Bureau of Customs’ crucial role in inclusive growth

Will farmers and fisherfolk have a merry Christmas? Only if BOC exercises its role in inclusive growth.

President Aquino wants our impressive growth to be more inclusive. The trickle down approach benefiting the poor in the long run is not good enough.

The rural sector, composed mostly of farmers and fisherfolk, is both the largest and the poorest. Their situation has not kept pace with our economic growth. For those victimized by smuggling, their situation has become even worse.

This is actually the opposite of inclusive growth. An example of smuggling’s curse is that 20 percent of our small backyard hog raisers lost their livelihoods over a two-year period according to the Department of Agriculture’s Bureau of Agricultural Statistics.

Landmark case

Today, there is a landmark case on rice smuggling that deserves immediate attention. This is the Dec. 13, 2013 order of Judge Emmanuel Carpio of the Regional Trial Court in Davao City.

A large shipment of rice without the necessary import permit from the National Food Authority (NFA) was recently seized in Davao by the Bureau of Customs (BOC). The plaintiff argued that no smuggling occurred because NFA import permits were no longer required to import rice.

In the court order, Judge Carpio stated: “The plaintiff has the right to cause the release of the rice shipments and take possession and custody thereof…It is clear that WTO special treatment for rice was the only source of the Philippines’ right imposed on quantitative restrictions by way of import permits/import quotas in importation of rice.” However, this treatment “expired on June 30, 2012.”

The critical question is whether this treatment has indeed expired or not. In the court order, the following was recorded:

Court: But you acknowledge… that the right of the NFA to issue permit already expired based on the records?

NFA lawyer: Well, based on the records shown by the plaintiff in his complaint, your honor. We have also read it in the paper, your honor, that it has expired but there was no… (interrupted).

Court: No extension of their right to…

NFA lawyer: That is what is stated in the papers, your honor. But there is no exact legal opinion on that, your honor. We are waiting actually for a legal opinion from our Manila office, your honor.

Plaintiff’s lawyer: Anyway, the government will not be prejudiced, your honor,  because the interest of the BOC is only the payment of taxes, your honor, duties and tariff.

Analysis

Assuming the NFA lawyer was not quoted out of context, it is extremely disappointing that what he knows is only from “the papers.” In addition, he said he had no legal opinion at the time of the hearing.

From another perspective, the plaintiff’s lawyer is mistaken when he says that the only interest of BOC is revenue collection. The four other elements of the BOC mission, as stated in the BOC website (www.customs.gov.ph), are: “To provide quality service to stakeholders with professionalism and integrity; to facilitate trade in a secured manner; to effectively curb smuggling; and to be compliant to international best practices and standards”.

To collect revenue in violation of the law is to violate the four other BOC mission elements. The court order releasing the allegedly smuggled rice appears logical. But the premise of no more required import permits is contradicted by interviews I conducted with senior DA and NFA officials.

As a current member of the International Trade Committee of the public-private sector National Agriculture and Fisheries Council (NAFC) and as a former vice president for Asia of the United Nations Council for Trade and Development (UNCTAD), I can confidently say that the DA and NFA position that there are still quantitative restrictions is valid. It is unfortunate that the NFA lawyer did not argue this case with the necessary facts.

If no strong case for reconsideration is given and the rice shipment is released, it will signal the similar releases of all the other apprehended rice shipments that arrived after June 30, 2012. This is ironic, since it is only lately that we have seen successes in confiscating smuggled rice.

Next move

We commend the many successes of the newly-reformed BOC under the supervision of Finance Secretary Cesar Purisima. But the mistaken release of this landmark rice shipment may reverse the increasing confidence farmers and fisherfolk have in the government’s efforts to protect their livelihoods from smuggling. If the alleged Napoles scam is a setback to inclusive growth of P10 billion in 10 years, the smuggling scam quantified by PNoy in his Sona address of P200 billion in one year is 200 times worse.

The BOC must move swiftly with help from the DA and NFA with a strong case for reconsideration to prevent this rice shipment release. This is necessary if the BOC is to fulfill the four other elements in its stated mission. Only then can the BOC exercise properly its important role in inclusive growth, especially as it relates to the small farmers and fisherfolk who are the perennial victims of smuggling.

(The author is chair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former Undersecretary for Agriculture, Trade and Industry. For inquiries and suggestions, e-mail [email protected] or telefax (02) 8522112).