The dying antismuggling bill

The fight against smuggling is lost on a daily basis. If our imported goods are subject to either outright or technical (i.e., undervaluation, misclassification and misdeclaration) smuggling, the estimated annual smuggling amounts to P630 billion, with a government revenue loss of more than P100 billion. It is therefore imperative that the antismuggling bill be prioritized over the proposed Customs and Tariff Modernization Act (CTMA).

Recent smuggling

Already, the seasonal onion smuggling from China has started. Last May 25, an Agriculture and Fisheries 2025 follow-up meeting was convened by Agriculture Secretary Proceso Alcala, Congressional Oversight Committee on Agricultural and Fisheries Modernization (Cocafm) co-chairmen Sen. Francis Pangilinan and Rep. Mark Mendoza, and private sector agriculture and fisheries leaders. Rodolfo Niones, an Alyansa Agrikultura leader, reported that smuggled onions are again flooding the Divisoria market. We desperately need a law to stop all this.

Today, there are two such proposed laws to stop smuggling. The ASB is devoted completely to address this problem, while the CTMA addresses many issues, one of them purportedly to stop smuggling.

But after several CTMA congressional hearings where antismuggling advocates proposed that ASB provisions be included in the CTMA, these provisions were rejected.

10 differences

Below are three critical differences between the two bills, which the Alyansa has prioritized.

The ASB recommends the creation of a government-private sector oversight body to ensure transparency and better governance. This duplicates the very successful Cabinet Oversight Committee on Antismuggling (Cocas), which was abolished after they caught “big fish.” The Alyansa Agrikultura and the Federation of Philippine Industries participated actively in the Cocas meetings, which met every two weeks.

Very often, the cases of the Bureau of Customs (BoC) against the alleged smugglers were too faulty to prosper. The ASB contains a provision to strengthen the antismuggling cases through the participation of private sector lawyers.

• Much of the smuggling today is done through undervaluation. ASB has a provision that adopts measures compliant with the World Trade Organization (WTO) that stops the abuse of this “transaction value” mechanism to justify undervalued imports.

The other seven differences were identified by Mario Jose Sereno, Alyansa Agrikultura International Affairs adviser and Federation of Philippine Industries International Trade chairman.

The ASB substantially increases fines and penalties (i.e., P20 million-50 million and reclusion perpetua for unlawful importation if the value exceeds P50 million) vs smaller increases in the CTMA (i.e., P100,000-500,000 and six to 12 years for unlawful importation if the value exceeds P1 million).

• It strengthens controls over CBWs and over the modes of disposition of seized goods and other goods under Customs custody vs CTMA which merely copies existing TCCP provisions.

• It provides for the link-up of the computer systems of the BoC and the Bureau of Internal Revenue (BIR) to greatly enhance the conduct of tax and importation audits vs none for CTMA.

It tightens the accreditation process to weed out fly-by-night operators and “importers-for-hire” schemes vs none for CTMA.

• It provides for internal audit mechanisms on top of external audit of the Commission on Audit versus none for CTMA.

• It enhances risk analysis by broadening transparency in customs transactions.

The CTMA institutionalizes the seeming abdication by Congress of its tariff-setting powers to the executive branch, whereas the Constitution grants such powers exclusively to Congress. The Constitution merely allows a limited delegation by Congress to the President.”

Why the rush

At the Senate hearings, the Alyansa agreed to the Revised Kyoto Convention (RKC), which facilitates importation, provided that the three- to five-year timeline allowed by RKC for transition measures be implemented. If not, the RKC would actually make smuggling easier.

This timeline is not provided for in the CTMA. If only 72 percent out of the 176 country members of the World Customs Organization have acceded to the RKC, why the rush to implement all the RKC provisions immediately? There is something suspicious in this, especially since the CTMA adopts all the RKC provisions and rejects the most important ASB provisions.

Recommendation

The ASB must be prioritized over the CTMA. If the CTMA has to be passed first, then all the important ASB provisions must be incorporated into the CTMA before its passage. In addition, the three- to five-year implementation timeline for the critical RKC provisions must be specified. If not, smuggling may not only continue but also prosper.

The House of Representatives must be the champions of the smuggling victims in the current 15th Congress, as it was in the two previous Congresses when they passed the ASB. Many of the smuggling victims have vowed to report the vote of each representative in this critical issue to find out who are actually on their side.

(The author is chairman of Agriwatch and former secretary for presidential flagship programs and projects. For inquiries, e-mail [email protected] or telefax (02) 8522112.)