Transparency enables accountability, which in turn leads to integrity.
Last Nov. 8, this subject was tackled in a forum organized by Integrity Initiative Inc., which is ably led by its president, Alex Cabrera, who is also chair emeritus of PwC Philippines. How this relates to Bureau of Customs (BOC) integrity and rampant smuggling was discussed. Former US Securities and Exchange Commission chair Luis Aguilar once wrote: “Without transparency, it is difficult to have accountability.”
Transparency in the BOC was made possible via Executive Order No. 297 issued on March 4, 2004. The fiat created a Cabinet Oversight Committee Against Smuggling, which is composed of the heads of relevant departments. It ensured private sector participation: one representative from agriculture via the Alyansa Agrikultura (AA) and another from industry via the Federation of Philippine Industries.
It met with the BOC every month, while also directly reporting to the President. Having been tasked to monitor the bureau’s activities, it was able to reduce smuggling by an impressive 25 percent.
Unfortunately, the committee was abolished. The chair said it was because it became too successful and the so-called “big fish” was caught.
Thereafter, smuggling soared by 102 percent.
(Note: a good indicator of smuggling is data from the UN Comtrade. Information is collected from the top 25 countries contributing up to 91 percent of Philippine imports. Comparing the value against data collected by the BOC, the difference will show outright and technical—undervaluation, misdeclaration and misclassification—smuggling.)
Nine years later, Administrative Order No. 38, s. 2013 created the National Competitiveness Council. It prescribed a similar antismuggling oversight committee, chaired by the Department of Finance, together with AA as the vice chair.
Smuggling rate decreased by 31 percent. And because it was too successful, it was abolished during the first year of the Duterte administration.
Data from UN Comtrade then revealed that underreported imports more than doubled from P500 billion in 2019 to P1.3 trillion in 2021.
AA has since recommended the restoration of the committee. While this was approved by the international trade committee of the Philippine Council of Agriculture and Fisheries, no action was ever taken.
Worsening smuggling
When the Regional Comprehensive Economic Partnership (RCEP) was proposed, 141 organizations urged the Senate to look into the trade deal’s negative impact on agriculture. They raised the alarm that smuggling will only flourish under this pact.
The AgriFisheries Alliance (AFA) took steps to make the Senate realize these. AFA is composed of three major agriculture-related sectors: farmers and fisherfolk, agribusiness, science and academe.
In the end, the Senate required six conditionalities before it ratified RCEP. These were expressly stated in the Feb. 21, 2023 ratification document. A key condition was the restoration of the public-private antismuggling body. Sans compliance, the document reads: “The Senate of the Philippines may recommend to the President the withdrawal from the Agreement.”
Since then, a low-level antismuggling group has been created. Its request to meet the BOC head has been denied for the last 15 months.
In other words, the all too crucial prerequisite in the RCEP document has yet to be implemented.
Last Oct. 25, the Senate invited the AFA to testify on this and other conditionalities. It was eventually postponed, but it would allow AFA the time and opportunity to present the views of company presidents and student leaders and other agriculture advocates present at the recent integrity forum.
With this external support, the voice of agriculture calling for private sector participation in the antismuggling initiative will hopefully get the attention it deserves.