Prevention better than cure

Unlike the reported pork barrel scam involving government officials and media personalities, smuggling has received little or no attention.

But there is no question—smuggling should be addressed immediately. This is because the pork barrel scam reportedly cost the government P10 billion in 10 years, while smuggling accounted for P200 billion in losses each year, according to President Aquino during his last state of the nation address.

Also, smuggling leads to loss of jobs, deterring future investments needed to generate employment. This is crucial for the country as it strives to attain inclusive growth.

For smuggling, prevention is decidedly better than cure. We have never heard of a “big fish” being caught and penalized due to smuggling. If we have trouble curing smuggling, can we prevent it?

It has been proven so.

In 2005, a public-private sector anti-smuggling body created and implemented preventive systems, which led to a 25-percent decline in smuggling. This body was abolished, along with its preventive measures, because it was said to be too successful. Thus, the smuggling rate in 2005 increased from 6 percent, with a government revenue loss of P19.4 billion, to 33 percent in 2012, which translated to P203.4 billion in losses.

There are two preventive systems that can significantly prevent smuggling.

Inward foreign manifest

The first is the automatic transmittal of the Inward Foreign Manifest (IFM) from the Bureau of Customs (BOC) to the Department of Agriculture (DA) and the Department of Trade and Industry (DTI).

IFM is a list of products being shipped from one country to another and contains the name of the ship. This document is submitted at least 24 hours before the ship arrives. Thus, products without the required import permits and suspicious entry documents can be identified. When the BOC submitted this information to the DA and DTI, many suspected smugglers were arrested.

But when this practice was stopped, smuggling resumed.

During the March 11 Senate hearing on smuggling, Alyansa Agrikultura presented the steps it took to reinstitute the IFM transmittal. On Feb. 11, 2011, the same proposal was discussed during the tripartite executive-legislative-private sector Agriculture Fisheries 2025 Conference. On July 23, 2012, a provision for the transmittal of IFM documents was included in the Food Security Bill. It was passed by Congress on June 5, 2013, and signed into law by President Aquino on Aug. 23.

Although the BOC has committed to this practice during the Senate hearing, Customs officials have admitted that they have yet to implement the submission of IFM documents during the Philippine Economic Briefing last March 18. After more than three years, the BOC still has to follow through on their commitment.

World Customs Organization

A second preventive mechanism that BOC has not strictly implemented is the “SAFE Framework of Standards to Secure and Facilitate Global Trade” of the World Customs Organization (WCO).

DTI Director Luis Catibayan informed us that the framework was unanimously adopted by 166 WCO members as early as June 23, 2005.

When I reviewed the 64-page WCO document, I found Section 1.3.2 on Cargo Declaration very revealing. It states: “The carrier or his/her agent is to submit in advance electronic cargo declaration to Customs at export and/or at import. For maritime containerized shipments, the advance electronic cargo declarations should be lodged prior to the goods/container being loaded onto the vessel.”

The WCO provision appears to be better than the submission of IFM at least 24 hours before the vessel arrives. This is because the cargo declaration is required even before the goods leave the source country.

Executive action

Farmers and other victims of smuggling are upset because of the lack of executive action needed to curb smuggling. While the new BOC management should be commended for undertaking important reforms, unscrupulous subordinates are taking advantage of the new management’s unfamiliarity with BOC procedures by providing misleading information.

The anti-smuggling bills being considered today contain provisions that the executive branch may carry out even without legislation. Much more can be done if the appropriate executive departments give the proper support to public-private groups like the NCC Anti-Smuggling and Import-Export Documentation Committee.

The implementation of preventive mechanisms is slow in coming. If this is not corrected, the BOC management’s laudable gains will be reversed and smuggling may run rampant anew.

(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.)