SPECIAL REPORT: Agri smugglers take advantage of old laws, loopholes (Second of 3 parts)

Read Part 1 here

MANILA, Philippines - Smuggling of agricultural commodities has become widespread in recent decades because some policies and procedures in the country’s importation system have become antiquated.

These statutes and practices have created loopholes that allow smugglers to operate.

A study on the dynamics of smuggling of agricultural products has recommended that the issues be earnestly tackled through legal and procedural measures.

Funding the research project was the Department of Agriculture-Bureau of Agricultural Research (DA-BAR).

Implementing it was the government-hosted Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) with the help of experts from the University of the Philippines at Los Baños (UPLB).

Over the past quarter of a century, smuggling of agricultural products has grown to a $10-billion plus illegal trade per year because the country’s importation policies have not been responsive to the exigencies of the times, the study said.

In key informant interviews (KIIs) and focus group discussions (FGDs), the DA/BAR-SEARCA research team found out that some KII respondents from the regulatory agencies cited as example a policy enunciated in 1987 to have imported cargoes pre-inspected and certified at the port of origin.

The policy was generally perceived to be effective in mitigating smuggling. However, it was stopped during the Estrada administration primarily because it was expensive.

Another critical issue is the accreditation of importers. In the Philippines, seized smuggled shipments more often than not end up consigned to fictitious firms located at fictitious addresses.

“This is an indication of a weak accreditation system, resulting mainly from the registration to separate offices by the importers, thereby facilitating finger-pointing when something goes wrong,” the study said.

In contrast, in Singapore and Indonesia, importers are required to register with only one central office. Both countries stringently inspect the importer’s warehouses and rarely encounter fictitious importers with fictitious addresses.

In many instances, in Singapore, importers are made to pay the cost of inspection by the regulatory authorities of the facilities and production procedures and standards of the sources of the agricultural products.

“This results in higher investment cost for the importer so that the incentive not to jeopardize his/her accreditation by doing something illegal like smuggling is high among the importers,” the study said.

Disproving the classical concept that penalty deters smuggling, the study said: “The existing penalties for smuggling in the country are so light that smugglers in the southern part of the country can afford to set up decoys so that the main vessel carrying the bulk of smuggled commodities can pass through without detection.”

The Customs and Tariff Code provides a penalty of only up to 2.5 times the value of smuggled commodities.

In Indonesia, the penalty is to pay 1,000 percent of the value of smuggled commodities for outright apprehension. In Singapore, stiff fines are accompanied by “social sanctions” like publication of offenders in the mass media.

The DA/BAR-SEARCA study expressed grave concern that deadly animal diseases might find their way to the country owing to lack of appropriate cargo inspection facilities.

Most importers use reefer vans for shipment of agricultural products due to perishable nature of the goods.

The policy is for all reefer vans to be subjected to inspection, and the Bureau of Customs (BOC) has been provided with X-ray machines.

However, the regulatory agencies (for plants and animals alike) do not have free access to the machines or do not exercise explicit roles in the examination process.

The study warned that the entry of contaminated agricultural products into the country can wipe out the whole industry.

“This scenario poses a lot of risk for the local industry,” the study said.

The Philippines might not remain the only Asian country free from foot-and-mouth disease and AH1N1 if the regulatory authorities are not equipped to perform their jobs more effectively.

The study saidregulatory authorities, mostly veterinarians and agriculturists, are technically trained to detect contamination and contaminants.

“In contrast, the BOC personnel is mostly composed of lawyers, who have less appreciation of the actual danger of any contaminated cargo” since the regulatory office’s performance is mainly gauged by revenues collected,” the study said.

 The study saw other “avenues of smuggling” like the “green lane” for bulk importers and “domestic transshipment.”

To facilitate post-border processing of imported shipments, the BOC has designed a system where cargoes are automatically classified and color-coded.

Shipments consigned to bulk importers (like multinational companies and chain-store operators) are not necessarily inspected because of their good reputation.

Unfortunately, the study reported, the green lane and domestic transshipment had lately been noted by informants as “avenues of bulk smuggling,” particularly for rice and sugar, which do not require reefer vans.

Currently, shipments destined for regional or local ports are not inspected at the international cargo terminals

This procedure is vulnerable to manipulation to evade inspection and proper payment of duties, as exemplified by recent accounts of thousands of containers missing or unaccounted for in BOC records.

Another possibility for facilitating smuggling in the country is the policy of allowing traders to amend the cargo manifest.

“Countries of origin may have strict rules and tight systems to prevent unscrupulous trading practices. However, this can be negated by a single stroke of an amendment to the manifest,” the study said.

Other weak points found in the country’s importation system are inadequate access to cargo manifest, low utilization rates in bonded manufacturing warehouses, unconventional boarding protocol, not clearly defined rules of origin, variable tariff rates, and absence of price monitoring.

 (To be concluded)