Wrong trade-offs, bad governance
GOVERNANCE INVOLVES a series of trade-offs. Making the wrong trade-offs often means bad governance for a struggling country like ours.
The other day, the Congressional Oversight Committee on Ways and Means held a hearing on the proposed Customs and Tariff Modernization Act (CTMA). The CTMA seeks to replace the Tariff and Customs Code of the Philippines.
This is an important but complex undertaking. It took six years to discuss the critically needed Anti-Smuggling Bill (ASB), which has not even been passed. We hope that the CTMA is not rushed without the appropriate, thorough study it deserves.
Pressure
The Alyansa Agrikultura (AA) is of the position that the ASB should take priority over the CTMA. There is pressure to pass the CTMA because of a desire to comply with the provisions of the Revised Kyoto Convention (RKC). The RKC is an international agreement to facilitate import procedures to boost international trade.
But there should be more pressure to pass the ASB first. President Noynoy Aquino has said that before one gives a solution, one should know the real problem.
The AA for agriculture, and the Federation of Philippine Industries (FPI) for industry, have both stated unequivocally that smuggling is a much bigger problem than trade facilitation.
P-Noy himself has often said that fighting smuggling is one of his top priorities. Smuggling is causing people to lose their jobs, thus causing more poverty. It is depriving our government of more than P110 billion in annual revenue, which we need badly for necessary government services.
It is destroying our agriculture, and our industries.
Smuggling must therefore be addressed immediately. If we are not careful, facilitating import procedures may in fact make smuggling easier.
In previous Senate hearings on the RKC, both the AA and the FPI were assured by the senators that the RKC treaty would permit some of its provisions to be implemented in three to five years. This would give adequate time for the proposed anti-smuggling measures in the ASB to take effect first.
Unless the CTMA, which now intends to include all the RKC provisions, makes the three to five years timetable still possible, CTMA will unwittingly become a pro-smuggling measure!
Trade-offs
If Congress insists on passing the CTMA before the ASB, then at least three ASB provisions should be included in the CTMA. So far, some influential Congressmen have expressed strong opposition to these provisions.
The first problem is that the Bureau of Customs (BOC) lacks the resources and expertise to successfully file, and prosecute, anti-smuggling cases. ASB proposes that private sector lawyers be allowed to assist BOC in both the filing and prosecution of these cases. In this way, the cases will be stronger and the prosecution more successful.
The second problem is that the BOC often allows undervaluation because of an erratic interpretation of the World Trade Organization (WTO) sanction “Transaction Value” as the basis of import valuation. The ASB proposes a clear procedure for disallowing a grossly undervalued “transaction value” using a WTO compliant method, that countries like India are adopting. This is critical, because much of our smuggling today is done through undervaluation using “transaction value” as the reason.
The third problem is that the BOC procedures and activities are not subjected to oversight functions by the private sector. Thus, transparency and accountability are sorely lacking. The ASB provision creates a government-private sector oversight body to address this. This was previously done, but was abolished. Many believe this was because it had caught “big fish”, and was too successful against smuggling.
Recommendation
We recommend that Congress pass ASB first before the CTMA. Before pleasing foreign interests, let us put Filipinos first. Please. But if for some reason the CTMA is passed first, then at least the three ASB provisions identified here must be included in the CTMA.
Making the wrong trade-offs by passing the CTMA without these three provisions will be a clear indication of bad governance.
(The author is chair of Agriwatch, former secretary for presidential flagship programs and projects, and former undersecretary for Agriculture, and Trade and Industry. For inquiries and suggestions, email [email protected] or telefax (02) 8522112)
