Secrecy and smuggling

Secrecy, the opposite of transparency, secures smuggling. This is especially true during election season, when smuggling increases.

Senate President Vicente Sotto III commendably called the Senate committee as a whole to address smuggling during a Dec. 14 hearing.

Upon the questioning of Sen. Richard Gordon, the Alyansa Agrikultura representative stated there should be a “cordon sanitaire” surrounding Customs Commissioner Rey Leonardo Guerrero. He could not reconcile Guerrero’s antismuggling activities with the massive smuggling still going on.

An example of this is contained in a report submitted by Raul Montemayor, national manager of Federation of Free Farmers. Citing the International Trade Center, he said Vietnam exported to the Philippines 2,239,418 tons of rice in 2020, but the Bureau of Customs (BOC) reported only 1,849,166 T. The difference of 294,852 T is accounted for by smuggling, a high 13-percent smuggling rate. This is from outright or technical smuggling (i.e. undervaluation, misclassification and misdeclaration).

Montemayor also submitted data showing that from March 2019 to October 2021, the government lost P8.85 billion in foregone tariffs.

This huge revenue loss is due to underdeclaration of quantities, freight and insurance charges; classification of rice grades; and wrong application of tariff rates. What is even worse is the loss of significant farmer incomes due to cheap smuggled rice.

Montemayor had earlier suggested specific steps to curb smuggling in the following areas: importer’s declaration, BOC classification, detection of undervaluation and postaudit of transaction. However, he has heard little from the BOC.

To paraphrase the song “Mona Lisa” by Nat King Cole, “Many have been left by BOC’s doorsteps. They just lie there, and they die there.”

In 2005, a structure was created to implement an antismuggling strategy. Called the Cabinet Oversight Committee on Anti-smuggling (Cocas), its members were the chiefs of the Departments of Finance, Justice, Agriculture and Trade and Industry. There were representatives from the private sector, one from Alyansa Agrikultura and one from Federation of Philippine Industries. They met with the BOC monthly, and decreased smuggling by an impressive 25 percent.

Cocas was subsequently abolished, allegedly because it had caught a “big fish.”

In 2015, a lower level public-private antismuggling committee was created. It helped decrease the smuggling rate by 32 percent. But once again, it was abolished, allegedly for the same reason that saw the death of its predecessor.

Customs Deputy Commisioner Arturo Lachica and Alyansa Agrikultura later agreed to continue the agriculture import information flow. A few days later, on Nov. 12, 2016, Lachica was killed, and the information flow stopped.

Needed legislation

At the Dec. 14 Senate hearing, the Alyansa Agrikultura representative said: “We do not want to rely any longer on the Executive Branch. Officials create a public-private structure to combat smuggling, only to abolish it when it succeeds. If hearings are for legislation rather than elections, we now ask for a law that will create a public-private antismuggling structure, similar to the successful ones in the past.”

A legal precedent is the public-private Philippine Council for Agriculture and Fisheries (PCAF). Agriculture Secretary William Dar has encouraged transparency, especially with the accounting of P22 billion of alleged unliquidated funds in his department.

Without PCAF, this serious matter would just be ignored. This is why an antismuggling public-private body is important.

Only with this structure can transparency replace the secrecy that secures and sustains massive smuggling.

The author is Agriwatch chair, former secretary of Presidential programs and projects and former undersecretary of the Department of Agriculture and Department of Trade and Industry. Contact is [email protected].