the Dominican armed forces and Haitian traders crossing the border. Offices at these border points are regularly subject to very violent attacks by the population following seizures, tax increases, armed actions by customs officers, or accusations of organized corruption.24 Civil servants operate in complex conditions, far from the capital, with very limited capacity for control and personal protection. 31. At the land border, declared values are lower, and physical checks cannot be carried out systematically to ensure compliance or the nature and quantity of goods. There are no declarations in advance, all formalities are carried out upon truck entrance at the border point and manifests are not recorded in the computer system but by hand, where customs officers collect them whenever there are transport manifests. In the case of "formal" traffic, declarations are made by authorized customs brokers, while customs officers make them on behalf of "informal" brokers. Haitian customs officials at border offices acknowledge that the relationship with the people and the large share of "informal" operators does not allow them to carry out customs clearance operations under the same conditions as in the major ports. The term "informal" refers to small-scale smugglers who are intercepted by the surveillance brigade at border exit points and taken to the ticket office to complete the required formalities. 23https://www.lenouvelliste.com/article/115947/le-calme-est-revenu-a-la-frontiere-fonds-parisienmalpasse https://www.lenouvelliste.com/article/150151/le-trafic-a-repris-a-la-frontiere-malpasse-jimani 24 https://www.lenouvelliste.com/article/164460/malpasse-des-douaniers-accuses-descroquerie. 12 Box 2. Violent Incidents at Land Borders25 In 2015, the Anse-à-Pitres office was burned down following the seizure of a truck with bags of flour.A In 2015, in Thomassique, close to the border (not visited), the office was ransacked.B In 2018, in Anse-à-Pitres, people brought operations to a standstill and threatened customs office staff in protest against an increase in the tax on used clothing.C In 2018, in Belladère, the customs office was vandalized. In 2018, in Malpasse, the customs office was attacked by the crowd, after a truck driver was shot by a customs officer. Some of the Haitian police officers took refuge in the Dominican Republic under the protection of the Dominican army;Dthere were 7 deaths, 5 of whom were customs officers.E In 2018, an altercation between customs officers and police at the border in Ouanaminthe led to the death of a Customs officer, followed by roadblocks by the population. In March 2018, the Dominican authorities closed the border to prevent clashes between Dominicans and Haitians, following a violent incident on the Dominican side.F In 2019, in Trou-du-Nord (North-East), traders erected barricades on roads to protest the seizure of their goods by the customs brigade.G In September 2021, Haitian traders blocked the border at Ouanaminthe to protest Dominican