Recommendations for the new Customs chief
Building on the gains of the Bureau of Customs (BOC) during the last three years, here are three recommendations that newly appointed Customs Commissioner Ariel Nepomuceno may consider.
Smuggling oversight committee
The first is the restoration of the anti-smuggling oversight committee which reports directly to the President. The two times it was implemented resulted in a significant smuggling decrease of 27 percent and 31 percent.
How can smuggling be measured? The United Nations Commodity Trade Statistics Database (Comtrade) shows the amount a specific country reports to us. This can then be compared to the amount that our BOC says we receive. The difference is a smuggling indicator.
For example, if a country reports it sends us goods worth P500 billion, but the BOC reports only P400 billion, the P100 billion difference is generally due to outright or technical smuggling. The latter is categorized into undervaluation, misclassification or misdeclaration.
This public-private oversight committee is composed of one representative each from the Departments of Finance, Justice, Agriculture, Trade and Industry, and Interior and Local Government. There is one private sector each from agriculture and industry.
It meets monthly with the the BOC and reports to the President.
Unlike Congress which has no direct power to reward or penalize specific BOC officials, this committee can take immediate action. The result is better transparency and accountability.
The first time this committee was abolished, the smuggling rate increased by 104 percent. The second time, without this committee in 2019, the UN Comtrade smuggling indicator increased from P500 billion to P1.2 trillion.
The restoration of this practice is a documented conditionality of the Regional Comprehensive Economic Partnership, ratified by the Senate on February 21, 2023.
Consideration should now be given now to implementing this highly effective proven practice.
Agriculture working group
The second recommendation is the BOC quarterly meeting with the Border Controls and Anti-Smuggling Working Group (BAWG) of the public-private Philippine Council for Agriculture and Fisheries (PCAFI).
When Agriculture Secretary Francisco Tiu Laurel, Jr. assumed office, the agriculture smuggling apprehensions tripled, with the help of Undersecretary Carlos Carag.
Quarterly meetings with the public-private BAWG will supplement not only this welcome development, but also go beyond further increasing anti-smuggling achievements.
An example is the last BAWG meeting with former BOC Commissioner Bienvenido Rubio.
After 11 years, the Agricultural and Fisheries Mechanization Law (RA 10601) had not been fully implemented.
Because there was no BOC-DA circular that enabled the required registration of imported agriculture machines, substandard machines were being sold without the necessary traceability.
When Rubio learned about this from the BAWG, he immediately ordered the drafting of this circular that would put a stop to this very harmful activity.
Agriculture technical experts
The third recommendation is for the BOC to support agriculture the same way it supports industry.
I was with the Federation of Philippine Industries (FPI) team that the BOC fully supported in using private sector Industry Technical Experts (ITEs) to curb technical smuggling.
Industry sectors such as cement (while I led) had ITEs accredited by the BOC to look at their respective sector imports and documents upon arrival.
Working with the BOC, they discovered significant discrepancies which the BOC alone could not do. The result was improved thoroughness, accuracy and transparency.
The BOC should now support this practice in agriculture by similarly accrediting Agriculture Technical Experts.
This will better identify and penalize the undervaluation, misclassification and misdeclaration currently happening in agriculture imports.
The PCAFI Committee on International Trade supported this move in its recent quarterly meeting last October 30.
With the private sector participation that Nepomuceno has advocated in the past, his continued support for this unity with the private sector bodes well for the BOC’s success and agriculture’s future.
