Egypt’s House of Representatives has approved the new Customs Law, proposed by the Ministry of Finance and the Egyptian Customs Authority as a replacement for the current Law No. 63 of 1966 and its amendments. It disregards most objections raised by the Chambers of Shipping on the draft law during its preparation.
The new law, which will soon be published, includes many controversial changes and amends several provisions of the current law, especially in matters of addressing the carriers’ liabilities.
Al Tamimi & Company is taking a closer look and offering its professional legal and practical expertise for any individual or entity wishing to further understand the Customs Law, how to benefit from it, and any risks caused to the benefactors of the New Customs Law (the “New Law”).
Al Tamimi & Company will also be highlighting the economic impacts that will be triggered due to the issuance of the New Customs Law. Furthermore, our firm presents essential guidelines to be put into consideration to maximise the utilisation of the benefits presented by the New Law, and to avoid any possible repercussions from the amendments.
The New Law introduced some provisions that should improve the customs system in Egypt. For example, in efforts to reduce corruption, a risk management system will be introduced to lead the release of any goods in accordance with the established controls.
By applying this new system, customs procedures will be expedited and simplified. Moreover, settling customs dues in monthly instalments has now been introduced to importers of machinery, industrial equipment and production lines. The New Law also regulates provisions for prior clearance of goods, which was only discreetly available under the old law for major regular dealers.
The New Law introduces regulations to practices of the Egyptian Customs Authority, since a lot of the authority’s practices are regulated by internal order and instructions, not by virtue of the state’s law.
This new law aims to encourage national industry, reduce the cost of local production, and maximise its competitiveness in global markets. This also includes abolishing custom duties on government and university hospital medical items.
The new law also introduced, for the first time, the work of customs’ clearance agents, by defining their role and setting controls for practicing this profession, and the penalties that may be imposed upon them in cases of violation.
On the other hand, the New Law placed some constraints on the customs procedures. For example, with regards to unclaimed goods, it reduces the previous four-month period set for the owners of the unclaimed goods to reclaim them to one month. After this point, the Egyptian Customs Authority shall have the right to sell these goods or assign them to any government authority or agency without charge.
Additionally, in almost all its articles addressing the activities of maritime carriers, the New Law emphasises the carrier’s liability for validating the description of the goods entrusted to them, to carry and made the carrier a primary responsible party should those descriptions vary after physically inspecting the cargo.
This is somehow unjust and is not applicable in cases of containerised cargoes. It is established and well-known to the Egyptian Customs Authority and all those who work in the containers business that these are arranged by the shippers at their own factories, storage facilities, stores or farms, without any sort of supervision or interference from the carrier.
The descriptions of the goods are merely as dictated by the shipper at his own risk and responsibility, and thus, we believe, the shipper and the cargo interests should be solely held liable for their authenticity.
We also need to highlight Article 39, which sees the importer or his agent obligated to present the documents related to the goods to the authority before they are shipped to the country so that it can mark them with an initial customs registration number.
It is also obligatory to notify the shipper of this number in order to register it with the documents of shipment of the goods. The carrier or the captain of the ships and the pilots of the aircraft, as well as the captains of other means of transport or their shipping agents or their representatives, are obligated to include this number in the shipping documents related to the goods coming to the country.
In case this number is not included in the shipping documents, these goods are re-shipped outside the country without being discharged into Egyptian ports and outlets at the expense of the carrier or his representative.
The new customs law has several advantages, such as the risk management system, but comes with consequences, due to the new process that has been introduced. As a result, it may be difficult to implement them without providing the necessary mechanisms.
Importers are required to submit documents related to the goods to be imported before shipment so that customs can mark them with an initial customs registration number. This can cause a penalty for non-inclusion without unloading the goods from the means of transport from the basis and to be re-shipped out of the country. The article neglects the fact that many shipments coming to the port which are linked to freight brokers in the first place, not the importers addressed at the beginning of the first paragraph of the text of the article.
We believe that this article should be suspended due to practical problems that it may cause. It will negatively affect the flow of incoming trade to Egyptian ports, and cause confusion in the maritime transport system for all importers and shipping lines dealing with Egyptian ports. This will continue until they are given their right to negotiate with shipping lines, shipping brokers, transport, and maritime law experts.
The carriers, according to the New Law, shall also become liable for re-shipping the goods or destroying them at their own expense if the importer failed to complete the customs’ formalities to clear out the cargo despite the fact that according to the new law, all importers should be well known persons to the Customs Administration.
The Carrier hall also becomes liable for the authenticity of the description of the cargo in the bill of lading, and for any damage to the seals affixed on the containers or the discharge and/or storage of the container at yards other than those designated by the Customs. All of which is not in line with the practical nature and operational scope of the carrier.
Lastly, we are hopeful and looking forward to the implementation of the provisions that keep pace with the technological development of the customs systems, and encourage further investments. Yet, we remain cautious to the effects of the remaining provisions on the industry, especially maritime carriers and shipping agents.
Hany Maamoon: Senior Counsel at Al Tamimi & Company law firm
